Friday Email: 20 September 2013
Every Friday morning our lead analyst Mark Riding sends out his weekly run-down and upcoming events in the investor calendar, like this one:
That was a very quiet week on the corporate front with Galliford Try being the star performer after it posted a 23% increase in the full year dividend. Redrow, as we expected returned to the dividend list with a 1p final dividend and Smiths group posted a 4% dividend increase and threw in a special dividend of 25p per share. The stock market still lacks direction at the moment in the UK as the Dow and the S&P hit all time highs. The FTSE 100 is up slightly on the week following Thursdays bounce on the back of QE tapering in the US not being quite as imminent as thought.
So, it is the same story of the markets being addicted to the cheap money on offer. We still think a correction is due in the coming weeks, but overall, we expect the market to be at least as high at the year-end as it is now. It currently looks overbought in the US and any correction over there will be felt over here. Metals prices were on the up yesterday and that will benefit the miner heavy FTSE 100, where the miners have been a drag for some time now. As we have pointed out before, if there is a real, sustainable economic recovery globally, then the miners will be very good value at these levels.
The week ahead looks like being one of the quietest for some time on the corporate front.
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Read next: 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,