While CPI may have dropped back of late, I’m still interested in the dividend potential of shares in National Grid plc (LON:NG) (NG.L), Vodafone Group plc (LON:VOD) (VOD.L), Prudential plc (LON:PRU) (PRU.L) and Aviva plc (LON:AV) (AV.L). Could they offer impressive income investing potential for the long run?
Aviva’s 5% dividend yield could become more appealing over the medium term. The company has been able to generate excess capital of late and this may prompt a higher dividend payment to investors.
Alongside this, Aviva also seems to have a solid business model after a period of major restructuring. Further acquisitions could help to improve its profit potential, while a reduction in leverage may also improve its risk to reward ratio.
Vodafone has a 6% dividend yield at the moment, which is among the highest yields in the FTSE 100. I feel that it undervalues the company and its future prospects, since it is forecast to deliver a rise in EPS which is in the double digits over the next couple of years.
With Vodafone having invested heavily in its network and in broadening its product range, I believe it has a bright future from an income investing perspective.
Prudential’s prospective 3.1% dividend yield may be less than the wider FTSE 100 at the moment. But the company could deliver high EPS growth over the medium term which could prompt a fast rate of growth in dividends.
Since Prudential has a PEG ratio of 1.1 at the moment, I feel that it offers good value for money. I’m particularly encouraged by its focus on Asia, where demand for its services may continue to rise in the long term.
National Grid’s 6% dividend yield appeals to me at the moment. With the Footsie experiencing a volatile period, defensive stocks could experience higher demand from investors.
This could lead to a rise in the valuation of National Grid over the medium term. The company appears to have a solid growth outlook when it comes to dividends. They could match CPI in future years and make it a sound income investing option.