3 UK Blue-Chip Dividend Bargains
06/21/2013 7:00 am EST
These three large-cap stocks offer more dividend bang for your buck than they did just a few weeks ago, writes GA Chester of The Motley Fool UK.
The FTSE-100 has put the "Summer Sale Now On!" signs up. The index has fallen 9% from its recent high, and I've been rummaging through the sale stock looking for some blue-chip dividend bargains.
Some companies' shares have fallen more heavily than the index, but at the same time, the City consensus on forecast dividends for the companies has risen. The combination of a lower share price and a higher dividend means you're getting much more income-bang for your buck than just a few weeks ago.
National Grid, the owner of UK gas and electricity distribution assets, as well as assets in the US, had seen a strong rise in its shares prior to the recent market sell-off. A 25% gain in just a few months is a rare occurrence for a utility.
The company set a new dividend policy earlier this year: "to grow the ordinary dividend at least in line with the rate of RPI inflation each year for the foreseeable future." The recent fall in the shares has pushed the forecast yield up to 5.7%.
I don't know about you, but that fat income and the potential of inflation-proof growth looks pretty appealing in today's low-interest-rate environment.
Like a lot of banks and insurers, Old Mutual cut its dividend deeply during the financial crisis. However, the company, which has banking businesses in southern Africa, and international insurance and investment operations, has been recovering strongly.
In addition to a fast-rising ordinary dividend over the last three years, Old Mutual paid out a special dividend of 18p a share last year, amounting to a distribution of £1 billion ($1.57 billion).
City analysts' are forecasting an ordinary dividend of 8.33p a share for the current year. If the forecast is on the money, the payout would be 20% up on 2012's ordinary dividend. The recent fall in Old Mutual's shares, offers investors today a prospective income of 4.6% for the year ahead.
Aberdeen Asset Management
Aberdeen Asset Management's shares have risen by over 200% during the last five years, making it far and away the best performer of the several fund managers listed on London's stock exchange. Indeed, the increase in Aberdeen's market value has been such that the company was promoted to the FTSE-100 last year.
After the financial crisis, Aberdeen's earnings bounced back by 116% for 2010. The two following years saw growth of 43% and 22%, and analysts are forecasting growth of 25% and 17% for the next two years.
Dividend growth has likewise been strong. The consensus forecast from City analysts of 15.33p a share for this year compares with a payout of 5.8p for 2008. With Aberdeen's shares currently over 20% off their recent high, the prospective dividend income for this year has risen to an above-market-average 4%.