Today I’m looking at the investment case of three London-quoted dividend hits.
Building chunky income flows
I believe housebuilder Taylor Wimpey (LSE: TW) is one of the hottest dividend selections out there thanks to Britain’s chronic homes crunch. Sales and forward order figures from the FTSE’s construction sector continue to cause much reason for cheer, and industry data suggests that this trend isn’t likely to cease any time soon.
On Wednesday, Nationwide advised that average house prices in the UK had risen 0.8% in December, the largest monthly increase since April. It also said home values have advanced 4.5% during the course of 2015. I believe further chunky advances can be expected as favourable lending conditions and improving affordability propel demand.
Such a scenario obviously bodes well for Taylor Wimpey and the City expects the company to enjoy earnings bounces of 32% and 15% in 2015 and 2016, respectively. As a result, the business is anticipated to shell out dividends of 9.7p per share this year and 11p for 2016, creating vast yields of 4.9% and 5.5%, respectively.
Retailer on the rise
And I believe investors should also enjoy bumper payout yields from clothing retailer N Brown (LSE: BWNG) now and in the future.
The company – whose brands include Jacamo, Simply Be and JD Williams – saw revenues rising 4.2% to £415.8m between March and August as demand for its goods online and in-store continued to rise.
Indeed, the fruits of massive restructuring to transform N Brown from a mail-order business to an internet-focused one is clearly paying off handsomely. I expect sales to keep ticking higher thanks to improving consumer spending power and the surging popularity of e-commerce.
The number crunchers expect a 19% earnings uplift in the year to February 2016 to push the dividend from 14.23p per share in each of the past two years to 14.5p. This creates a chunky 4.1% yield. And this figure rises to 4.2% in fiscal 2017 as a further 10% bottom-line rise is expected to produce a 15p dividend.
Bank payments bowling higher
Like N Brown, global banking behemoth Barclays (LSE: BARC) has been forced to keep the dividend locked in recent times as earnings have fluctuated – indeed, the bank has kept the payout frozen at 6.5p per share since 2012.
But with Barclays having pulled out all the stops to build its capital base, and its Retail Banking and Barclaycard arms delivering steady income growth, I expect dividends to step higher again along with earnings.
This view is shared by the City, and an anticipated payout of 6.6p for 2015 yields a decent-if-unspectacular 2.9%. But this number leaps to 3.6% for next year thanks to forecasts of an 8.3p dividend.
Questions concerning the size and strategy of Barclays’ Investment Banking division continue to suppress investor appetite. And a steady stream of regulatory fines (the bank was fined an extra $13.75m by US regulators just this week over previous mutual fund deals) is having a similar effect. But I believe the business remains a solid pick for income seekers now and in the coming years.