What This Top Dividend Portfolio Is Holding Now: Royal Dutch Shell, GlaxoSmithKline, and BP

LONDON -- Merchants Trust  (LSE: MRCH  ) announced its annual results this week and its thirtieth straight year of dividend increases. The trust lifted its dividend by 0.9% for 2012 -- not the biggest uplift, but at a current share price of 427 pence, the income yield is a chunky 5.4%.

Picking great dividend shares has helped Merchants outperform the FTSE All-Share Index over the past three, five and 10 years.

Let's take a look at Merchants' current top three holdings: Royal Dutch Shell  (LSE: RDSB  ) , GlaxoSmithKline  (LSE: GSK  ) , and BP  (LSE: BP  ) (NYSE: BP  ) .

Royal Dutch Shell
Oil super-major Royal Dutch Shell is the FTSE 100's biggest company with a market capitalization of around 140 billion pounds. This dividend dynamo paid out a whopping 11 billion pounds to shareholders during 2012.

Shell raised its dividend per share for the year by 2.4%, and analysts are forecasting a similar level of growth for each of the next two years. This fairly modest growth is due to City expectations of subdued earnings as Shell continues to invest heavily for the future. The pay-off for investors buying at a current price of 2,213 pence is a tasty prospective yield of 5.3%

GlaxoSmithKline
GlaxoSmithKline, Britain's No. 1 pharmaceuticals group, has suffered less from expiring patents on major drugs than fellow joined-up-name Footsie pharma AstraZeneca. Glaxo has also been helped by a strong stable of consumer brands that includes energy drink Lucozade, over-the-counter analgesic Panadol, and billion-dollar earner Sensodyne toothpaste.

Glaxo continued its fine dividend record with a 5.7% uplift to the payout for 2012. Analysts are expecting growth of the same order for 2013 and 2014. The shares, trading at 1,525 pence, offer a prospective income of 5.1% for investors today.

BP
Not content with Shell, Merchants also has Britain's second-largest oil company, BP, among its top three holdings. BP's disastrous blowout in the Gulf of Mexico during 2010 has required asset sales to raise cash for liabilities and potential liabilities, including a recent rejigging of the company's oil interests in Russia that has added $12.5 billion to the kitty.

Since a temporary suspension of BP's dividend, forced on it as a result of the oil spill, the company has grown the payout from a lower level over the past two years. Analyst forecasts for 2013 suggest a dividend yield of 5.1% is on offer for investors buying at a current share price of 463 pence.

Happy retirement!
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