Are growing dividends ahead for Centrica PLC, Barclays PLC, HSBC Holdings plc and Standard Life Aberdeen PLC?

Do these shares have improving income investing prospects? Centrica PLC (LON:CNA) (CNA.L), Barclays PLC (LON:BARC) (BARC.L), HSBC Holdings plc (LON:HSBA) (HSBA.L) and Standard Life Aberdeen PLC (LON:SLA) (SLA.L)


While Centrica PLC (LON:CNA) (CNA.L), Barclays PLC (LON:BARC) (BARC.L), HSBC Holdings plc (LON:HSBA) (HSBA.L) and Standard Life Aberdeen PLC (LON:SLA) (SLA.L) are due to offer relatively high dividend yields in the current year, could they deliver rising shareholder payments thereafter?

With Centrica having a dividend yield of around 8%, it continues to be one of the highest-yielding stocks in the FTSE 100. The company, though, is in the process of implementing a new strategy which is expected to lead to slowing dividend growth in the near term according to market forecasts.

Centrica also faces an uncertain political and regulatory outlook in my view. Therefore, while I feel it has recovery potential after recording a share price fall in recent years, I believe it could experience a challenging outlook.

HSBC’s 6% dividend yield suggests to me that the stock could offer good value for money. The company’s pivot to Asia could provide it with a growth catalyst over the long run, with wage growth and demand for banking services set to rise across the region.

With HSBC seeking to become increasingly efficient, I feel it has a sound overall strategy. While dividend growth may be somewhat modest in the short term, I’m upbeat about the company’s long-term income investing prospects.

Barclays is due to increase dividends rapidly over the next couple of years. It is expected to yield 5% in the current year, with it having largely completed its restructuring. The bank now expects to generate excess capital which could be used to strengthen its financial position, or improve dividend payments to its investors.

While the UK and global economies face challenging outlooks, Barclays’ single-digit P/E ratio suggests to me that the stock could offer a margin of safety at the moment.

Standard Life Aberdeen’s 8.9% dividend yield has largely been caused by the decline in the company’s stock price. It has fallen by almost 50% in the last year as investors have become increasingly uncertain about the prospects for the world economy, as well as the changes being made to the business post-merger.

In my view, the strategy being followed by Standard Life Aberdeen is sound. It may offer improved efficiency and allow it to focus on its key growth areas. In the near term, however, it may mean that dividend growth is relatively low. A high yield, though, indicates to me that it may offer good value for money over the long run.

About Robert Stephens 5430 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email or use one of the other contact methods available on the 'Contact Us' page