This week we look back at last weeks declarations and we are going to look at two companies who declared special dividends last week; Paypoint and Aveva.
Paypoint have a tremendous track record of increasing their dividend and it is up 270% since 2006 with a 14.7% rise in the final dividend last week. They also announced a special dividend of 15p making a total payout of 35.2p going ex-dividend on June 26th.
Aveva's track record is even more impressive with the dividend up over 500% in the same period. Last week they also announced an increase in the final dividend of 15% with a £100 million special dividend. They have net cash of £190 million and so can easily afford the special dividend. The special dividend represents about 6% of their market cap and after an initial fall in their share price last Thursday, the market woke up and the shares rose quite sharply on Friday.
The rise in the Aveva share price over the past 12 months is pretty frightening, but investors have had to learn to live with that over the past few months as the market has risen extremely strongly. They are up over 60% from their 52 week low point. the exact details of the special dividend are as yet unknown; it will be accompanied by a share consolidation. Full details will be sent to shareholders in the AGM circular. The AGM is on the 9th July.
Meanwhile, the shares will have gone ex-dividend for the final dividend of 19.5p on the 19th June. Unfortunately, Aveva have risen another 45p this morning on top of the 80-odd pence on Friday, which all but wipes out the special dividend. I really wish I had written this on Thursday when the results were announced and the price actually fell.
So with the share price rise in Aveva being too much to stomach, we can have a look at Paypoint. It has 4 main businesses. Retail payments, Internet payments, phone payments and parcels. This spread of businesses means that it is well positioned for the continued growth in internet usage and transactions. As with so many stocks, it can hardly be described as cheap on around 16x forward earnings for 2014, but with the cash pile increasing year on year and now standing at around £46 million, the prospects for increased dividends look very secure.
Whilst I like Aveva, I prefer Paypoint for its broad spread of businesses geared to the continued use of the internet by consumers. Paypoint is our dividend of the week.
