FTSE 100 dividends surged in Q1! I reckon these income heroes should keep paying big rewards

Royston Wild discusses a couple of FTSE 100 (INDEXFTSE: UKX) dividend heroes that he thinks could make you rich.

| 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.

For dividend investors with exposure to the UK stock market, the first quarter proved yet another bountiful period as recent data from Link Asset Services showed

Shareholder rewards in that period hit fresh record highs of £19.7bn, but the financial services firm’s UK Dividend Monitor report showed not all London-quoted shares are equal.

In particular, the survey showed that stocks from the FTSE 100 embarrassingly outshone the mid-caps during quarter one as, after excluding the effect of exchange rates and supplementary dividends, payouts from the Footsie rose 2.6% in the three months to March. Mid-cap payouts, by comparison, fell by 2.5%.

And there’s plenty of reason to expect some of the FTSE 100’s big hitters to continue impressing as 2019 progresses and probably beyond too.

Stunning yields

Take ITV (LSE: ITV), for example. At current share prices, City predictions of an 8.1p per share dividend for 2019 yield a whopping 6%. For next year, an 8.5p reward is anticipated which nudges the yield to 6.3%.

Many share pickers remain reluctant to take a chance on the broadcaster because of the steady pressure on advertising budgets. ITV has seen earnings fall for the past couple of years because of constrained marketing spend. Last year, advertising sales at the firm edged just 1% higher to £1.8bn.

Things look set to remain difficult at the Footsie firm for a little while longer too. ITV cautioning recently that “economic and political uncertainty continues to impact the demand for advertising as we expected, with total advertising forecast to be down 3% to 4% for the first 4 months.”

The Brexit saga looks set to drag well into autumn at least, and this threatens to flatten ad sales well beyond this month. It’s why the number-crunchers are anticipating another annual earnings drop in 2019, this time by a chubby 12%.

Still, I believe the future remains extremely bright for ITV because of its transition to a multimedia broadcaster as well as steps to establish itself as a truly global programme-making goliath. Last year, turnover at its ITV Studios production division grew 6% to £1.67bn, a result that helped group revenue grow 3% to £3.77bn, despite those problems in the ad market. And online viewing numbers grew by 32% year-on-year.

Another 6% yielder

Right now, ITV carries a forward P/E ratio of 9.9 times, a figure I consider far too cheap given the company’s exceptional long-term outlook. And the same can be said for National Grid (LSE: NG), another dirt-cheap dividend star that’s much too cheap at current prices (as I type, it sports a prospective P/E multiple of 14.2 times).

As concerns over the health of the global economy drag on, the peace of mind that the electricity network operator affords makes it a great share to buy right now, the indispensable nature of its services giving it excellent earnings visibility. It’s why the number-crunchers are expecting dividends to keep rowing through the medium term, to 48.8p and 50.2p per share for this fiscal year and next, respectively.

Subsequent yields sit at an inflation-busting 6% and 6.1%. I’m confident that efforts to build operations in Europe and the US should provide the base for profits and thus dividends to keep growing further into the future.

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 has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

After it crashed 25%, should I buy this former stock market darling in my Stocks and Shares ISA?

Harvey Jones has a big hole in his Stocks and Shares ISA that he is keen to fill. Should he…

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

How’s the dividend forecast looking for Legal & General shares in 2025 and beyond?

As a shareholder, I like to keep track of the potential dividend returns I could make from my Legal &…

Read more »

artificial intelligence investing algorithms
Investing Articles

Could buying this stock with a $7bn market cap be like investing in Nvidia in 2010?

Where might the next Nvidia-type stock be lurking in today's market? Our writer takes a look at one candidate with…

Read more »

Investing Articles

Is GSK a bargain now the share price is near 1,333p?

Biopharma company GSK looks like a decent stock to consider for the long term, so is today's lower share price…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could December be a great month to buy UK shares?

Christopher Ruane sees some possible reasons to look for shares to buy in December -- but he'll be using the…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Sticking to FTSE shares, I’d still aim for a £1,000 monthly passive income like this!

By investing in blue-chip FTSE shares with proven business models, our writer hopes he can build sizeable passive income streams…

Read more »

Growth Shares

BT shares? I think there are much better UK stocks for the long term

Over the long term, many UK stocks have performed much better than BT. Here’s a look at two companies that…

Read more »

British Pennies on a Pound Note
Investing Articles

After a 540% rise, could this penny share keep going?

This penny share has seen mixed fortunes in recent years. Our writer looks ahead to some potentially exciting developments in…

Read more »