3 Stocks Poised To Deliver Explosive Dividends Past 2015: British American Tobacco plc, HSBC Holdings plc And Barratt Developments Plc

British American Tobacco plc (LON:BATS), HSBC Holdings plc (LON:HSBA) and Barratt Developments Plc (LON:BDEV) should be on your radar.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

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.

Should you invest £1,000 in British American Tobacco right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if British American Tobacco made the list?

See the 6 stocks

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.

Of course, there are plenty of other passive income opportunities to explore. And these may be even more lucrative:

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

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.

Royston Wild owns shares of Barratt Developments. The Motley Fool UK has recommended HSBC Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

Here’s a dirt-cheap FTSE 100 share to consider before it surges again!

This FTSE 100 share may have doubled in value in 2025. But as Royston Wild explains, it still looks like…

Read more »

Man thinking about artificial intelligence investing algorithms
Investing Articles

Can I buy Cathie Wood’s ARK Innovation ETF for my ISA or SIPP?

The ARK Innovation ETF is a US investment fund. Can the product be bought for an Individual Savings Account or…

Read more »

Little girl helping her Grandad plant tomatoes in a greenhouse in his garden.
Investing Articles

Lloyds shares: here’s the latest price and dividend forecasts

Harvey Jones is thrilled with the total return from his Lloyds shares. Now he examines whether they can keep serving…

Read more »

Investing Articles

Up 50% and 30% in a year! These 2 FTSE 100 dividend shares are behaving like growth stocks

When dividend shares deliver growth as well, investors are in luck. These two FTSE 100 shares are best known for…

Read more »

Middle aged businesswoman using laptop while working from home
Investing Articles

2 stocks every passive income seeker should know about

Dividend shares can be great sources of passive income. Stephen Wright likes the look of two that have fallen out…

Read more »

Mature black woman at home texting on her cell phone while sitting on the couch
Dividend Shares

I asked ChatGPT for the best FTSE 250 stocks for passive income, with these results!

Jon Smith asks his AI friend for advice regarding passive income options, but doesn't agree with all the results that…

Read more »

A handsome mature bald bearded black man in a sunglasses and a fashionable blue or teal costume with a tie is standing in front of a wall made of striped wooden timbers and fastening a suit button
Investing Articles

Want to make a million from penny shares? Here’s 1 way to try

Investors wanting to build up a potential millionaire portfolio with diversified penny shares might want to consider adding this one.

Read more »

Businessman using pen drawing line for increasing arrow from 2024 to 2025
Investing Articles

Want to turn a £20k ISA into a £1m portfolio? Here’s how

Dr James Fox explains the strategy many investors employ when trying to turn their ISA into a life-changing pot of…

Read more »