Today I am looking at three blue-chip stars ready to deliver smashing returns in 2015.
In a bid to produce a healthier correlation between earnings and dividends, Banco Santander (LSE: BNC) (NYSE: SAN.US) has elected to rein in its previously ultra-generous and ultimately unsustainable payout policy from this year onwards.
As a result, the bank is anticipated to fork out a payment of 58 euro cents per share in 2014, down 3% from last years levels. And this is expected to dive still in 2015 to 50.4 cents, a hefty 13% drop.
But investors should not lose sight that these projections still produce eye-watering dividend yields indeed, next years payout still produces a sizeable 7.3% yield, albeit down from a figure of 8.4% for 2014.
And with the firms terrific exposure to increasingly lucrative emerging markets, and in particular those of Latin America, expected to power earnings higher growth of 20% is pencilled in for 2015 alone I expect dividends to continue to outstrip the opposition.
Of course, a backcloth of rising competition continues to dent investor sentiment towards the motor insurance providers. Against this backcloth Admiral (LSE: ADM) has seen revenues dip lower in recent times, a factor which is likely to result in earnings dips to the tune of 2% and 8% in 2014 and 2015 correspondingly.
In the face of this pressure, the Welsh firm is anticipated to slash a predicted 99.2p per share dividend for this year by 7% in 2015, to 92.4p. Despite expectations of a large downgrade, however, the business still carries a monster yield of 7.5% for 2015, smashing a forward average of 5.6% for the rest of the non-life insurance sector.
Investors should of course be aware that further premium pressure could threaten dividends beyond next year. However, Admirals ability to maintain a loyal customer base total customers rose 10% during July-September to just over 4 million combined with rising exposure to overseas markets bodes well for future earnings and payout growth.
Direct Line Insurance Group
Like Admiral, Direct Line Insurance (LSE: DLG) also faces intensifying competitive pressures across its core markets. Still, the business is expected to flip from a 3% earnings dip this year to a 7% increase in 2015, helped by its portfolio of blue ribbon brands including Churchill and Privilege.
The result of special dividends bloat the final payout figure for 2014, and a total payment of 48.6p per share has been touted by the Citys number crunchers. Although a subsequent fall is somewhat inevitable, the 2015 figure remains impressive at 22.2p, in turn creating a stonking 7.8% yield.
Direct Line is undergoing a significant transformation programme to strip out costs and improve technological innovation across the business, a promising precursor for future growth. With the firm also ramping up its exposure to fast-growing sectors like landlord and pet insurance, I believe that Direct Line should continue offering delicious dividend yields.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.