Friday Email: 21 November 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 spite of the past two trading days being down, the FTSE 100 is still up 51 points on the week and looks set to continue its recent rally from the October lows. The miners are holding it back though as they continue to get battered on fears of China slowing down. It is very difficult to call the turn as the price of commodities is not just set by the end user demand. There are investment banks, hedge funds and other institutions who speculate massively on the price of commodities and they are capable of driving the prices down.
The week past was pretty good in terms of dividend increases. Of the 19 companies covered by DivMax that reported, 16 produced dividend increases. ICAP and Homeserve maintained and Enterprise Inns looks a long way off paying a dividend, especially in light of the ruling regarding tied pubs. There were four big increases to report from QinetiQ (28.5%), Grainger (29.4%), Big Yellow (30%) and of course Easyjet who managed a 35.5% increase. No special this time, but with the lock into lower fuel prices which so far goes out to 2016, we can expect higher profitability and cash flow for a while yet. So over the next two years they will generate excess capital and it will come back to shareholders by way of special dividends or a higher payout ratio which could easily go to 50%.
I made a mistake in last weeks Friday email by suggesting that Lancashire Holdings would go ex-dividend on the 20th November. It is in fact next Thursday, the 27th November and the equation has improved. They are 625p and paying out 76.5p by way of a special dividend. (12.24%)
There are another 19 companies that we cover reporting in the week ahead. We like Paragon who have been steadily rebuilding their dividend since the big drop at the start of the financial crisis. Also Kcom look interesting as they are currently trading at the bottom of their trading range and they will increase their dividend by 10% this year. Their pre-close statement on the 30th September confirmed their strong cash generation and commitment to their progressive dividend policy. Paragon report their finals and Kcom their interims, both on Tuesday 25th.
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.
It’s included as part of the free DividendMax trial.
Read next: 14 November 2014
The FTSE 100 has had another good week rising almost 100 points and the October correction has almost been eradicated leaving our target of the index over 7000 by the year end easily achievable. When the index hit 6076 in October, it was looking a little far fetched. Obviously markets do not go in a straight line and there is plenty of time left between now and the Santa rally for some pretty bad days. 17 companies that we cover declared their dividends in the week past and only 4 managed double digit increases; Workspace, Aveva, Burberry (all 10%) and TalkTalk who raised by 15%.
— Interested in a free trial? —