British Airways owner eyes takeover of budget carrier Norwegian, which offers no-cheap stocks to invest flights to the U. Want to buy breakfast with gold? Millions face British Gas price hike: Energy bills for dual fuel customers will increase by an average of 5. Where should investors hunt for income in 2018?
Read this: Where should investors hunt for income in 2018? Centrica has been tipped to pay its shareholders the most out of all the income stocks in the FTSE 100 in the new year, according to an online stockbroker. The Berkshire-based utilities company is forecast to dish out eight per cent in dividends payments – 0. 3 percentage points more than Direct Line in second place and 0. 4 higher than Taylor Wimpey in third, according to research by AJ Bell. 5billion to shareholders in 2018 – a 7 per cent increase on 2017.
Dividend hunters should note that the bulk of the FTSE 100 dividends payments come from a relatively small proportion of the index. 51 per cent of the index’s total dividend payments. Royal Dutch Shell, Hargreaves Lansdown and BP are among the ten companies forecast to have the highest dividend yields. Scaling income For those looking to invest in shares for income over the long term, it is paramount to select stocks that not only offer handsome dividend payments, but also have a good track record of growing these payments over time. Dividend cover is a useful metric to get an idea of a company’s ability to grow its dividend payments in the future. It is the ratio of a company’s net income over dividends paid to shareholders.
When dividends exceed profits, the ratio is below one, so anything above that figure suggests dividends are more sustainable and affordable for companies to pay out. So while, for example, BT ranks seventh on the top ten list, it boasts the highest dividend cover ratio of 1. 73 times and therefore has the potential to climb up the list a couple of years down the line. Mould said: ‘The issue of skinny dividend cover refuses to go away. Earnings cover for dividends remains much thinner than ideal at 1. 63 for 2018 and there has been little real improvement here in 2017.
Ideally earnings cover needs to be around the two level to offer a margin of safety to dividend payments, should there be a sudden and unexpected downturn in trading at a specific company, or indeed the UK and global economies as a whole. Pearson and Provident Financial are both examples of what can happen in the event of a profits stumble under such circumstances, as both had been offering apparently juicy yields but with skinny earnings cover. Indeed, some of the companies with the juiciest-looking dividend yields have dividend cover that looks particularly malnourished at 1. Dividend cover for the FTSE 100 firms is forecast to hit 1. 63 next year – which is lower than it was at the height of the financial crisis a decade ago, according the research.
So it might be worth looking beyond the FTSE 100 to listed small and medium-sized listed companies which tend to have stronger dividend cover. Could these LED lights on crossings save lives on the road? Car shop shows their Seat Toledo 1. Would you let your travel insurance track your location? The comments below have not been moderated. Post comment to your Facebook Timeline What’s This?