LONDON -- The FTSE 100 (INDEX: ^FTSE ) currently offers a trailing dividend yield of a little more than 3.5%, which is quite a decent return when interest rates are low and the index has no clear direction. Indeed, buying shares now and taking the dividends, while waiting for a potential price recovery, could serve you very well.
And with the half-year reporting season well under way, many companies are actually defying the wider economic gloom and are in fact raising their dividends. Today we take a look at three that have upped their payouts this week:
Greggs (LSE: GRG.L ) continued its bumper dividend run on Tuesday as it lifted its interim dividend once again, up 3% this time to 6 pence per share. The high-street baker has raised its annual payout every year since it joined the stock market in 1984, which is a record unmatched by many.
Current City forecasts suggest a year-end dividend yield of 4%, rising to 4.3% for December 2013, and given the firm's illustrious record, few will doubt those projections. The 492 pence shares are currently on a forward P/E for 2012 of 12, falling to 11 for next year.
Engineering in the dumps? Don't you believe it! Meggitt (LSE: MGGT.L ) raised its interim dividend by a cool 13% to 3.6 pence per share on Tuesday as the defense contractor announced its interim results.
Full-year forecasts suggest a modest yield of 3% based on the current price of 400 pence, but the payout should be very well covered by possible earnings. Furthermore, increasing the dividend by such a margin at the halfway stage suggests strong management confidence.
Xstrata (LSE: XTA.L ) added optimism to the mini-recovery being enjoyed by mining companies at the moment when it lifted its interim dividend by 8% on Tuesday to $0.14 per share. Indeed, Rio Tinto (LSE: RIO.L ) followed the trend today, boosting its interim payout by 40% to 46.43 pence per share.
Current forecasts for Xstrata put the 904 pence shares on a prospective dividend yield of 3%, rising to 3.5% next year. And although earnings are expected to fall by a third this year, there's a rebound expected next year, to give a lowly 2013 P/E of just eight.
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