Today I am detailing the investment case for five terrific payout plays.
AstraZeneca
For income hunters AstraZeneca (LSE: AZN) may not be the most obvious stock candidate, the double whammy of hefty exclusivity losses and vast capital demand of drug development weighing heavily on the balance sheet. But for me the prospect of huge earnings, and consequently dividend growth, is a very real possibility for the pharma play in the coming years as a revitalised R&D department — not to mention healthcare surging demand from developing regions — brings home the bacon.
Indeed, a mild thawing in AstraZeneca’s turnover troubles is expected to result in a slight uptick in the dividend in 2015 and 2016, to 290 US cents per share — the payout has been locked at 280 cents for the past four years. Consequently the drugmaker sports a hefty yield of 4.3% through to the close of next year.
RSA Insurance Group
I believe that RSA Insurance (LSE: RSA) is a solid pick for those seeking explosive dividend expansion in the years ahead. The company has finally put to bed the capital travails of recent years and, with disposals and cost-cutting continuing and the insurer doubling-down on its key markets of Britain and Ireland, Scandinavia, Canada and Latin America, I reckon a reshaped group should be well positioned to deliver chunky payouts.
In the meantime RSA Insurance throws up decent-if-unspectacular yields, with an anticipated 13.5p-per-share payment for this year producing a reading of 3.1%. But this leaps to 3.5% for 2016 amid expectations of a 15p reward in 2016, illustrating the excellent potential that the life insurance leviathan offers for more patient investors.
Cobham
I reckon that, supported by galloping demand for civil aircraft, dividends are on course to surge higher at component builder Cobham (LSE: COB). The order books at planebuilding giants Boeing and Airbus remain mighty, a promising omen for the top-tier supplier, while recovering defence budgets in the West should also boost military sales — and with it profits — for the Dorset-based business.
This bubbly outlook, combined with a formidable cash pile, has enabled Cobham to keep dividends ticking higher despite recent earnings woes. And with the bottom line expected to flip higher from this year, the firm is in great shape to keep offering up market-beating payments. Indeed, a prospective dividend of 11.6p for this year is anticipated to advance to 12.3p in 2016, forecasts which generate yields of 3.9% and 4.2%.
N Brown Group
With clothing house N Brown’s (LSE: BWNG) restructuring plan well off the ground, I reckon that dividends should sprint forth from this year onwards. The payment was frozen at 14.23p per share last year as the firm switched its attention to internet retailing from mail order, but with the huge cost drain now put behind it and online sales surging at Jacomo, JD Williams and its other brands, I believe investors can look forward to even-sunnier returns.
This view is shared by the number crunchers, who expect the payout to advance to 14.5p in the year ending February 2015 and to 15.1p in 2016. Consequently the fashion play carried handsome yields of 4.3% for 2015 and 4.4% for next year.
Countrywide
As house prices continue to rise, lenders fall over themselves to provide finance to homebuyers, and the government rolls out scheme after scheme to get first-time buyers on the ladder, I reckon the stage is set for investors in Countrywide (LSE: CWD) to enjoy terrific earnings and dividend growth. Indeed, the housing market continues to improve and latest British Bankers’ Association numbers showed mortgage approvals hit a six-month high in April.
Accordingly the City expects Countrywide to record further double-digit earnings advances in 2015 and 2016, underpinning meaty dividends of 24.1p and 27.3p per share for these years. Such projections mark a huge leap from 2014’s payment of 15p, and carry splendid yields of 4% and 4.6% correspondingly.