Lloyds Banking Group plc, Vodafone Group plc and Persimmon PLC: The FTSE 100’s Hottest Dividend Stars?

Royston Wild looks at the payout prospects of FTSE 100 (INDEXFTSE: UKX) stars Lloyds Banking Group plc (LON: LLOY), Vodafone Group plc and Persimmon PLC (LON: PSN).

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Today I am discussing the hot dividend outlook of three FTSE 100 (INDEXFTSE: UKX) giants.

Phone phenomenon

With customer demand flowing across the globe, I reckon Vodafone (LSE: VOD) should keep on delivering market-mashing dividends in the years ahead. The telecoms titan saw total organic service revenues flip 1.4% during October-December, the sixth successive quarterly improvement.

Not only is Vodafone benefitting from improving off-take in Europe — revenues here slipped just 0.6% in the period — but surging data and voice demand in Asia, the Middle East and Africa saw organic service revenues in these regions leap 6.5% year-on-year.

Vodafone has thrown vast sums at improving its global presence via its multi-billion-pound Project Spring organic investment programme. And with these costs set to slip in near future — 92% of mobile builds have now been completed — Vodafone’s balance sheet should enjoy an extra boost.

 The company is expected to keep the dividend stable around 11.4p per share in the year to March 2017, yielding a smashing 5.2%. And a predicted 11.6p for the following year reward propels the yield to an unmissable 5.3%.

Build bumper returns

I am convinced the gargantuan gap between housing supply and homebuyer demand should keep powering dividends at Persimmon (LSE: PSN) in the near-term and beyond.

At face value, latest data from the Royal Institution of Chartered Surveyors (or RICS) made for worrying reading. The impact of increased stamp duty on landlords saw new property enquiries drop by a net balance of 22% in April, the biggest drop since 2008.

The body added that the fall “may also reflect some uncertainty beginning to enter the market in the run up to the UK’s referendum on its EU membership.”

Still, RICS estimates that house prices should continue chugging higher in the longer-term, with average values expected to advance 3%-5.5% during the next five years.  And the City expects shareholder payouts at Persimmon to keep climbing against this backcloth — the London firm is expected to dole out dividends of 110p and 111.7p per share in 2016 and 2017 respectively, throwing up lip-smacking yields of 5.6% and 5.7%.

Make a deposit

While banking play Lloyds’ (LSE: LLOY) reliance on the British high street may not make it a hot stock for growth investors, I believe the stable nature of the domestic retail market makes it a rock-solid pick for those seeking solid dividend growth.

Sure, the issue of PPI-related penalties is set to weigh on the bank for a little while longer — claim numbers are expected to accelerate ahead of a proposed 2018 deadline, a scenario that is likely to add substantially to Lloyds’ current £16bn bill.

But the bank is pulling out all the stops to reduce costs across the rest of the business, and remains well on course to close 200 branches by the end of 2017.

Lloyds’ CET1 pile clocked in at a healthy 13% as of March, and this should continue to head higher as a robust UK economy boosts revenues and streamlining measures continue to pay off.

Consequently the number crunchers expect Lloyds to shell out dividends of 4.3p per share in 2016 and 5.2p next year. And I reckon subsequent yields of 6.8% and 7.9% for 2016 and 2017 are too good to pass up on.

RISK WARNING: should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice. The Motley Fool believes in building wealth through long-term investing and so we do not promote or encourage high-risk activities including day trading, CFDs, spread betting, cryptocurrencies, and forex. Where we promote an affiliate partner’s brokerage products, these are focused on the trading of readily releasable securities.

Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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