An annual income of under3% looks disappointing compared to thehigh-flying yields available on todays FTSE 100. But the dividends paid by these three solid companies are a lot more robust as a result.
In a turbulent five years for the FTSE 100, Sky (LSE: SKY) has been a relative high flier, posting growth of 55% in that time, and withminimalturbulence along the way. I still remember the early years when a sceptical establishment sneered at Sky, but ithas shrugged off their scorn to become an established part of everyday UK life. Although its Premier League coverage still grabs most of the attention, its movies, originaldrama, childrens offerings and broadband and mobile bundles give ittremendous reach into 10 million Britons homes.Sky Atlantic is now a firmly established brand.
Skyposted a10% increase in operating profits in the third quarter and secured937,000 new paid-for subscription products, including133,000 new broadband subscribers. BT may be putting up a good fight butSky is still the one to beat. It isnt cheap at 20 times earnings and the yield is hardly compulsive viewing at 2.9%, covered 1.7 times, but as with its multi-channel offerings, you get what you pay for.
If you can make money while all around people are losingit, then you know how it feels to beSchroders (LSE: SDRC). TheUK-based asset management company posted a 21% rise in profit before tax to 438.9 million in the last nine months, up from 364.2 in 2014. It also generated 8.3bn of net new business, up from7bn one year earlier. Assets under management rose 18.6bn to 294.8bn, a rise of 6.7%. Although this was achieved in tough trading conditions.
Despite these impressive numbers the Schroders share price has fallen in recent months, and at 2232p is well below its 52-week high of 2629p. One reason may be the underperformance of its wealth management arm, which suffereda drop in both sales and profits. Stock-market turbulence has been a bigger issue, with Schroders failing to recover since the shock of Black Monday.
I see this as a buying opportunity, despite the disappointing yield of 2.6%, comfortably covered 2.1 times. Earnings per share are forecast to rise 3% this year and 6% next, lifting the yield to a slightly more respectable 3.1%. If 2016 isa better year for stock markets, investors will be too busy watching the share price soarto worry about the lowlyyield.
Pull The Lever
Unilever (LSE: ULVR) isanother low yielder returningjust 2.4%, covered 2.3 times, but twas ever thus. In a troubled world the household goods behemothhas cleaned up, growing 56% over the last five years, as its everyday brandnames keep flying off the shelves all over the world.
Unileversproven model of competitive, profitable, consistent and responsible growth drove a 9.4% rise in turnover to 13.4bn in the third quarter. Underlying sales growth of 5.7% was even healthier in emerging markets at 8.4%, a positive pointer for the future. EPS are forecast to rise 15% this year but slow to 5% in 2016. Unilever isnt cheap at 21.7 times earningsbut then Im not sure it ever will be.
One of thesetopbuys features prominentlyin this Motley Fool FREE wealth creation report5 of the best FTSE 100 stocks you can buy today.
All five stocks named in the report are ideally placed to deliver a heady combination of generous dividend payouts and long-term share price growth over the years ahead.
To find out their names and see how they could help you secure a comfortable retirement, simply download the documentThe Motley Fool’s 5 Shares To Retire On. The report won’t cost you a penny, soclick here now.
Harvey Jones has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Sky. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.