Today I am highlighting three FTSE 100 stocks expected to provide plump returns in 2015.
British American Tobacco
Tobacco giants like British American Tobacco (LSE: BATS) are having to stage a rearguard action to maintain their reputation as reliable earnings generators. The bottom line has gradually deteriorated in recent times as legislators across the world bring out new initiatives to exacerbate rising concerns over the effect of the habit on consumers’ health.
As a result, earnings at British American Tobacco are expected to dip for the first time in many moons in 2014, with a 4% decline currently pencilled in. But recovering conditions in emerging regions, combined with the rising popularity of e-cigarettes, are expected to underpin strong growth thereafter — indeed, an 8% recovery is pencilled in for 2015 alone.
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As a result, British American Tobacco is anticipated to keep its progressive dividend policy rolling, with an estimated 146.1p per share payout for 2014 up 3% from last year’s levels. And an extra 7% rise is pencilled in for 2015, to 155.8p.
These projections push a tasty yield of 3.9% for this year to a big-cap bashing 4.2% for 2015 — by comparison the wider FTSE 100 carries a forward average of just 3.2%.
HSBC Holdings
Global banking behemoth HSBC Holdings (LSE: HSBA) (NYSE: HSBC.US) is a popular pick for income investors owing to its strong balance sheet — indeed, this has allowed the business has lifted the dividend at a compound annual growth rate of 9.6% during the past five years even as earnings have fluctuated wildly.
Underpinned by expectations of a 5% earnings improvement this year, HSBC is expected to raise the full-year dividend 2% in 2014 to 50 US cents per share. And an additional 8% hike, to 53.9 cents, is chalked in for 2015.
Consequently “The World’s Local Bank” sports a stonking yield of 5% for this year, and which moves to an even more appetising 5.4% for 2015. And I fully expect the firm’s terrific exposure to the hot growth regions of China and Hong Kong to continue delivering delicious returns well into the future.
SKY
Despite the onset of intensifying competition, I believe that the newly rebranded SKY (LSE: SKY) has both the financial clout and the know-how to continue generating strong dividend growth in the coming years.
Even though earnings are anticipated to dip 2% during the year concluding June 2015, SKY is predicted to raise the full-year payout 3% to 33p per share. As a result the broadcasting giant sports a terrific yield of 3.5%.
It is true that the firm is having to fork out vast sums to fight off the charge of the likes of BT Group, which is looking to pillage SKY’s catalogue of top-notch sporting events. Indeed, next year’s bidding process for the FA Premier League rights is likely to leave much blood on the floor.
But I believe that SKY’s expansion strategy across the continent — the business hoovered up Sky Italia and a majority holding in Sky Deutschland in recent months — should underpin strong growth in the hot triple-play entertainment sector and consequently premier payout prospects.
