10 Dividend Names To Consider Now

Published in Investing on 19 June 2012

Decent income from these serial dividend raisers with growth potential.

Back in August, when markets had sold off and everyone was worried about Europe, I looked for the 10 potentially fattest and most reliable dividend yields on my watch list of consistent, dividend-growing companies.

I said then: "These shares have underlying businesses that are growing, so when markets stabilise, their prices could return to former levels before continuing to grow alongside their profits."

Fast-forward to 18 June 2012, and markets have sold off and everyone is worried about Europe, but the results from those underlying businesses have been encouraging. Without considering the return from the dividend payments, performance has been as follows:

ShareShare price 22/8/11Forward yield 22/8/11Share price 18/6/12Gain/loss
Man Group (LSE: EMG)180p9%74p(59%)
Kier (LSE: KIE)1075p5.9%1259p17%
Safestore (LSE: SAFE)98p5.7%116p18%
N. Brown (LSE: BWNG)252p5.2%243p(3.6%)
Regus (LSE: RGU)66p5.1%91p38%
BP (LSE: BP)386p4.8%421p9%
Greggs (LSE: GRG)465p4.5%491p5.6%
Cranswick (LSE: CWK)620p4.5%802p29%
RPC (LSE: RPC)300p4.5%384p28%
Morrisons (LSE: MRW)278p3.9%279p0.4%

Thanks to the big stinker, Man Group, the average gain has only been about 8.2%. That compares to a gain in the FTSE All-Share index of 7.7% over the period. Nevertheless, the results are sufficiently encouraging to justify running the process again.

10 big growing dividends now

This time, I've skipped the mega cap, BP, which currently has a forward yield of around 4.9%, and turned my back on Man Group to discourage averaging down on a loser. That leaves 10 places for big-yielding small, mid-cap, and smaller FTSE 100 companies from my dividend grower watch list.

Each company name in the table has a link attached that takes you to an earlier article for more background:

ShareIndexSectorShare price 18/6/12Forward yield
Carillion (LSE: CLLN)FTSE 250Support services274p6.3%
Cape (LSE: CIU)FTSE 250Support services255p6.1%
N. BrownFTSE 250General retailers245p5.5%
Tullett Prebon (LSE: TLPR)FTSE 250Financial services293p5.4%
KierFTSE 250Construction & materials1256p5.3%
SafestoreFTSE Small CapReal estate investment & Services115p5%
W. S. Atkins (LSE: ATK)FTSE 250Support services690p4.6%
Hill & Smith (LSE: HILS)FTSE Small CapIndustrial engineering322p4.3%
MorrisonsFTSE 100Food & drug retailers279p4.3%
Sage (LSE: SGE)FTSE 100Software & computer services250p4.2%

City analysts have recently reduced most of these companies' earnings growth forecasts against the current uncertain macro-economic background. That said, most have a good history of cash-covered dividend raising and might be reluctant to break that pattern, in my view.

Fallen high-flyer Cape is worthy of special mention. It has found its way onto the high-yielder list thanks to a profit warning in May. The non-mechanical support services provider expects to lose around £14m on a contract in Algeria.

The rest of the trading news from Cape is bullish, but its worth mentioning that the long-serving CEO left the company shortly before the bad news emerged. That might be an unconnected event, of course, but it does incline investors to speculate about the financial integrity of Cape's other projects. On the other hand, the knocked share price could recover further if the company's other trading remains profitable.

Fool on

So there we have 10 ideas as a starting point for your own research.

I also recommend checking out the ideas in the free Motley Fool reports Top Sectors For 2012 , 8 Shares Held By Britain's Super Investor and The One UK Share Warren Buffett Loves.

Further investment opportunities:

> Kevin owns shares in Man Group, N. Brown, BP, Greggs and Morrisons. He does not own shares in the rest of the companies mentioned in the article.

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Comments

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QuantumDealer 19 Jun 2012 , 3:59pm

Hill & Smith would be the only stock on the 2nd list I would be remotely interested in...what a sorry list of stocks otherwise.

KevinGodbold 19 Jun 2012 , 6:15pm

Why would you be remotely interested in Hill & Smith, QuantumDealer?

SteveMarkus 19 Jun 2012 , 8:11pm

On the contrary, most of those stocks are good companies. I am invested in a number of them, always nice to have a good dividend together with a decent business.

Cheers,
Steve.

WealthyInvestor 20 Jun 2012 , 11:35am

Man group is getting very interesting indeed as I am starting to wonder whether it is heading into takeover target territory but the tricky thing to work out is exactly what the buyer would be getting and at what valuation. It's heading into vulnerable territory which is exactly what makes it more interesting than it was. Not one for the cautious investor or income seeker though. The dividend will evaporate shortly.

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