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.
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%.