Shell
Oil giant Shell (LSE: RDSB)(NYSE: RDS-B.US) is the bluest of blue-chip companies. With global operations and a long history of success, it is regarded as one of the strongest listed companies in the world.
This flows through to Shell’s owners in shareholder dividends.
Shell has not cut its dividend in more than 50 years. Last year, the company paid $3.05 in dividends. At today’s share price, that equates to a yield of 5.0%. However, the payout is expected to increase this year, hitting $1.86 i.e. a 5.4% yield on today’s price of 2,158p. Even better, the dividend is expected to increase again in 2014, meaning a prospective yield of 5.6%.
Shell looks cheap on a forward P/E of 8.8 versus 14.1 for the average FTSE stock.
SSE
SSE (LSE: SSE)(NASDAQOTH: SSEZY.US) is a diverse utility company, providing electricity, gas and telecom services. As such, it has a high degree of earnings visibility. The company uses this strength to reward its shareholders with large dividend payments.
Last year, SSE paid 84.2p of dividends for every share owned. This year, that figure is expected to increase to 87.8p. That’s a forecast yield of 5.6%.
Earnings growth is expected to outstrip this. This matters, because SSE needs profits to pay its dividend. Forecast earnings are around 1.4 times the expected dividend. As long as earnings are increasing, any dividend reduction becomes less likely.
The shares trade on a P/E of 13.2, falling to 12.3 next year.
Resolution
Resolution (LSE: RSL) is owner of the Friends Life Group. This business consolidates the acquired operations of Friends Provident, the majority of AXA‘s UK life insurance businesses and Bupa Health Insurance.
Although Resolution has for some time been the highest-yielding share in the FTSE 100, this has not stopped the company increasing its dividend for three years running.
It is more likely that the company will hold its dividend this year at 21.1p per share. At today’s share price, that’s a 6.5% yield. Although forecast earnings cover looks thin at just 1.1 times, the payout is so large that it could be halved and still beat a bank deposit. Double-digit earnings growth is forecast for 2014, which should enhance dividend protection.