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Nine key stocks for income hunters to follow in 2014

Nick Paler
Written By:
Posted:
06/01/2014
Updated:
06/01/2014

Vodafone, BP and some less predictable names including a number of UK housebuilders have been tipped to lead the income tables in 2014.

According to the latest UK dividend outlook from Markit, the big five income payers – Vodafone, HSBC, BP, Royal Dutch Shell and GlaxoSmithKline – are expected to once again dominate payouts across the FTSE 350.

Of the five companies – which currently account for 31% of ordinary dividend payouts – Markit said it expects HSBC to increase its payout by 13% in total for its full financial year.

Meanwhile, BP’s results are expected to show an 8.8% increase year on year as the company recovers from the Macondo disaster, with Shell and Glaxo completing the picture with increases of 4.7% and 5.4% respectively.

Vodafone also makes the list despite the reduction in its per-share payout which will take effect in May as a result of its huge dividend late last year.

Vodafone’s dividend is expected to be 28.6% lower year-on-year.

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Looking further down the scale, Lloyds Banking Group also presents an interesting opportunity for income hunters, according to Markit.

The bank is expected to return to the dividend register when it announces its final results, after discussions with regulators commenced in Q3 last year.

Housebuilders Redrow and Berkeley Group have also been tipped to produce impressive results after strong trading.

Ryan Bransfield, head of UK dividend research at Markit, said: “We are forecasting generous dividend increases for Redrow, Taylor Wimpey, and Barratt Developments, and are predicting hikes of around 40% from Bovis, Bellway, and Berkeley Group.”

Markit highlighted Redrow and Berkeley as the two companies expected to hike payouts by the most, with increases to their dividends of 200% and 143% respectively.

In the industrials sector, Xaar could increase its payout by 150%, after profit before tax trebled at its half-year stage.

Markit added, in total, FTSE 350 companies should pay £72.4bn in payouts, up 4.5% year-on-year.