Below is a table showing the expected annual returns on a
long term holding of the following list of FTSE100 stocks. I've ranked them in
order of total expected return based on the model I outlined in the entry on
stock valuation.
All the data I have used is from digitallook.com. Analysts'
forecast is the annualised dividend growth rate over the next 2 years. So if a
share currently pays a 10p dividend and the forecast dividend for 2014 is 12.1p
then the annualised dividend growth will be 10%pa. I've limited the growth rate
to 15%, if a stock has an analyst growth rate higher than this, say 20% I have
substituted 15% into the table below for the model. The reason for this is that
high growth rates for large cap stocks are unsustainable in the long run.
The 3 year average yield is the total dividend paid over the
last 3 years divided by 3 and then divided by the most recent share price.
I've omitted stocks with negative dividend growth forecasts
(Eurasian, Kazakhmys, Man Group and Fresnillo), erratic dividends (BP), no
dividends (Lloyds, RBS and Int Cons Airlines), or without 3 years track record
of making dividend payments (GKN, Anglo American, ITV, Wolseley, Evraz,
Carnival, Glencore, and Polymetal). That still leaves 84 stocks in the FTSE100.
As the stocks in the FTSE100 are large cap I have used a
factor of 40% on the analyst growth rates for the model (for FTSE250 stocks I
would use 33%).
I have used the adjustment factor which I outlined in a
previous post, but have been conservative and not used any positive adjustment
factors.
|
Share
|
Price
|
Analysts' forecast*
|
3yr average yield
|
Growth
|
Adjustment
|
Total
|
1
|
Aviva
|
269
|
3.6%
|
9.4%
|
1.4%
|
0.0%
|
10.8%
|
2
|
Vodafone
|
174
|
15.0%
|
5.1%
|
6.0%
|
-0.4%
|
10.8%
|
3
|
RSA
|
101
|
3.1%
|
8.7%
|
1.2%
|
0.0%
|
9.9%
|
4
|
Standard Life
|
206
|
5.2%
|
6.3%
|
2.1%
|
0.0%
|
8.4%
|
5
|
L&G
|
111
|
11.7%
|
4.5%
|
4.7%
|
-1.0%
|
8.2%
|
6
|
Resolution
|
203
|
3.6%
|
6.7%
|
1.4%
|
0.0%
|
8.1%
|
7
|
BAE
|
272
|
3.3%
|
6.4%
|
1.3%
|
0.0%
|
7.7%
|
8
|
BT
|
207
|
14.6%
|
3.6%
|
5.8%
|
-2.0%
|
7.4%
|
9
|
SSE
|
1359
|
4.5%
|
5.5%
|
1.8%
|
0.0%
|
7.3%
|
10
|
ICAP
|
341
|
3.5%
|
5.8%
|
1.4%
|
0.0%
|
7.2%
|
11
|
Admiral
|
1116
|
15.0%
|
3.4%
|
6.0%
|
-2.4%
|
7.0%
|
12
|
AstraZenica
|
2632
|
2.0%
|
6.2%
|
0.8%
|
0.0%
|
7.0%
|
13
|
HSBC
|
514
|
7.7%
|
4.6%
|
3.1%
|
-0.9%
|
