This week's dividend of the week reported last week and declared a 15.6% increase in their dividend whilst at the same time promising a further 15% dividend increase in the next financial year. That is a pretty good start if you want to be dividend of the week.
So, the dividend of 6.95p is in the bag and goes ex-dividend on 3rd July. After that, the forecasts are for 3.95p at the interim stage and another 8p at the final stage about a year from now, so you can expect to pick up around about 19 pence per share between now and July 2014 for an annualised yield approaching 7% (6.85% at yesterday's close)
Unfortunately, they are not cheap as they have been justifiably re-rated over the past 12 months on the back of a very strong business performance. The recent numbers were affected by some one-offs and underlying earnings per share actually grew at just shy of 21%. The one off was incurred via a £62 million investment in their TV business, which they now boast is the UK's fastest growing TV business, which you would expect quite shortly after launch. Analysts are expecting pre-tax profits to grow to roughly £194m next year and £250m the following year from £122m in the year just gone.
They have a couple of exciting years ahead of them and seem to have a fully focused business. There are rich pickings to be had in this huge industry and the more nimble players such as TalkTalk should do very well on a 3-5 year view. It is obviously underpinned by a pretty good dividend and the promise of more to come, at least for next year. I would expect the growth story to continue beyond that. Our dividend of the week is TalkTalk.
