Dividends remain towards the top of my list of investing priorities with inflation being relatively high, and that’s why I’m looking at the prospects for BP plc (LON:BP) (BP.L), Barclays PLC (LON:BARC) (BARC.L), Aviva plc (LON:AV) (AV.L), SSE PLC (LON:SSE) (SSE.L) and Vodafone Group plc (LON:VOD) (VOD.L).
BP’s 6% dividend yield is becoming more sustainable in my view. The oil price has moved higher in recent months, and this could boost the company’s future financial performance. With the company having what appears to be a sound asset base and the potential to increase investment in its future growth prospects, I feel BP could have a high total return outlook.
Barclays has not been a strong dividend stock in recent years. It has prioritised improving its balance sheet and restructuring. However, much of the latter has now been completed and it is now set to rapidly increase dividend payments. It is expected to yield as much as 3.8% next year, and this could create rising demand for its shares among income investors. Therefore, I feel Barclays could post strong total returns.
Aviva’s 5% dividend yield could increase in my view. The company is planning on increasing its payout ratio to around 60%. With its EPS forecast to rise over the medium term, this could equal a relatively fast pace of dividend growth. With Aviva continuing to invest in small acquisitions, I feel its EPS growth rate could be surprisingly high. Therefore, I’m upbeat about its future prospects.
SSE’s recent past has been filled with uncertainty. Political and regulatory risk have caused share prices across the utility sector to decline. This trend may continue in the short run in my view – particularly if the UK political scene remains unstable as Brexit talks progress. However, with a 7%+ dividend yield and what I see as a sound business model, I’m still positive about SSE’s dividend potential.
Vodafone is much more than just a 6% yielder in my eyes. The company also has growth potential resulting from the investment it is making in its network. It may also now be reaping the benefits of the acquisitions it made a few years ago. Together, these factors could deliver double digit growth over the next couple of years and help to push the Vodafone valuation higher.