Blue Chip Dividend Bargains: National Grid, Old Mutual, and Aberdeen Asset Management
LONDON -- The FTSE 100 has put the "Summer Sale Now On!" signs up. The index has fallen 9% from its recent high, and I've been rummaging through the sale stock looking for some blue-chip dividend bargains.
Some companies' shares have fallen more heavily than the index, but, at the same time, the City consensus on forecast dividends for the companies has risen. The combination of a lower share price and a higher dividend means you're getting much more income-bang for your buck than just a few weeks ago.
Three companies fit the bill -- National Grid , Old Mutual , and Aberdeen Asset Management -- and the table below gives the lowdown on them.
Price High (pence)
1 Month Ago
National Grid, the owner of U.K. gas and electricity distribution assets, as well as assets in the U.S., had seen a strong rise in its shares prior to the recent market sell-off. A 25% gain in just a few months is a rare occurrence for a utility.
The company set a new dividend policy earlier this year: "To grow the ordinary dividend at least in line with the rate of RPI inflation each year for the foreseeable future." The recent fall in the shares has pushed the forecast yield up to 5.7%.
I don't know about you, but that fat income, and the potential of inflation-proof growth, looks pretty appealing in today's low-interest rate environment.
Like a lot of banks and insurers, Old Mutual cut its dividend deeply during the financial crisis. However, the company, which has banking businesses in southern Africa, and international insurance and investment operations, has been recovering strongly.
In addition to a fast-rising ordinary dividend over the last three years, Old Mutual paid out a special dividend of 18 pence a share last year, amounting to a distribution of 1 billion.
City analysts' are forecasting an ordinary dividend of 8.33 pence a share for the current year. If the forecast is on the money, the payout would be 20% up on 2012's ordinary dividend. The recent fall in Old Mutual's shares offers investors today a prospective income of 4.6% for the year ahead.
Aberdeen Asset Management
Aberdeen Asset Management's shares have risen by over 200% during the last five years, making it far and away the best performer of the several fund managers listed on London's stock exchange. Indeed, the increase in Aberdeen's market value has been such that the company was promoted to the FTSE 100 last year.
After the financial crisis, Aberdeen's earnings bounced back by 116% for 2010. The two following years saw growth of 43% and 22%, and analysts are forecasting growth of 25% and 17% for the next two years.
Dividend growth has, likewise, been strong. The consensus forecast from City analysts of 15.33 pence a share for this year compares with a payout of 5.8 pence for 2008. With Aberdeen's shares currently over 20% off their recent high, the prospective dividend income for this year has risen to an above-market average of 4%.
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The article Blue Chip Dividend Bargains: National Grid, Old Mutual, and Aberdeen Asset Management originally appeared on Fool.com.G.A. Chester does not own any shares mentioned in this article. The Motley Fool recommends National Grid. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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