3 super income stocks: HSBC Holdings plc, BAE Systems plc and Aberdeen Asset Management plc

Updated
HSBC head office
HSBC head office

While it's relatively easy for a company to increase dividends during prosperous times, doing so in challenging periods can prove to be much more difficult. And with the global defence industry experiencing a tough period in recent years, the fact that BAE(LSE: BA) has been able to raise dividends per share in each of the last five years provides evidence of how appealing it is as an income play.

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In fact, BAE's shareholder payouts have increased at an annualised rate of 2.9% in the last five years even though austerity has caused defence spending to come under pressure. Looking ahead, US economic growth is likely to act as a catalyst to deliver an improved outlook for the industry and with BAE's earnings forecast to rise by 6% next year, its dividend prospects are relatively bright.

Due to BAE's yield standing at 4.4%, it remains a top-notch income stock. And with it having a payout ratio of just 56% as well as upbeat growth forecasts, it looks set to record real-terms dividend increases over the medium-to-long term.

High yield

Similarly, Aberdeen Asset Management(LSE: ADN) continues to have significant long-term income appeal. Although its shares have been down by as much as 27% this year due to fears surrounding emerging market growth prospects, since then investor sentiment has picked up strongly. In fact, in the last four months Aberdeen's shares have risen by 14%, which is twice the rate of growth of the FTSE 100.

Despite this, Aberdeen continues to offer a relatively high yield. It currently stands at over 7%, but the reality is that dividend rises could be somewhat limited over the medium term. That's because Aberdeen is expected to pay out all of its profit as a dividend in the current year. While that's possible in the short run, it's unsustainable in the long term and so a lack of dividend growth would be unsurprising.

However, with Aberdeen having such a high yield to start with as well as the potential to benefit from further growth in China and the emerging world, it remains a strong income buy for the long term.

Play the long game

Meanwhile, HSBC(LSE: HSBA) is currently experiencing a challenging period. Its operating costs have spiralled and it's seeking to implement a new strategy that could see staffing numbers significantly reduced and the bank become more efficient. Clearly, this would be good news for its bottom line and with HSBC expected to post a rise in its earnings of 8% next year, its dividend outlook remains relatively bright.

Clearly, the slowdown in China has caused investors to question HSBC's long-term growth prospects. However, with its new strategy and the potential for rising demand for financial products from the Chinese middle class, dividend growth prospects remain strong. Alongside this, HSBC currently yields 7.7% and with dividends being covered 1.2 times by profit, HSBC appears to be a stunning long-term buy for income-seeking investors.

Despite this, there's another stock that could be an even better buy. In fact it's been named asA Top Income Share From The Motley Fool.

The company in question could make a real impact on your income prospects in 2016 and beyond. And in time, it could help you retire early, pay off your mortgage, or simply enjoy a more abundant lifestyle.

Click here to find out all about it, doing so is completely free and comes without any obligation.

Peter Stephens owns shares of Aberdeen Asset Management, BAE Systems, and HSBC Holdings. The Motley Fool UK has recommended Aberdeen Asset Management and HSBC Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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