Today Im running the rule over four of the Footsies big yielders.
Travel chaos
The result of last monthsBrexit referendum has forced me to reconsider my bullish take on travel operator TUI Travel (LSE: TUI).Indeed, an environment of plummeting consumer confidence is likely to take a hefty dent out of consumers enthusiasm to spend, and big ticket items like package holidays are one of the first things to be cutin times of economic hardship.
Consequently I wouldnt be tempted to invest in TUI at the current time, even though a predicted dividend of 61.4 euro cents per share yields a massive 5.7%.
Set to collapse?
Like TUI, Ive also been singing the praises of construction giant Kier Groups (LSE: KIE) outlook.
But a period of significant belt-tightening in the near term and beyond could have a significant impact on the prospects for Kiers earnings, and consequently its dividends. News this week that the construction sector slipped back into contraction in June, at 46, gives plenty of reason to be concerned.
I therefore believe stock-pickers should stay away from Kier for the time being, even in spite of a predicted 63.5p-per-share dividend that yields a market-bashing 6.1%.
Money worries
Financial giant Aberdeen Asset Management (LSE: ADN) has endured its fair share of problems in recent times as fears over emerging markets prompted massive fund outflows.
And shaky investor confidence would hardly have been boosted by last weeks Brexit vote, a development that could lead to further heavy outflows at the likes of Aberdeen.
Indeed, Standard Life and Avivas decisions to halt redemptions at their property funds earlier this week is likely to smash investor activity across the asset management segment. Both Aviva and Standard Life have been whacked by a flurry of redemption requests in recent days.
Given these broad concerns, I reckon investors should disregard Aberdeens projected 2016 dividend of 19.5p per share and its subsequent 6.7% yield for the time being.
Driller dilemma
The City expects a period of low crude prices to have a significant impact on BPs (LSE: BP) dividend outlook. Having said that, projections arent as bad as many investors had feared.
Sure, BPs progressive dividend policy is expected to shudder to a halt. But predicted payouts of 40 US cents per share through to the close of 2017 in line with last years dividend still yield a handsome 6.2%.
However, I would give these forecasts scant regard. Dividends for this period comfortably outstrip expected earnings, with this years payment alone screaming ahead of estimated earnings of 19 cents.
And BPs fragile balance sheet gives little scope to ride out these problems and keep shelling out monster dividends. Net debt surged to $30bn in March from $25.1bn a year earlier.
And with question marks remaining aroundthe oil markets long-term supply balance, I reckon those seeking solid dividend prospects should give BP a wide berth.
Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Aberdeen Asset Management and BP. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
