Today I am highlighting three FTSE 100 darling expected to deliver stunning income flows beyond this year.
British American Tobacco
The effect of falling demand for traditional cigarettes has played havoc with revenues at British American Tobacco (LSE: BATS) in recent years. The firm has taken a multi-pronged approach to combat this problem, however, from increasing investment in its premier brands such as Lucky Strike and Pall Mall — labels which carry terrific pricing power — whilst also boosting its operations in the red-hot e-cigarette sector.
With the tobacco manufacturer also initiating a vast cost-cutting programme, City analysts expect the cigarette giant to stymie a backcloth of steady earnings declines over the past five years, culminating in a 4% bottom line dip in 2014. Indeed, growth of 6% and 9% are currently pencilled in for 2015 and 2016 respectively, figures which are expected to propel dividends skywards.
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British American Tobacco is expected to hike the dividend 5% this year to 153.9p per share, and an extra 7% advance is chalked in for 2016, to 164.4p. Consequently a chunky yield of 4.2% for this year charges to an even more impressive 4.8% for 2016.
HSBC Holdings
Global banking behemoth HSBC Holdings (LSE: HSBA) (NYSE: HSBC.US) has long been a favoured pick for those seeking access to market-beating dividends.
The company’s excellent exposure to lucrative Asian growth regions has enabled it to finance terrific payout expansion for many years, and although growth has stagnated in these places more recently, the bank’s terrific capital pile is expected to keep payouts moving higher through to the close of next year at least. Indeed, HSBC emerged from the European Banking Authority’s October stress tests with a capital ratio of 9.3%, smashing the minimum target of 5.5%.
“The World’s Local Bank” is estimated to increase the total dividend 4% in 2015, to 52.6 US cents per share, and a further 6% rise is predicted for next year, to 55.9 cents. As a result a monster yield of 5.7% for this year moves to a stonking 6% in 2016. And I fully expect the bank to maintain this stunning momentum in future years as current cyclical headwinds in key growth regions abate.
Barratt Developments
Housebuilder Barratt Developments (LSE: BDEV) has been one of the biggest casualties in end-of-week business, the share price dive prompted by broker downgrades on fears of near-term difficulties in the housing market. Still, the company noted in November that conditions remain “robust,” and Barratt plans to ignite new-build activity still further in 2015.
This bubbly outlook is backed up by the majority of City brokers, and the construction play is expected to deliver stonking earnings growth of 36% in the year concluding June 2015. An additional 19% rise is anticipated for fiscal 2016.
A backcloth of consistent growth and abundant cash flows has enabled Barratt to reward shareholders with a stream of special dividends, and the full-year payout is expected to move from 10.3p per share last year to 22.1p in 2015. And a spectacular 25% is anticipated in 2016, to 27.6p.
In turn, Barratt’s terrific yield of 5.7% for this year charges to a mouth-watering 6% in 2016. I bought stock in the housebuilder last year owing to its delicious dividend outlook, and expect the company to continue delivering lip-smacking returns as Britain’s housing crisis persists.
