Today I am highlighting three companies ready to deliver smashing dividend returns in 2015.
National Grid
Electricity transmission play National Grid (LSE: NG) (NYSE: NGG.US) has long been a favourite among dividend hunters, the essential role of power in first world economies like the UK and US providing terrific earnings visibility and with it reliable payout growth.
City analysts expect the firm to lift the total dividend 4% in the year ending March 2015 to 43.5p per share, in turn creating a colossal 4.7% yield and comfortably taking out a forward average of 3.4% for the complete FTSE 100.
And the payout is expected to rise a further 3% the following year to 44.9p, pushing the yield to a stonking 4.8%. With National Grid’s aggressive asset expansion scheme ready to deliver long-term growth, and new RIIO price controls in the UK boosting efficiency and thus cash flows, I believe the company remains a hot pick for those seeking terrific income flows.
Imperial Tobacco Group
I have long been a holder of Imperial Tobacco Group (LSE: IMT) owing to the firm’s ability to keep on delivering year-on-year dividend growth. The business has lifted the payout at a compound annual growth rate of 11% during the past five years alone, and the number crunchers expect a further 10% rise in the year to September 2015, 140.7p per share. This projection creates a monster 4.9% yield.
Undoubtedly an environment of rising industry regulation, a surging black market, and social and economic pressures on consumers’ wallets has severely dented sales expansion in recent times.
Still, I expect the spoils of heavy restructuring at Imperial Tobacco — which includes the shuttering of scores of local brands and doubling down on key brands like West and John Player Special — combined with aggressive moves into the accelerating e-cigarette market to underpin further dividend expansion in coming years.
BHP Billiton
Diversified mining giant BHP Billiton (LSE: BLT) (NYSE: BBY.US) — like the rest of the commodities sector — remains a classic high-risk, high-reward play. A backcloth of surging production and insipid global demand has resulted in severe earnings volatility in recent times, a trend which is anticipated to result in a significant 19% earnings dip in the 12 months concluding June 2015.
As a result BHP Billiton is expected to put paid to its progressive dividend policy and keep the full-year payout at 121 US cents per share. However, this forecast still produces a whopping yield of 4.7%.
With factory activity at commodities-glutton China still on the ropes, and the eurozone economy lurching back into recession, BHP Billiton could continue to suffer the effects of insipid demand. But with mines all over the globe shuttering production in the face of weak product prices, brave investors could enjoy the fruits of better market fundamentals and thus improving bottom line over the long-term.