LONDON — The FTSE 100 has put the “Summer Sale Now On!” signs up. The index has fallen 8% from its recent high, and I’ve been rummaging through the clearance section looking for some blue-chip dividend bargains.
Some companies’ shares have fallen more heavily than the index, but at the same time, the City consensus on their forecast dividends has risen. The combination of a lower share price and a higher dividend means you’re getting much more income bang for your buck than just a few weeks ago.
British American Tobacco PLC (ADR) (NYSEAMEX:BTI), Tesco PLC (LON:TSCO), and Severn Trent Plc (LON:SVT) fit the bill, and the table below gives the low-down on them.
| Company | Recent Share-Price High | Current Share Price | Change | Forecast Dividend One Month Ago | Current Forecast Dividend | Current Forecast Yield |
|---|---|---|---|---|---|---|
| British American Tobacco PLC (ADR) (NYSEAMEX:BTI) | 3,807 pence | 3,469 pence | (9%) | 149.59 pence | 149.61 pence | 4.3% |
| Tesco | 388 pence | 337 pence | (13%) | 15.10 pence | 15.16 pence | 4.5% |
| Severn Trent | 2,200 pence | 1760 pence | (20%) | 80.34 pence | 80.37 pence | 4.6% |
British American Tobacco PLC (ADR) (NYSEAMEX:BTI)
The shares of British American Tobacco PLC (ADR) (NYSEAMEX:BTI), the world’s second-largest tobacco company, don’t tend to track the wilder gyrations of the stock market. The owner of global top-10 cigarette brands Dunhill and Lucky Strike is known as one of the “Steady Eddies” of the FTSE 100.
However, the recent downswing has seen BAT’s (LSE:BATS) shares drop with the market and then some. As a result, the company’s forecast dividend yield has risen to 4.3% — a full percentage point higher than the market average. I’d say 4.3% isn’t a bad starting income for a company that has grown its dividend by double digits for the past five years and is forecast to continue doing so.
Tesco
I have to admit that I didn’t go along with the general Foolish wisdom that Tesco PLC (LON:TSCO) was a good bet after its shares were hammered by a profit warning some 18 months ago. My view was thatTesco PLC (LON:TSCO)’s problems are more deep-rooted than many fans would like to believe and that struggling supermarkets take an awful long time to turn around. As such, I felt my money could be more profitably employed elsewhere.
Having said that, if you believe in Tesco PLC (LON:TSCO)’s long-term future and are prepared to tough it out, the shares have dropped 13% from their recent high — they began falling a week or so before unimpressive first-quarter results announced on June 5 — and are now yielding a forecast 4.5%.
Severn Trent
Severn Trent Plc (LON:SVT), the water utility that takes its name from the catchment area of two of Britain’s largest rivers, is something of a special case. Ever since Northumbrian Water was acquired by leading Hong Kong infrastructure group Cheung Kong Infrastructure Holdings a couple of years ago, it’s been clear that U.K. regulated water utilities are coveted by foreign cash-rich investors prepared to take a long-term investment view.
From the middle of May, Severn Trent Plc (LON:SVT)’s shares were driven up by a series of offers from a Canadian-led consortium. The price has fallen back after the consortium withdrew its interest last week following Severn Trent Plc (LON:SVT)’s rejection of a final £22-per-share proposal. The U.K. water company’s shares are now 20% below that level, which has pushed the forecast dividend yield up to 4.6%.
The article 3 More Blue-Chip Dividend Bargains originally appeared on Fool.com.
G. A. Chester has no position in any stocks mentioned. The Motley Fool recommends Tesco. The Motley Fool owns shares of Tesco.
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