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AMP, QBE, Origin, Wesfarmers – dividend prospects for 2014

With the official cash interest rate as determined by the Reserve Bank of Australia (RBA) is at a measly 2.5%, many investors have turned to shares for their appealing dividends, which often offer yields higher than those available from their savings account.

While it can be instructive to look back on the historical records of a company’s past pay-outs, it is even more important to look forward at what the future holds. Consistent past performance can often provide a reasonable basis for forecasting future returns, however for many investors, making use of broker consensus forecasts is also a regularly employed tool.

The following four companies are widely held and generally considered ‘blue chip’ stocks. Based on consensus data provided by Morningstar (with the exception of Origin Energy (ASX: ORG)) all companies are forecast to increase their dividends in the 2014 financial year (FY).

AMP (ASX: AMP) which is trading at $4.24 is forecast to pay 24.2 cents worth of dividends in 2014. Based on this consensus forecast, AMP currently has an appealing dividend yield of 5.7%.

QBE Insurance (ASX: QBE) has taken a beating in the past week after issuing downgraded guidance. At $10.16 the share price is currently trading near its decade low. Consensus has dividends for FY 2014 at 37.2 cents and on this forecast the stock is trading on a dividend yield of 3.6%.

Origin Energy is currently trading at $13.39 and with a forecast dividend of 50 cents per share for financial year 2014. This implies a dividend yield of 3.7%.

Wesfarmers (ASX: WES) shares are riding high at $42.56. Based on a forecast dividend of $2 per share in FY 2014, the stock is trading on a dividend yield of 4.7%.

Foolish takeaway

While investors should not forget about capital gains, for many investors thinking about their retirement, a consistent stream of fully franked dividends is highly important.

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Motley Fool contributor Tim McArthur owns shares in Origin Energy and QBE Insurance.

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