Murray Income Trust (LSE: MUT) announced its annual results last month. The board lifted the dividend by 3.4% to record 30 years of unbroken growth. At a current share price of 762p the trailing yield is 4%.
Picking great dividend shares has helped Murray Income outperform the FTSE All-Share Index over the past three, five and 10 years.
Let’s take a look at the trust’s current top three holdings: GlaxoSmithKline (LSE: GSK), Centrica (LSE: CNA) and Vodafone (LSE: VOD) (NASDAQ: VOD.US).
GlaxoSmithKline
GlaxoSmithKline (GSK) is a longstanding favourite of income investors. The UK’s top pharmaceuticals group has continued to increase its dividend despite the recent years of patent expiries and threat from generic rivals.
Free cash flow has been tight of late but GSK has a strong late-stage pipeline of new treatments, and recent agreements to sell non-core drinks brands Lucozade and Ribena, and thrombosis brands Arixtra and Fraxiparine, will bring in handy cash of £2bn.
Analysts are forecasting a 4.2% increase in the dividend for the current year, giving a 5% yield at a recent share price of 1,540p.
Centrica
Shares of Centrica, the owner of British Gas, have come under the cosh recently as a result of Ed Miliband’s proposal to break up the ‘Big Six’ utilities and cap energy bills. High-profile fund manager Neil Woodford — Centrica’s largest shareholder — has slammed the proposal as “economic vandalism”.
Now could be a good time to invest in Centrica, if you believe Labour’s proposal is unworkable on the basis that, as Woodford says: “If Centrica and SSE cannot make any money supplying electricity to the retail market then they won’t supply it. The lights will go off …”
Centrica has been a reliable dividend payer, and the recent drop in the share price has pushed up the yield. With the shares trading at 368p, and analysts forecasting a 6% rise in this year’s dividend, the prospective income is 4.7%.
Vodafone
There was big news last month with the coming to fruition of Vodafone’s long-mooted sale of its 45% interest in US company Verizon Wireless to Verizon Communications.
On announcing the sale — worth a whopping $130bn — Vodafone said “The Board … intends to increase the total 2014 financial year dividend per share by 8% to 11p”. At a recent share price of 217p that represents a yield of 5.1%.
Such an event as the game-changing sale of Verizon Wireless inevitably leads to some uncertainty. However, as far as the dividend is concerned, Vodafone has said that after the upcoming 11p a share payout, the board “intends to grow [the dividend] annually thereafter”.
