Today I am looking at three blue-chip winners set to deliver stunning returns in 2015.
AstraZeneca
The crushing impact of patent expirations across key products is expected to keep earnings growth at AstraZeneca (LSE: AZN) (NYSE: AZN.US) underwater for some time to come. Even though the firm has ramped up R&D to compensate for the loss of these labels, the effect of exclusivity losses is expected to push earnings 18% and 4% lower in 2014 and 2015 respectively.
As a result, AstraZeneca is expected to keep the full-year payout locked at 280 US cents per share in both 2014 and 2015. Still, the yield still clocks in at a tasty 3.7% through to the end of next year, taking out a forward average of 3.2% for the complete FTSE 100.
AstraZeneca will have to keep the lab bench buzzing to create the next generation of earnings drivers and get dividends moving higher once again. Although the business of drugs development is fraught with pitfalls, I believe that the pharma giant’s refreshed development strategy — allied with its proactive acquisition strategy in key growth areas and success in developing markets — should generate excellent returns in coming years.
Standard Life
Even though Standard Life (LSE: SL) has seen earnings fluctuate wildly in recent years, brought on by industry pressures and wider macroeconomic troubles, the firm has still been able to keep dividends ticking higher. Indeed, the life insurer has raised the total dividend at a compound annual growth rate of 6.6% during the past five years, and City analysts expect payouts to keep on rolling.
City analysts forecast a full-year dividend of 16.9p per share in 2014, up 7% from last year’s levels, and an extra 7% advance is anticipated next year to 18p. As a consequence Standard Life’s chunky 4% yield for this year jumps to an even more appetising 4.2% for 2015.
The effect of pension changes in this year’s UK budget is likely to result in pressure at the firm’s domestic operations. But over the long-term I believe that Standard Life’s terrific product diversification should underpin strong earnings, and consequently dividend, expansion on a long-term time horizon.
Aviva
General insurance leviathan Aviva (LSE: AV) (NYSE: AV.US) has fallen out of favour with income investors in recent times, the business having slashed the payout in both 2013 and 2014 to boost the balance sheet and enhance its restructuring plan.
But City analysts expect the dividend to get rolling again from this year onwards as the business returns to a period of sustained earnings growth — the payout is expected to increase 15% this year, to 17.2p per share, and an additional 14% rise is anticipated for 2015 to 19.6p. These projections push a healthy yield of 3.4% for 2014 to a lip-smacking 3.9% for next year.
After Aviva nailed down terms for its £5.6bn takeover of Friends Life earlier this month, the business indicated that the move should give a further leg up to dividend growth. Should the takeover boost cost-cutting as planned and drive business volumes higher, I believe dividend hunters can looking forward to lucrative payout growth in the future.