2023 dividend forecasts: Aviva, Anglo American & Reckitt

Dividend forecasts provided by City analysts can provide a good guide to how much income to expect from a stock in the coming year.

Although these broker forecasts are not guaranteed, in my experience they are usually quite accurate, especially for FTSE 100 stocks.

For this review, I have compiled the latest dividend estimates for insurance companies Aviva (LSE: AV), the mining group Anglo American (LSE: AAL) and consumer goods company Reckitt Benckiser (LSE: RKT).

Aviva: 7% + bonus payout

This British insurer has undergone remarkable changes since CEO Amanda Blanc took charge in 2020. As a result, the group’s cash generation has improved, and its dividend has returned to growth after being cut by almost 50% in 2019.

Unusually, Aviva has set the size of its 2023 dividend, so I will use this guide instead of the broker’s forecast:

• Aviva’s 2023 dividend guidance: 32.5p per share
• Forecast dividend yield: 7.3%

The above payout is the company’s regular dividend, which I expect will gradually increase over the coming years.

However, Aviva is also planning “Returning capital to shareholders in 2023”. We don’t know how much this will be yet, but I expect a significant amount in addition to the regular dividend.

Aviva shares look good to me at a 2023 price-to-earnings (P/E) ratio of 8, with a yield of 7%+. I see them as a wise buy for income.

Anglo American: bad times?

Profits at FTSE 100 mining group Anglo American have soared in recent years. These gains are mostly due to rising prices for commodities such as iron ore, coal, and platinum.

However, commodity prices tend to move in boom-and-bust cycles. City analysts seem to think that prices can only go so far. They expect Anglo’s after-tax profits to fall from $8.6bn in 2021 to $5.4bn in 2023.

Dividends are also expected to fall. This suggests that last year’s bumper payout of $2.89 per share will not be repeated:

• Anglo American 2023 dividend forecast: $1.76 (146p) per share
• Forecast dividend yield: 4.6%

In my opinion, anyone investing in this stock should look at the market cycle. If the miners are going down, then I think I should wait before buying. But if commodity prices remain high due to world events, then I think Anglo American can be a decent value now.

Reckitt: buy-and-hold dividends

Consumer goods and healthcare group Reckitt has not cut its dividend for at least 20 years. I don’t think it will be in 2023 either. Company – which brand is included Dettol, Doneand Durex – is expected to report a 15% increase in operating profit for 2022.

Analysts expect a slower rate of growth in 2023. However, they still expect Reckitt’s dividend to return to growth after being frozen at 175p from 2019:

• Reckitt’s 2023 forecast dividend: 180p per share
• Forecast dividend yield: 3.2%

Reckitt shares peaked at £79 in 2017 and have underperformed since – they were trading at £57, when I wrote. But I think the company’s problems and mistakes have now been addressed.

The stock is currently trading at a P/E ratio of 16 and yields 3.1%. I see this business as a long-term buy.