The income investing prospects of Barclays PLC (LON:BARC) (BARC.L), BP plc (LON:BP) (BP.L), ITV plc (LON:ITV) (ITV.L) and Royal Bank of Scotland Group plc (LON:RBS) (RBS.L) are the focus of this article. Could they deliver improving dividend growth?
While Barclays has lacked dividend growth appeal in recent years, it is forecast to increase dividends per share at a fast pace this year. This is due to put it on a dividend yield of around 5% for 2019, which is 30 basis points ahead of the FTSE 100’s yield.
With Barclays having made various changes to its asset base and strategy in recent years, I think it is in a better position to deliver growth in the long run. A single digit P/E ratio suggests to me that it may offer a margin of safety.
ITV’s financial prospects are relatively downbeat. The company is due to post modest growth in EPS this year, with the weakness of the UK economy being a contributing factor in my view. Brexit seems to be causing business confidence to decline, which may continue to affect UK-focused shares.
With ITV set to put in place a revised strategy over future months and its operational performance being sound in my opinion, I think that it could deliver a recovery over the long term. A 5%+ dividend yield suggests to me that it may offer good value for money.
BP’s financial prospects could be difficult to predict in the short run, with a declining oil price likely to impact on its profitability to some degree. Although it has risen in recent trading sessions, it is still priced at $57 per barrel having been as high as $86 per barrel in October 2018.
With BP having a dividend yield of around 6%, I think that the company could offer a margin of safety. With the company investing heavily in its asset base, I’m upbeat about its long-term prospects, but feel that volatility could be high in the near term.
RBS is expected to deliver improved underlying performance over the next couple of years. This is due to boost its dividend growth prospects, with the stock having a forward yield of over 5% at the moment.
In my view, there is still some way to go before the stock returns to full financial health. However, with what seems to be a sound strategy and a low valuation, I believe RBS could perform well relative to other FTSE 100 banking shares over future years.