6.8%
|
14
|
National Grid
|
685
|
2.3%
|
5.6%
|
0.9%
|
0.0%
|
6.5%
|
15
|
Centrica
|
313
|
6.9%
|
4.5%
|
2.8%
|
-1.0%
|
6.3%
|
16
|
GlaxoSmithKline
|
1417
|
6.2%
|
4.6%
|
2.5%
|
-0.9%
|
6.2%
|
17
|
Aberdeen AM
|
240
|
15.0%
|
3.1%
|
6.0%
|
-2.9%
|
6.2%
|
18
|
M and S
|
348
|
5.6%
|
4.7%
|
2.2%
|
-0.8%
|
6.1%
|
19
|
British Land
|
495
|
2.7%
|
5.3%
|
1.1%
|
-0.2%
|
6.1%
|
20
|
RDShell 'B'
|
2081
|
2.7%
|
5.2%
|
1.1%
|
-0.3%
|
5.9%
|
21
|
Morrisons
|
273
|
11.7%
|
3.5%
|
4.7%
|
-2.3%
|
5.9%
|
22
|
Tesco
|
310
|
5.3%
|
4.5%
|
2.1%
|
-0.9%
|
5.7%
|
23
|
BATS
|
3050
|
9.7%
|
3.7%
|
3.9%
|
-1.9%
|
5.6%
|
24
|
Imperial Tobacco
|
2400
|
10.7%
|
3.5%
|
4.3%
|
-2.2%
|
5.5%
|
25
|
Sainsbury's
|
296
|
1.4%
|
5.1%
|
0.6%
|
-0.4%
|
5.3%
|
26
|
Reed Elsevier
|
488
|
5.6%
|
4.3%
|
2.3%
|
-1.3%
|
5.2%
|
27
|
Ashmore
|
326
|
6.0%
|
4.0%
|
2.4%
|
-1.5%
|
4.9%
|
28
|
United Utilities
|
649
|
1.0%
|
4.9%
|
0.4%
|
-0.5%
|
4.8%
|
29
|
BHP Billiton
|
1704
|
8.4%
|
3.4%
|
3.4%
|
-2.4%
|
4.3%
|
30
|
CRH
|
1129
|
2.4%
|
4.4%
|
0.9%
|
-1.1%
|
4.3%
|
31
|
Old Mutual
|
143
|
12.1%
|
2.8%
|
4.8%
|
-3.3%
|
4.3%
|
32
|
Vedanta
|
967
|
8.3%
|
3.4%
|
3.3%
|
-2.4%
|
4.2%
|
33
|
Rexam
|
393
|
10.8%
|
2.9%
|
4.3%
|
-3.1%
|
4.1%
|
34
|
Standard Chartered
|
1327
|
7.7%
|
3.4%
|
3.1%
|
-2.4%
|
4.1%
|
35
|
Capita
|
611
|
8.8%
|
3.2%
|
3.5%
|
-2.7%
|
4.0%
|
36
|
Barclays
|
182
|
12.8%
|
2.6%
|
5.1%
|
-3.7%
|
3.9%
|
37
|
Land Sec
|
711
|
3.7%
|
4.0%
|
1.5%
|
-1.6%
|
3.9%
|
38
|
Prudential
|
684
|
7.4%
|
3.4%
|
3.0%
|
-2.4%
|
3.9%
|
39
|
Unilever
|
2029
|
15.0%
|
2.2%
|
6.0%
|
-4.4%
|
3.8%
|
40
|
WPP
|
782
|
12.7%
|
2.5%
|
5.1%
|
-3.9%
|
3.6%
|
41
|
Sage
|
254
|
7.0%
|
3.3%
|
2.8%
|
-2.6%
|
3.5%
|
42
|
Amec
|
992
|
12.1%
|
2.5%
|
4.8%
|
-3.8%
|
3.5%
|
43
|
Pearson
|
1142
|
6.2%
|
3.4%
|
2.5%
|
-2.4%
|
3.5%
|
44
|
Hammerson
|
422
|
3.8%
|
3.8%
|
1.5%
|
-1.8%
|
3.5%
|
45
|
IMI
|
880
|
9.0%
|
2.9%
|
3.6%
|
-3.1%
|
3.4%
|
46
|
Schroders NV
|
995
|
4.9%
|
3.6%
|
1.9%
|
-2.1%
|
3.4%
|
47
|
G4S
|
276
|
9.3%
|
2.9%
|
3.7%
|
-3.2%
|
3.3%
|
48
|
Kingfisher
|
280
|
11.3%
|
2.5%
|
4.5%
|
-3.8%
|
3.3%
|
49
|
Smiths
|
1015
|
5.4%
|
3.4%
|
2.1%
|
-2.3%
|
3.2%
|
50
|
Next
|
2996
|
9.7%
|
2.7%
|
3.9%
|
-3.4%
|
3.2%
|
51
|
BSkyB
|
700
|
8.8%
|
2.9%
|
3.5%
|
-3.2%
|
3.2%
|
52
|
Tate & Lyle
|
670
|
5.0%
|
3.5%
|
2.0%
|
-2.3%
|
3.2%
|
53
|
Hargreaves Lansd
|
474
|
15.0%
|
2.0%
|
6.0%
