Look to miners for dividend yield and growth while waiting for Lloyds Banking Group PLC et al to cra

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Do you remember the great dividend freeze of 2020, Daddy?


In some ways, the precautionary period brought on by the coronavirus epidemic spreading to the western world seems like it is very much in the rear-view mirror but 94 stocks out of the FTSE 350 are still not paying dividends.


Admittedly, 36 of those have never paid a dividend in the last five years and six of them are newly listed companies that have not had a chance to open their accounts but even so, it shows that not all large and medium caps have returned to business as usual yet.


Broker forecasts indicate that of the 36 FTSE 350 companies currently not paying dividends, 10 of them are not planning to resume dividend payments. The 10 culprits contain many of the companies you would expect to be reticent about splashing the cash just yet; companies such as cinemas operator Cineworld Group PLC; airlines such as easyJet Group PLC, British Airways owner International Consolidated Airlines SA, WizzAir Holding PLC (plus fellow travellers Rolls-Royce Group PLC and TUI AG); and hospitality plays, including Premier Inn and restaurants owner Whitbread PLC, pubs group Mitchells & Butlers PLC and Wagamama restaurant chain owner The Restaurant Group PLC.


For some companies, however, it has been a case of crisis? What crisis?


Dividends at the double


FTSE 350 companies paying dividends that are double the level of two years ago include Berkeley Group Holdings PLC, CMC Markets PLC, Baillie Gifford Japan Trust, Games Workshop PLC, Future PLC, Vivo Energy PLC, BHP Group PLC, Centamin PLC, Ferrexpo PLC, Polymetal International and Hipgnosis Songs Fund Limited.


Just look at the miners in that list. It truly is a sector of plenty for income seekers.


I am not sure how B&M European Value Retail SA sneaked onto the list with a 128% hike in its dividend over a two-year period but neither am I sure how it passed itself off as an essential retailer during the lockdown and was thus able to stay open.


Looking at dividend changes over a two-year period still leaves plenty of scope for outliers so I thought it would be more informative to look at the average dividend paid by FTSE 350 companies over a five-year period and compare that to its current dividend.


Here are the top 10 companies that really seem to be pushing to boat out on dividends.


Ticker Company Dividend per share 2yr %chg Dividend per share 5yr avg (p) Dividend per share (p) Dividend per share / Dividend per share 5yr avg. Forecast dividend per share (p)
GYS Gamesys Group PLC 8 40 5 41.5
IPO IP Group PLC 0.2 1 5 1
N91 Ninety One PLC 2.5 12.6 5 13.5
PFD Premier Foods PLC 0.2 1 5 1.3
SRP Serco Group PLC 0.3 1.4 5 2.5
VVO Vivo Energy PLC 209.7 1.4 4.6 3.2959 4
MNG M&G PLC 6 18.2 3.0232 18.4
AJB AJ Bell PLC 2.2 6.2 2.8025 9.3
BGFD Baillie Gifford Japan Trust (The) PLC 650 1.7 4.5 2.6163
FUTR Future PLC 220 0.6 1.6 2.5806 2.3
PSH Pershing Square Holdings Ltd 12.6 31.8 2.5267
FXPO Ferrexpo PLC 166.1 11.2 26.4 2.3596 102.8
CMCX CMC Markets PLC 1408.9 13.1 30.6 2.3364 18.1
KNOS Kainos Group Ltd 131.2 9.4 21.5 2.2775 21.6
JTC JTC PLC 125 3 6.8 2.2425 7.9
GAW Games Workshop Group PLC 485.7 98 205 2.0918 239.2
BHP BHP Group PLC 207 107.2 218.7 2.0413 230.2
POLY Polymetal International PLC 154.5 47.1 94.3 2.002 103.3
TIFS TI Fluid Systems PLC -3.3 3.9 7.6 1.9601 5.3
AVST Avast PLC 71.6 6 11.7 1.9402 11.4

I’ve not put the dividend yields in the table because I was more interested in identifying those companies that are growing the dividend exceptionally quickly (or because I only thought of it after exporting the table). The thinking is that companies paying dividends well above their five-year average are, as foreign football managers like to say, “in a good moment”. Some of them are not yielding a great deal but if the sharp increases in the dividend indicate heightened optimism then shareholders could enjoy some share price appreciation to go along with the dividend income.


If it is yield you are after, once again, the miners catch the eye on that score, with Ferrexpo PLC yielding 5.2%, BHP 10.0% and Polymetal 6.2%.


Compare those yields to retail investor favourites such as Lloyds Banking Group PLC, which is yielding 1.3% with a dividend that is just 27% of its five-year average – the banks have only just been given the go-ahead to start cranking up the dividends again – and AstraZeneca PLC, which is yielding 2.4% on a dividend that is about 98% of its five-year average.

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