Murray Income Trust (LSE: MUT) announced its annual results last month, and delivered “the 40th consecutive year of annual dividend increases”. At a current share price of 704p, the trust yields 4.4%.
Picking great dividend shares has helped Murray Income outperform the FTSE All-Share Index over the past three, five and 10 years.
Let’s take a look at the three highest yielding stocks in Murray’s top 10 holdings: namely, HSBC (LSE: HSBA) (NYSE: HSBC.US), GlaxoSmithKline (LSE: GSK) and Centrica (LSE: CNA).
HSBC
HSBC, which came through the financial crisis better than many of its rivals, is ahead of the field in cleaning up its balance sheet, and is probably one of the most investible banks in Europe.
HSBC has averaged annual dividend growth in high single digits since 2009, and analysts are forecasting more of the same to come.
The company offers a significantly higher income than its peers — an income that’s recently become even more attractive. HSBC’s shares have dropped 8% over the last four weeks, pushing the 12-month forward yield up to 5.5% at a current price of 612p.
HSBC not only beats its banking rivals on yield, but also trounces the 3.5% on offer from the wider market.
GlaxoSmithKline
GlaxoSmithKline is in the midst of a bribery scandal. It isn’t the first company to face this kind of situation, and it won’t be the last. If history is any guide, there should be little long-term damage to the company.
Glaxo has averaged annual mid-single-digits dividend growth for shareholders since 2009. Analysts see this continuing, albeit at the lower end of the mid-single-digits range.
While the UK’s top pharmaceuticals group is set to deliver lesser income growth than HSBC in the immediate future, the starting yield is significantly higher than the bank’s: Glaxo offers 6.3% at a current share price of 1,304p.
Like HSBC, Glaxo is the leader for yield within its sector.
Centrica
The UK’s ‘Big Six’ energy companies — which include Centrica, the owner of British Gas — are under intense political and regulatory scrutiny at the moment. Utilities tend to go through such periods from time to time … but come out of the other side still delivering for shareholders.
Centrica was posting double-digits dividend growth five years ago. This subsequently moderated to mid single digits, and analysts see a further softening to low single digits growth for this year and next.
The political pressure on the energy firms of late and the recent broad stock market sell-off mean Centrica’s shares are trading at a 52-week low of 281p, giving a Glaxo-matching 12-month forward yield of 6.3%.
And once again, like Glaxo and HSBC, Centrica is the top stock within its sector for yield.