Friday Email: 28 February 2014
Every Friday morning our lead analyst Mark Riding sends out his weekly run-down and upcoming events in the investor calendar, like this one:
In a week where around 15% of all the UK stocks that we follow reported, we should get a good feel for the way things are going and to be honest it does not feel too great. Once again the apparent 6850 ceiling on the FTSE 100 just could not be breached as it moved to around that level for the third or fourth time in the past 12 months.
In terms of companies reporting of course there were one or two highlights but overall it feel a little like a damp squid.
The brightest spark comes from anything to do with housebuilding and in this cyclical industry, boosted by the government there is good news all round with Howden Joinery, Countrywide, Redrow, Barratt, Taylor Wimpey, Travis Perkins, Countrywide, Persimmon and Bovis all performing like world beaters from a dividend perspective. It was not so long ago that people were betting on the likes of Taylor Wimpey going bust as the shares hit 5p and needed an emergency rights issue to keep them afloat. Now they are talking about large returns to shareholders in a kind of rights issue reversal just a few years on. When interest rates start to rise, things won't be so easy..
RPS group continued its very impressive track record with its 20th year of 15% annual dividend increases. Same again next year we think! Jupiter fund management produced a 43% increase. WPP did well with a 20% increase and still further increases in the payout ratio to come. The shares fell quite heavily on the day. St James' place increased it full year payout by 50% and promised a further 30-40% increase next year. Former dividend of the week ITV showed why it was chosen with a 35% increase in the full year dividend and another special thrown in. More to come from them we think. The Restaurant group also did well.
Man Groups numbers were well received by the market and they look ok-ish. The dividend is still decent and there will be more share buybacks.
Three big payouts (with special dividends) from Beazley, Easyjet and Playtech went ex-div last Wednesday and Easyjet have pretty much recovered already rising 2.44% on Thursday to 1721p.
This morning we also had good increases from Rightmove, Mondi and Laird.
Looking forward, the reporting season continues next week and we think the jury is still out after a steady if unspectacular week just past. We will be looking through everything in the next few days and hopefully come up with a good suggestion for members.
The Friday email is delivered to over 20,000 subscriber’s every week, and remains a widely read run-down of recent events and what investors can expect in the week ahead written by our chief analyst Mark Riding.
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Read next: 21 February 2014
Another relatively uncertain week but our move to a mildly bullish stance has proved justified with the FTSE 100 rising from 6680 to 6850 over the week. Our latest research on John Wood group was rewarded with a 46p rise in the shares on the day of the results last Tuesday and we also received an unexpected 29% increase in the dividend and a promise of a further 25% in the coming year followed by 'double digit' increases thereafter. Good stuff! The shares are up from 672p to 748p this morning, up 11.3% since publication last Friday. Most of the other companies reporting this week had little to offer. Galliford Try of the housebuilders did well, as you would expect with the stimulus being provided for the sector. Galliford managed a 25% increase in the interim but with only 1.8x cover compared to John Wood's 4.5x cover. I know which one I prefer. Essentra and Rexam also did well with 23% and 14% increases respectively.
