Dividends are back, with 2015 set to see the strongest underlying growth in three years at 6.4%, according to new research from Capita Asset Services.
That is great news for investors, since dividend growth is one of the biggest drivers of investment returns over time, if re-invested for growth.
Today you can pick up some great FTSE 100 companies paying generous yields.
Returns of 5% or even 6% a year look even more tempting against the average savings account, which currently pays 0.67%, according to MoneyFacts.co.uk.
Dig Deep For The Miners
The share prices of mining giants such as BHP Billiton (LSE: BLT) and Rio Tinto (LSE: RIO) have endured a rough ride lately, as Chinese demand slows, and the cost of metals such as iron ore and copper plunges.
BHP Billiton is down 23% over the past year, while Rio Tinto is down 13%.
But as share prices fall, yields increase, as you pay less to get your hands on that dividend income stream.
Accordingly, BHP Billiton yields a crunchy 5.05%, while Rio Tinto is a mineral-rich 4.38%.
Better still, both are now trading at easy valuations, just 8.45 times earnings in the case of BHP Billiton, and 12 times earnings for Rio.
I suspect commodity stocks will remain volatile for some time, but you can keep reinvesting those yields to boost your growth prospects when the cycle swings back in their favour.
Black Gold Flows
Oil giants BP (LSE: BP) and Royal Dutch Shell (LSE: RDSB) have both seen their share prices stall on falling oil prices.
BP has the added burden of the endless Gulf of Mexico oil blowout compensation saga, and concerns over the impact of Western sanctions on its Rosneft tie-up with the Kremlin.
But there are signs of a recovery, with BP up 15% in the last three months, and the oil price creeping above $60 a barrel as more US shale proves uneconomic.
With no serious alternative to black gold in sight, and with Shell making progress in liquefied natural gas, you would have to bet on an oil price recovery.
Buy today and you are drilling into a yield of 4.98% at BP and 5.38% from Shell, a great way to top-up your investment tank.
One Health Yield
GlaxoSmithKline (LSE: GSK) is many people’s favourite FTSE 100 dividend stock but it took a turn for the worse over the Chinese bribery scandal and falling profits in the US.
Glaxo is on the mend now, up nearly 20% in the last six months, although at 16.5 times earning it sadly isn’t as cheap as it was.
Nevertheless, it will still inject a healthy 5% yield into your portfolio, which as you won’t need reminding, is exactly 10 times base rate.