|
-4.9%
|
3.1%
|
54
|
Severn Trent
|
1701
|
1.5%
|
4.0%
|
0.6%
|
-1.6%
|
3.1%
|
55
|
Compass
|
634
|
9.8%
|
2.6%
|
3.9%
|
-3.6%
|
2.9%
|
56
|
Diageo
|
1514
|
8.9%
|
2.5%
|
3.6%
|
-3.8%
|
2.3%
|
57
|
Rolls Royce
|
808
|
12.9%
|
2.0%
|
5.2%
|
-4.9%
|
2.2%
|
58
|
SABMiller
|
2394
|
11.8%
|
2.1%
|
4.7%
|
-4.6%
|
2.2%
|
59
|
Schroders
|
1194
|
4.9%
|
3.0%
|
1.9%
|
-3.0%
|
1.9%
|
60
|
Meggitt
|
378
|
8.1%
|
2.5%
|
3.3%
|
-3.9%
|
1.8%
|
61
|
Reckitt Benckiser
|
3433
|
2.4%
|
3.3%
|
1.0%
|
-2.5%
|
1.8%
|
62
|
Whitbread
|
1821
|
8.1%
|
2.4%
|
3.2%
|
-4.0%
|
1.7%
|
63
|
Johnson Matthey
|
2141
|
12.3%
|
1.9%
|
4.9%
|
-5.2%
|
1.7%
|
64
|
Petrofac
|
1577
|
12.0%
|
1.9%
|
4.8%
|
-5.3%
|
1.3%
|
65
|
ABF
|
1180
|
10.2%
|
2.0%
|
4.1%
|
-5.0%
|
1.0%
|
66
|
Burberry
|
1372
|
15.0%
|
1.4%
|
6.0%
|
-6.5%
|
0.9%
|
67
|
Bunzl
|
1006
|
6.5%
|
2.4%
|
2.6%
|
-4.1%
|
0.8%
|
68
|
Intercont Hotels
|
1412
|
7.3%
|
2.2%
|
2.9%
|
-4.5%
|
0.6%
|
69
|
Rio Tinto
|
2795
|
6.6%
|
2.3%
|
2.6%
|
-4.3%
|
0.6%
|
70
|
Wier Group
|
1552
|
11.0%
|
1.7%
|
4.4%
|
-5.6%
|
0.5%
|
71
|
Experian
|
903
|
9.0%
|
2.0%
|
3.6%
|
-5.0%
|
0.5%
|
72
|
Croda
|
2180
|
9.9%
|
1.7%
|
4.0%
|
-5.7%
|
0.0%
|
73
|
Intertek Group
|
2564
|
15.0%
|
1.1%
|
6.0%
|
-7.6%
|
-0.5%
|
74
|
Xstrata
|
913
|
8.1%
|
1.7%
|
3.2%
|
-5.7%
|
-0.8%
|
75
|
International Power
|
414
|
1.3%
|
2.4%
|
0.5%
|
-4.0%
|
-1.0%
|
76
|
Antofagasta
|
1017
|
15.0%
|
1.0%
|
6.0%
|
-8.4%
|
-1.5%
|
77
|
Serco
|
524
|
9.1%
|
1.4%
|
3.6%
|
-6.6%
|
-1.6%
|
78
|
Smith & Nephew
|
606
|
3.7%
|
1.7%
|
1.5%
|
-5.8%
|
-2.7%
|
79
|
Aggreko
|
2157
|
13.9%
|
0.8%
|
5.6%
|
-9.1%
|
-2.8%
|
80
|
BG Group
|
1266
|
7.5%
|
1.1%
|
3.0%
|
-7.8%
|
-3.7%
|
81
|
ARM
|
492
|
15.0%
|
0.6%
|
6.0%
|
-10.5%
|
-3.9%
|
82
|
Tullow
|
1395
|
15.0%
|
0.4%
|
6.0%
|
-12.7%
|
-6.3%
|
83
|
Randgold
|
5130
|
15.0%
|
0.3%
|
6.0%
|
-13.3%
|
-6.9%
|
84
|
Shire
|
1897
|
10.7%
|
0.4%
|
4.3%
|
-11.8%
|
-7.1%
|
|
|
|
|
|
|
|
|
|
|
There's the data. No real
surprises. A lot of insurance companies at the top of the list with their high
yields and growth forecasts. I'm a bit wary of them though. The adjustment
factor is very harsh on stocks what have low dividend yields. As my preference
is for investing in high dividend stocks I don't have a problem with it but the
model clearly favours dividend stocks opposed to growth
See also: FTSE100: Individual stocks (Updated)