FTSE350 companies results and dividend updates
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Several companies have released annual and quarterly results, dividends, etc, including:
Royal Dutch Shell
Royal Dutch Shell announced the sterling conversion of their first quarter US dollar dividend of 43¢. This will be 27.92p payable on 21 June, having already gone xd on 09 May.
In dollars, the increase on last year’s first quarter of 42¢ is a rather paltry 1¢ for a rise of only 2.4%, i.e. well below inflation. However, as UK shareholder receiving RDSB shares in pounds the increase here is a far healthier 8.6%.
While this is ‘great’....that due to the weakness of the pound against the dollar the dividend has "increased" well above inflation rate, this is an inherently dangerous situation for dividend investors, as currencies can, and do, operate against the pound at times.
Severn Trent, the water utility share, released annual results to 31 March. While the final dividend is 42.06p they have decided to pay a special dividend of 63.00p. The combined figure of 105.06p goes ex dividend on 20 June followed by payment on 27 July.
This makes a total for the financial year of normal dividends of 70.10p, up 7.7% on last year’s 65.09p and in line with their RPI+3% growth commitment through to the end of the current regulatory period in 2015.
Adding in the special dividend, the year’s total dividend is 133.10p, showing a massive 104.5% up on 2011. Don’t assume that these will become ‘recurring’.
In contrast, underlying earnings per share was down about 16% and gearing rose from 352% to a massive 408%. Given this debt situation, it is rather strange that they are paying a special dividend as its cost will undoubtedly increase debt even more.
The forecast 2012/13 dividend is approximately 75.7p, as per their stated dividend - RPI+3% - growth promise.
De La Rue
De La Rue, the security printer, published annual figures to 31 March. The final dividend will be 28.2p going ex-dividend on 4th July and payable on 2 August. This makes a total for the year of 42.3p, unchanged on last year and in fact unchanged on the year before. Not one for the dividend growth part of your portfolio. Unless they start printing millions of Drachmas.
First Group, the rail and bus operator, announced annual figures to 31 March. The final dividend will be 16.05p going ex-dividend on 11th July and payable on 17th August. This makes a total for the year of 23.67p, up an inflation beating 7% on last year’s 22.12p. This rate of increase is in line with First’s present policy on dividend growth, going through to 2012/13.
Gearing rose a little to 214% from 209%. These are the kind of debt levels are seen typically in utilities. While rail and bus services can be regarded as a very similar kind of business in providing essential services that are subject to a lot of government control but also winning franchises. In my book this adds substantial risk to these types of companies.
Looking ahead, First Group’s dividend forecast for 2013 is around 25p giving a rather high forward yield, indicating to me that the market does not trust it to sustain this level of dividend. It could be that after 2013 it cuts the dividend payout if its business activities does not improve or it loses one of its franchises (it is bidding for).
United Utilities, released its annual accounts to 31 March. The final dividend will be 21.34p going ex-dividend on 20th June with payment on 3rd August. The year’s total is 32.01p, up 6.7% on last year’s 30.00p. This rise is ahead of inflation as per its stated annual dividend increase policy of RPI+2% for the current regulatory period to 2015.
Underlying earnings per share was virtually unchanged at 35.3p, while net debt was £5,076m resulting in gearing of 288%, very much the same as last year.
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