Top quality FTSE 100 dividend stocks for ISA investors

Tuesday, Apr 03 2012 by
6
Top quality FTSE 100 dividend stocks for ISA investors

For those of us that want more bang for our buck in the coming year, a self-select ISA focused on stocks that deliver sparkling dividends could be the ideal solution. Shareholder pay-outs from London listed blue chips hit record levels last year and the signs are that dividend growth will continue again in 2012. The trouble of course is that even the most stoic investors in some of the sturdiest FTSE 100 stocks can never be certain of a sure thing. With economic malaise still weighing heavily, those of us with an eye on dividends need to take a more methodical approach to placing our bets. 

According to Capita Registrars, which monitors dividend payments by UK listed firms, dividends bounced back to a new record in 2011 and despite economic uncertainty are forecast to rise by 10.6% to £75.0bn in 2012. That means that this year, the prospective gross dividend yield for the FTSE 100 is 4.5%. But can you match or even beat that? And, if you can, how can you heighten your protection from the risk of stocks that may unexpectedly hit hard times and cut their yields to shareholders? 

Dogs of the FTSE

Screening the market for the best yields is nothing new when it comes to investment strategies. In the early 1990s Michael O’Higgins and John Downes popularised what is known as “Dogs of the Dow” in their book Beating the Dow. Their technique dumped traditional valuation metrics and focused simply on digging out stalwart income generators and spreading the risk with a 10-strong portfolio of the best yielding shares. At Stockopedia, we have produced a UK version of this approach, which has returned 11.81% over the last three months compared to 3.62% for the FTSE 100. But some might say that this isn’t enough… 

With a straightforward yield screen, investors can quickly spot the best dividend payers but that gives no indication of whether a company might be about to reduce payments or shelve them altogether. Indeed, a high yield can be an indicator that the market thinks a dividend may soon be cut.. To counter this problem, one metric to keep an eye on is the dividend cover – or the cushion each company has to pay those dividends without compromising earnings. Another strong filter, particularly given the dramatic and sometimes unexpected effects of tough economic conditions, is…

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Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


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Vodafone Group Plc (Vodafone) is a telecommunications company. The Company's business is organized into two geographic regions: Europe, and Africa, Middle East and Asia Pacific (AMAP). Its segments include Europe and AMAP. Its Europe segment includes geographic regions, such as Germany, Italy, the United Kingdom, Spain and Other Europe. The Other Europe includes the Netherlands, Portugal, Greece, Hungary and Romania, among others. Its AMAP segment includes India, South Africa, Tanzania, Mozambique, Lesotho, Africa, Turkey, Australia, Egypt, Ghana, Kenya, New Zealand and Qatar, among others. The Company provides a range of services, including voice, messaging and data across mobile and fixed networks. The Company acquires spectrum and licenses to use radio frequencies that deliver mobile services. Its fixed capabilities include cable, fiber and copper networks to enable television, broadband and voice services. more »

LSE Price
199.05p
Change
-1.5%
Mkt Cap (£m)
52,990
P/E (fwd)
30.2
Yield (fwd)
6.2
45

The Sage Group plc is a United Kingdom-based company, which provides integrated accounting, payroll and payments solutions. The Company also provides the option of solutions hosted locally and accessed on-premise. The Company's segments include Europe, which consists of France, the United Kingdom and the Ireland, Spain, Germany, Switzerland, Poland, Portugal and Sagepay; North America, which consists of the United States and Canada, and International, which consists of Brazil, Africa, Australia, the Middle East and Asia. It provides solutions that help businesses of all shapes and sizes to manage accounting and finances, manage payments, manage people and payroll, and manage the entire business. Its accounting solutions include sage One, sage Live and sage X3. Its payment solutions include sage Pay and sage Payments. Its payroll solutions include sage One Payroll, sage 50 Payroll and sage X3 People. more »

LSE Price
670p
Change
 
Mkt Cap (£m)
7,242
P/E (fwd)
19.9
Yield (fwd)
2.5

The Royal Dutch Shell plc explores for crude oil and natural gas around the world, both in conventional fields and from sources, such as tight rock, shale and coal formations. The Company's segments include Integrated Gas, Upstream, Downstream and Corporate. The Integrated Gas segment is engaged in the liquefaction and transportation of gas and the conversion of natural gas to liquids to provide fuels and other products, as well as projects with an integrated activity, ranging from producing to commercializing gas. The Upstream segment includes the operations of Upstream, which is engaged in the exploration for and extraction of crude oil, natural gas and natural gas liquids, and the marketing and transportation of oil and gas, and Oil Sands, which is engaged in the extraction of bitumen from mined oil sands and conversion into synthetic crude oil. The Downstream segment is engaged in oil products and chemicals manufacturing, and marketing activities. more »

LSE Price
2002.5p
Change
-0.4%
Mkt Cap (£m)
165,090
P/E (fwd)
13.4
Yield (fwd)
7.2



  Is Vodafone fundamentally strong or weak? Find out More »


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About Ben Hobson

Ben Hobson

Strategies Editor at Stockopedia. My goal is to help private investors learn and invest with confidence through the articles, ebooks and other resources we publish on site. I also occasionally bunk off to interview famous investors at expensive restaurants. I studied History at Aberystwyth University, trained as a journalist and covered business news and corporate finance before settling in as one of the first staff members at Stockopedia.  Away from Stockopedia I'm a mountain bike junkie. more »

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