Even though inflation may have fallen in the last few months, I’m still taking a closer look at the income prospects of Aviva plc (LON:AV) (AV.L), HSBC Holdings plc (LON:HSBA) (HSBA.L), National Grid plc (LON:NG) (NG.L) and Royal Bank of Scotland Group plc (LON:RBS) (RBS.L).
HSBC’s dividend potential appears to be impressive in my opinion. The company’s exposure to Asia could act as a major growth catalyst over the medium term and may provide it with rising EPS that could translate into higher dividends.
Although HSBC’s investment in growth areas could mean dividend growth is relatively modest over the near term, its 5%+ dividend yield suggests that it could have strong income investing potential.
National Grid also has a 5%+ dividend yield at the moment. The company may not be a particularly in-demand share due to its lack of strong EPS growth potential and the regulatory risk it faces. However, its recent update stated that it continues to perform as per expectations.
With National Grid expected to deliver further dividend growth over the next few years, it could offer an inflation-beating income outlook. Due to what I see as an appealing valuation, I feel it has dividend investing appeal.
Aviva’s dividend prospects appear to be relatively bright in my view. Its 5%+ dividend yield and excess capital generation could lead to a strong future when it comes to income investing.
The capital that the company is ploughing into acquisitions could create further growth for EPS. This could lead to higher dividends further down the line, as well as scope for a rising Aviva share price over the medium term.
RBS may not be viewed as a particularly enticing income stock at the moment. However, with dividends due to grow rapidly, it could be yielding over 4% next year.
Sure, the banking sector may not have the stability of other industries, given the challenges it has faced in recent years. But with the RBS share price set to benefit from its current strategy and the reduction in legacy issues, I feel it offers an upbeat dividend outlook.