Friday Email: 09 October 2015
Every Friday morning our lead analyst Mark Riding sends out his weekly run-down and upcoming events in the investor calendar, like this one:
The FTSE 100 has had a very good October so far and has risen over 500 points from the 5850 intraday low reached on the 28th September. It is currently trading at 6435 in pre market, up 10% since the 28th September low. Even with this boost, the FTSE 100 is still nearly 2% lower than it started the year. The DividendMax model portfolio continues to outperform and is up 6% year to date.The volatility has gone this week and we are going up in pretty much a straight line. I'm not quite sure why. I suspect the market was just very oversold as I suggested a couple of weeks ago when I thought that we had reached capitulation. The other reason is that the current feeling is that the U.S. won't raise intertest rates any time soon following the poor jobs report.
There were only 2 sets of results this week; from Tesco and Ted Baker. Tesco, as expected, failed to reinstate its dividend and Ted Baker produced a very creditable 16.8% increase in its interim.
The week ahead is pretty quiet too with Connect Group, N Brown, WH Smith and Booker reporting to the market. Booker and WH Smith both have fantastic recent dividend track records. Smiths has risen 530% from 6.2p in 2006 to an expected 39.1p this year. Booker's has risen from 0.54p in 2008 to 3.66p in 2015, a rise of 577% in less time.
Old favourite Easyjet took a battering on Tuesday and Wednesday. Looks overblown to me as the oil price has not risen that much and they recently raised the guidance for profits in the year to end September 2015. From the recent trading statement "Consequently full year profit before tax guidance is now expected to be in a range of £675 million to £700 million for the year to 30 September 2015, from £620 million to £660 million as previously guided." We are expecting a final dividend of 55p to be declared in November with the full year results announcement.
The fall leaves them on 11.8x next years earnings, which is not demanding.
Meanwhile, there has been something of a rebound in the commodities space and Oil and metals have been rising. We still favour BHP and Rio above all the others for their solid dividend track records and low cost producer status.
The decision to add back the GVC dividend proved correct as they declared on Thursday, but that will be it from them for a while as they undertake the merger with Bwin Party. In my view this will be a very fruitful merger and it won't be too long before they return to the dividend list.
New into DividendMax this week is GCP Student living (DIGS)
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: 02 October 2015
The past week has once again been volatile with the markets hitting lows mid week, but having recovered somewhat in the past two days. The FTSE 100 once again fell below the 6000 level but is now trading above 6100 for a modest gain on the week. The falls on Tuesday and Wednesday resulted in the FTSE 100 recording its worst quarterly loss since September 2011. There was very little of note from companies last week with Wolseley delivering its usual dividend increase of around 10% and announcing a share buyback. James Halstead maintained its record of being one of the most consistent dividend payers on the UK stock market with an increase of 10%.
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