Friday Email: 13 September 2013

The market is still looking nervous in spite of the improved situation in Syria. We are expecting a correction between now and the end of October, although we are bullish of a decent end to the year that should see markets above current levels. The week just past started slowly with some lacklustre dividend performances. The highlight was Barratt returning to the dividend lists on Wednesday. The prospect of further double digit dividend increases from Barratt over the coming years looks almost assured. Thursday saw a small increase from Kier (3%) who we favoured a few months back, but they have risen strongly up to the results. Centaur Media, who we featured in our recent dividend of the week for the Investors Chronicle also managed a small, but decent 7% dividend increase on Thursday. The day was stolen by the retailers. Firstly, Morrisons, who drew to a close their three year policy of increasing the dividend by 10% per annum. Dunelm, increased the standard dividend by 15% and declared a special, going ex next week of 25p. Next continued with their extraordinary record, boosting EPS via their strong share buyback program and also increasing the dividend by 16.1% into the bargain. The retailers look expensive, but surely they will continue to benefit from economic recovery if it is indeed happening,

That, for me, is the big question and although the government are making extravagant claims, I just do not know what the reality is. For sure, the markets have been pricing in a recovery for well over a year now. For the markets to continue upwards, it must take hold.

Next week looks quiet on the corporate front but there is plenty going on outside the corporate world to keep investors on their toes. Beware of a correction in October, but do see it as a buying opportunity if it were to happen.