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Summary
- Some FTSE shares could help in beating the market volatility and provide consistent incomes.
- These businesses have resilient business models, and their shares have delivered decent returns in recent times.
Dividend paying stocks are the most preferred choice for income seeking investors in the equity markets. People looking to supplement their earned income or planning retirement tend to include these stocks in their portfolio.
However, it is considered better to invest in companies having earnings growth potential while shortlisting dividend stocks. Earnings growth not only guarantee consistent dividend payments but also ensure capital appreciation in the long run.
Also read: 5 Dividend Stocks Under Investors’ Radar in 2021
Right stocks selection can lead to generous gains and lead to wealth creation in the long run. In this article, we would scan through some businesses that have a solid history of distributing their earnings along with earnings growth potential. However, investors need to do a thorough analysis or seek professional advice before investing in these companies.
(Data Source: London Stock Exchange)
- BHP Group Plc (LON: BHP)
FTSE 100-listed global resources company BHP Group Plc produces various commodities, including Petroleum products and coal. The resource company remains confident of its long-term prospects and expects a robust economic recovery due to a boost in commodities demand. Overall, BHP seems to have the potential for consistent cash generation and making dividend payments.
BHP Group had adopted a progressive dividend policy and has delivered high cash returns in the last three years. As per its dividend policy, BHP is expected to pay a minimum of 50 per cent payout of its underlying attributable profit for each period. The board has declared a record half-year dividend per share of US$ 1.01. Notably, the annual dividend yield of the company stood at 5.39 per cent.
During the first half of 2021, the company delivered a strong set of results that were primarily driven by record production at Western Australia Iron Ore.
The company recorded a stronger underlying EBITDA margin of 59 per cent during the period. Also, the company’s underlying attributable profit surged by 16 per cent YoY during the period. The company generated robust cash flows; free cash flow was recorded at US$ 5.2 billion for H1 FY21, primarily driven by strong operational performance and higher iron ore and copper prices. On the sustainability front, the company expects to reduce greenhouse gas emissions by 2030. BHP shares delivered a price return of 24 per cent in the last six-month period.
Also read: 3 FTSE Listed Lithium Mining Stocks Set to Revolutionise the EV Market
- Pearson Plc (LON:PSON)
FTSE 100-listed media company Pearson facilitates learning by providing a portfolio of educational products and services. Pearson has repositioned itself for sustainable growth. In the post-pandemic world, the media company is eager to capitalise on strong market opportunities with the rise in digital learning tools, demand for accreditation and certification, and workforce skills gap.
During the bruising 2020, the demand for virtual learning picked up steam. The company’s Global Online Learning business shall benefit from Virtual Schools. The Global Online Learning revenue rose 18 per cent year-on-year driven by increased demand for virtual learning. Also, the company expects brisk recovery for Global Assessment and North American Courseware businesses this year.
The company’s financial position improved, and it had a liquidity of £1.9 billion by the end of FY20. Also, the company managed to reduce its debt to £463 million in 2020 (2019: £1,016 million). Pearson recommended a dividend per share of 13.5 pence, which equates to a total dividend per share of 19.5 pence for the year 2020. Notably, annual dividend yield of the company stood at 2.38 per cent. Pearson shares delivered a price return of 57 per cent in the last six-month period.
- Bunzl Plc (LON:BNZL)
Bunzl Plc specialises in industrial goods & services, primarily in the B2B space. During the fiscal year 2020, the company has delivered strong financial performance and expects to deliver higher revenue growth in 2021, fueled by the active pipeline of acquisitions. However, the company needs to pursue due diligence while integrating new acquisitions as any gap can impact the financial and operational performance.
For the FY2020, the company delivered strong revenue growth of 9.4 per cent at a constant exchange rate, along with a 20.9 per cent increase in adjusted operating profit. Bunzl is expected to deliver strong revenue growth in the fiscal year 2021.
The company has maintained consecutive dividend growth for 28 years. The company declared a final dividend of 38.3 pence per share in 2020. Notably, the annual dividend yield of the company stood at 2.41 per cent. Bunzl shares delivered a price return of 28 per cent in the last 52-week period.
