Friday Email: 15 November 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 busy week as things got active in the corporate world with plenty of results and Interim Management Statements. The FTSE 100 fell from 6722 to 6666 from Monday to Thursday of this week. Today brings results from Vedanta which will take some sorting out due to the mergers that have occurred. Yesterday saw Serco fall on a profit warning that was not overly dramatic, but the city took it very badly and hit the shares hard. Essentially, profits will be flat this year and next. We cannot be sure what will happen to the dividend policy which was to reduce cover from the current high level. I doubt very much that they will reduce the dividend and if they maintain their profitability at around current levels and reduce cover as promised then dividend increases can be expected. A return to bottom line growth should be possible in the 2015 financial year. Definitely one to put on your watch list.
A big-ish reporting week saw dividend increases from Babcock (9.5%), Workspace (10%), Vodafone (7%), Land Securities (2.7%), Synergy Health (8.5%), Oxford Instruments (10.2%), TalkTalk (15.9%), Fenner (7%), SSE (3%), LSE (4%), Sainsbury (4%), Euromoney Institutional Investor (7%), WS Atkins (5%), Burberry (10%) and 3i who announced a total dividend of 20p for 2014. So lots of relatively small increases and only 3i offering a bumper payout boosted by special dividends at both the interim and finals stages. Their well diversified nature and the prospects of improving economies makes them look very interesting, especially underpinned by a 20p payout against a share price of around 350p.
The week ahead sees a good number of companies reporting including Aveva, Diploma, Mitie, Easyjet, Homeserve, serial dividend payer Halma, Big yellow, Investec, SABMiller and paypoint to name a few. The market remains difficult to call and the euphoria of recent times seems to have gone for the time being. The 6800 level on the FTSE 100 seems to be difficult to break through, but we still expect a Santa rally to take us through 7000 by the year end.
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Read next: 08 November 2013
The market remains difficult to call and has been volatile this week going up, down, up, down from Monday to Thursday. The pattern looks set to end today with a second consecutive down day after the biggest fall on Wall Street for 2 months. Having said that, I would not bet against the yo-yo continuing. There is definitely momentum with equities as there has been a fairly large shift from bonds over the past 12-18 months, but this past week shows that there are nerves around after recent strong gains.
