2023 dividend forecast: Aviva, Anglo American & Reckitt

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Dividend forecasts provided by City analysts can provide us with a good guide to the income to be expected from our shares over the coming year.

Although these broker forecasts are not guaranteed, my experience is that they are generally reasonably accurate, especially for FTSE 100 stocks.

For this review, I’ve rounded up the latest dividend estimates for insurer Aviva (LSE:AV), mining group Anglo American (LSE:AAL) and consumer goods company Reckitt Benckiser (LSE:RKT).

Aviva: 7% + bonus

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

Unusually, Aviva has already specified the size of its 2023 dividend, so I will use these tips instead of the broker forecasts:

Aviva 2023 dividend target: 32.5 pence per share Expected dividend yield: 7.3%

The above payout is the company’s ordinary dividend, which I expect to gradually increase in future years.

However, Aviva also plans to “return more capital to shareholders in 2023”. We don’t yet know how much it will cost, but I expect it to be a significant amount on top of the ordinary dividend.

Aviva shares look good value to me with a price/earnings ratio (P/E) of 8 for 2023, with a yield of 7% and above. I see them as a sensible buy for income.

Anglo American: bad timing?

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

However, commodity prices tend to move in boom and bust cycles. City analysts seem to think prices may have peaked for the time being. They expect Anglo’s after-tax profit to grow from $8.6 billion in 2021 to $5.4 billion in 2023.

The dividend should also fall. This suggests to me that last year’s exceptional $2.89 per share payout won’t be repeated anytime soon:

Anglo American’s forecast dividend for 2023: $1.76 (146p) per shareProjected dividend yield: 4.6%

In my opinion, anyone investing in this stock should have a view of the market cycle. If the miners are down, I think it makes sense to wait before buying. But if commodity prices remain high due to world events, then I think Anglo American could be a decent value today.

Reckitt: a buy-and-hold dividend

Consumer goods and healthcare group Reckitt hasn’t cut its dividend for at least 20 years. I don’t think that will be the case in 2023 either. The company – whose brands include Dettol, Finish and Durex – is expected to report a 15% increase in operating profit for 2022.

Analysts expect the growth rate to slow in 2023. However, they still expect Reckitt’s dividend to return to growth after being frozen at 175p since 2019:

Reckitt forecast 2023 dividend: 180p per shareProjected dividend yield: 3.2%

Reckitt shares peaked at 79 in 2017 and have performed poorly since – trading at 57, as of this writing. But I think the company’s problems and mistakes have now been largely resolved.

The shares currently trade on a P/E ratio of 16 and offer a yield of 3.1%. I see this business as a long-term purchase.

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