Today I am looking at the investment appeal of two FTSE-quoted dividend darlings.
Bank on bumper returns
As a result of earnings fluctuations, heavy restructuring, and the need to build its capital base, shareholder rewards over at Barclays (LSE: BARC) have disappointed the market in recent years. Indeed, the bank has kept the dividend locked at 6.5p per share since 2012.
However, with the improving British economy driving revenues at its core businesses, and cost-cutting and asset sales still ticking along — Barclays’ retail operations in Italy were offloaded to CheBanca! this month — the dividend outlook at the London firm is steadily improving.
Indeed, the number crunchers expect Barclays to put aside the bottom-lime bumpiness of recent years, and stellar growth of 24% is pencilled in for this year. A further 21% advance is forecast for 2016.
As a result Barclays is predicted to put its progressive dividend policy back into gear, and a 6.6p per share reward is currently forecast for 2015, yielding a handy 2.9%. And dividend growth is really expected to get back into gear from next year, with an estimated 8.3p dividend yielding a decent 3.6%.
And there are plenty of reasons to be bullish over Barclays’ long-term dividend prospects. The bank’s Transform progranmme — aimed at stabilising the business, putting performance “on the right track” and becoming, in their words, the “Go-To” bank — still has plenty left in the tank, while revenues at its Barclaycard division keep on surging.
And Barclays’ hefty presence in Africa gives it solid exposure to emerging market consumers, a region with relatively-low product penetration. I believe the bank’s exceptional outlook at home and abroad should make it a lucrative dividend star in the years ahead.
A hulking housebuilding star
Stunning dividend expansion is nothing new over at housebuilder Bellway (LSE: BWAY), the business having lifted payouts at a stunning compound annual growth rate of 57.5% over the past five years.
Bellway’s investors have tearaway bottom-line growth to thank for this stunning performance, with earnings having surged by incredible double-digit percentages throughout this period. And if today’s trading update is anything to go by, I believe the construction giant should continue delivering knockout shareholder rewards.
Bellway announced that it has made “an excellent start to the current financial year, supported by strong market conditions and an increase in the number of units in production.” The company expects completions to rise 10% in the year to July 2017, to a record 7,752 units, while average selling prices are also anticipated to rise by around a tenth.
According to City forecasts, Bellway is set to deliver a stonking 17% earnings advance in fiscal 2016. As a result, last year’s dividend of 77p per share is predicted to leap to 87.8p in the current period, although I expect today’s positive result to prompt a flurry of upgrades. The current projection yields a chunky 3.4%.
And as Britain’s housing crunch intensifies, I expect shareholder payments to continue striding comfortably higher well into the future.