3 of the FTSE 100's Biggest Dividends
Mar 5th 2013 3:08PM
Updated Mar 5th 2013 3:14PM
LONDON -- I have searched the FTSE 100 to find the index's biggest dividend payers. Are these payments sustainable? Could they rise in the future? Here are three of the biggest shareholder payouts as measured by yield.
Resolution has long been the highest-yielding share in the FTSE 100. For 2011, the company paid 19.9 pence in dividends. Against today's price, that's a yield of 7.6%. Resolution increased its dividend at the half-year stage and is expected to pay a total of 20.9 pence per share for the year. That equates to a forecast dividend yield of 8%.
Resolution has been taking steps to secure its dividend payout. The company has recently reduced its annual debt obligations. Resolution also sold its stake in a joint venture, raising another 50 million pounds. These actions make it more likely that Resolution will pay its 2013 forecast dividend of 21.1 pence -- equal to an 8.1% yield.
In 2012, Vodafone paid out more cash in dividends to shareholders than any other FTSE 100 company. This was thanks to the company passing on a dividend that it received itself from Verizon Wireless, its U.S. joint venture.
This year, Vodafone is using 1.5 billion pounds of its dividend from Verizon Wireless to buy back its own shares in the market. This will reduce the number of Vodafone shares in circulation, meaning that the company can pay a higher per-share dividend without spending more cash. I estimate that Vodafone will declare a 6.54 pence dividend with its final results in May. This would mean a 5.9% annual dividend yield at today's share price.
As a utility firm, SSE's revenue and profit are more reliable than most companies'. SSE has been increasing its dividend to shareholders every year since 1998. In the last five years, the dividend has increased at an average rate of 7.8% per annum.
SSE's 80.1 pence distribution for 2012 equates to a yield of 5.5% at today's prices. The dividend is expected to increase for the next two years. The 2013 total is expected to hit 84.1 pence, rising again to 87.9 pence the year after. Earnings growth is expected to be slower than the dividend progression, making the payout less safe. Dividend cover still looks reasonable for a utility at an estimated 1.3 times for 2014.
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The article 3 of the FTSE 100's Biggest Dividends originally appeared on Fool.com.David owns shares in Vodafone but none of the other companies mentioned. The Motley Fool has recommended shares in Vodafone. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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