The FTSE 100 is becoming an increasingly-precarious hunting ground for income chasers.
Banking goliath Barclays was the latest to disappoint investors this week by choosing to cut the 6.5p per share dividend for 2015 to 3p for this year and next.
The business isn’t likely to be the last battered blue-chip to cut the dividend in the weeks and months ahead, however. With this in mind I’m looking at four stocks that should continue to offer up spectacular dividend flows.
Micro marvel
At first glance chipbuilder ARM Holdings (LSE: ARM) may not be the most appetising dividend stock out there.
A projected payout of 10.1p per share for 2016 yields just 1%, and this figure remains subdued, at 1.2%, for next year due to expectations of an 11.8p reward.
But investors should pay close attention to ARM Holdings’ commitment to meaty annual hikes — the tech play has lifted the dividend at an annualised rate of 26% during the past five years. And as demand for its wares surges across the smartphone, network and servers markets, I expect dividends to continue exploding.
Safe as houses
I believe the worsening imbalance affecting the UK housing industry should also keep powering payouts at Persimmon (LSE: PSN) in the years ahead.
Just today Standard & Poor’s predicted that rising income levels, falling unemployment, low mortgage rates and a homes stock shortage should propel house prices 5% higher in 2016. And the agency underplayed the impact of extra taxes for ‘buy-to-let’ landlords on future property values.
With the City expecting prolonged profits growth across the housing sector, Persimmon is expected to deliver dividends of 113.5p and 118.3p per share for 2016 and 2017, respectively. These figures create jumbo yields of 5.1% and 5.3%.
Drinks delight
Thanks to the unrivalled strength of its beverages portfolio, I believe Diageo (LSE: DGE) should keep raising the annual dividend well into the future.
Labels such as Johnnie Walker whisky and Captain Morgan rum enjoy a resonance with consumers that few other drinks manufacturers can match, giving the business brilliant earnings visibility. And Diageo’s rising presence in the fast-growing ‘premium’ drinks market — combined with an expanding presence in emerging markets — should also send profits shuttling higher.
For 2016 Diageo is expected to raise the dividend to 58.2p per share, yielding a chunky 3.1%. And predictions of a 61.5p reward for next year nudges the yield to 3.3%.
Payout powerhouse
Arguably network operator National Grid (LSE: NG) is the safest dividend pick of them all, the essential nature of electricity giving it brilliant earnings visibility of which other stocks can only dream.
And while other utilities giants from power plays Centrica and SSE face increasing competitive pressures, National Grid’s vertically-integrated structure leaves it immune to such worries.
As such, the business is expected to see earnings moving marginally higher in the years to March 2016 and 2017, driving the yield to 43.8p per share this year and 44.8p in the following period. Consequently National Grid boasts vast yields of 4.5% and 4.6% for these years.