Friday Email: 29 January 2016
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 market is currently volatile, although overall, it has been an up week for the first time this year with the FTSE 100 currently trading at around the 6000 mark. The past week saw little in the way of corporate reporting with the highlight being another housebuilder Crest Nicholson who increased their full year dividend by 38%. Slightly worrying for Diageo shareholders was the move to increase its interim dividend by only 5% after three consecutive years of 9% increases. We are maintaining our final dividend forecast, which will give an increase for the year as a whole of just over 7%. If the rate of increase of 5% becomes the norm, then they look stretched on a PE of over 20x. This morning ENTU reported their results and declared a dividend of 2.67p making for a total dividend for the year of 5.34p against a share price of 56p. They said in their results statement:
In the coming year the Board aims to maintain the current level of dividends, and would expect the payment profile to return to a more orthodox split paying one third as an interim dividend and two thirds as a final dividend.
So at the current price that is a forecast yield of nearly 10% for 2016 plus the 2.67p is available until the 6th April (It goes ex on the 7th) Most income seekers would be happy with that.
The week ahead sees reporting at a similar level to the week just past. So far we have seen no evidence of dividend reductions with most companies holding or increasing their dividends in the year to date so far.
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: 22 January 2016
You do not need me to tell you that the UK stock market has had a terrible week when fear took over investors and share prices slumped as a result. The FTSE 100 fell from 5918 to 5640 at the low point on Wednesday; down almost 5% on the week, and that after the previous two weeks of falling prices. Yields are rapidly on the rise and Pearson showed yesterday that the doom brigade who were saying that they must cut their dividend were very much wrong in their assertions. Pearson has a long history of a progressive dividend and by saying yesterday that they would maintain the final dividend at 34p, there will be an overall 2% increase for 2015. The shares rose by over 17% on the day and it is now the leading riser in the model portfolio with a rise since the new year of over 7%. That is why I said last week that I was looking forward to the reporting season. There is so much misery priced into the market that even moderately good or bad news relative to very low expectations results in a sharp increase in the share price. The model portfolio now has four gainers and sixteen losers since the start of the year, so nothing to shout from the rooftops about (yet). The other gainers are Glaxo, Pennon, and Diageo.
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