Dividend selection, ex date – 20/3/13

18 Mar

1. Law Debenture Group, financial services company, looks like a solid prospect – the final dividend, given shareholder approval on 10 April 2013, is 9.75p – up from 9p for the previous year, bringing the total dividend for 2012 to 14.25p. The trust, whose portfolio of investments are managed by Henderson Global Investors Ltd, does not market its share ostentatiously; but it makes special mention receipt of the judges’ ‘highly commended’ accolade in the Global Growth category at Investment Week’s ‘Investment Trust of the Year’ Awards, 2011.

2. Anglo American has its sights firmly on future growth, with a dividend reinvestment plan in new shares available in place of 2012’s interim dividend of 20.2740p (2011: 17.1665p). The 15% increase in the interim dividend smacks a little of an attempt to bribe shareholders into overlooking its $4bn write-off for the Minas-Rio iron ore project in Brazil. Striking platinum miners in South Africa resulted in negative publicity when the government fired on workers, and $600m impairment charges. Still, its annual report cites an underlying operating profit of $6.2bn, and underlying earnings of $2.8bn. Could the acquisition of a 40% interest in world no.1 diamond company de Beers be the new jewel in its crown, that returns the group to profitability?

Anglo-American CEO Sir John Parker said:

“The three major projects we commissioned in 2011 – Barro
Alto nickel, Los Bronces copper expansion and Kolomela iron
ore – have all been ramping up. At Minas-Rio, however, the
inevitable knock-on effect of permitting and other delays have
resulted in the project’s capital expenditure rising to an
expected $8.8 billion, if a Group-held risk contingency of
$600 million is consumed, with the first iron ore shipment due
by the end of 2014.”
However, he asserted his confidence that the published resource base of 500m tonnes (four times that recorded on acquisition) would make Minas-Rio a profitable venture.
3. The London Finance and Investment Group revised its forecast for earnings per share upward to 4.4p (compared to 3.6p for the first half of 2011), after it reported in February its net assets were up 13%. Shares are trading at around 23.5 (down 2.04%). Over the preceding year, share prices have shown a fair degree of volatility, ranging from 18 to 24.50p. Its beta value, reports Institutional Investor, is 0.34
4. Isis Property Trust is cementing moderate returns with a dividend of 4p. A panoramic view of a 54-week change in share prices shows a fall of 7.75 (8.54%), perhaps due to sensitivity to national macroeconomic trends – it has a high correlation with the FTSE index. Bid price is 83, ask is 85, so the current price is 84.
Following a recent merger between IPT Property Trust Ltd and IRP Property Investments Ltd, both Boards “have been reviewing their current dividend policies as each company has, since launch, followed a policy of paying out dividends which are not fully covered by net rental income.  Following consultation with larger shareholders, it is proposed that F&C Real Estate’s dividend will be set at a sustainable level which is expected to be fully covered by net rental income when the company is fully invested,” by around 30% for IRP and 20% for IPT.
5. Ladbrokes continues its steady and dogged rate of shareholder renumeration. Its proposed dividend is 4.60p, compared to the 2012 rate of 4.30p. Traders should note that it is not worth holding out on the final dividend, because Ladbrokes pays the same if note more for the interim figure. Its annual report states assets under management are around £18bn, on which revenue totalled £1bn. After accounting for expenses, it brought home EBITDA of £287m.
7. One to watch, and possibly avoid, is Haynes Publishing. Its operating profit for financial year 2012 fell to £5.1m, from £7.7m in 2011. Worse, group pre-tax profit fell to £4.7m from £7.2m in 2011. It could be difficult for a relatively small firm to absorb or write off that degree of loss. Interim dividend reflected this trend, falling from its 2011 level of 6.2p to 3.5p. Its shares are trading with a high volatility of 3.576% average, and the price fell today 3p (1.73%).
The dividend as it stands is the result of a larger dividend payout the company managed to avoid through a share buyback, which Haynes explains in its report to investors:

Due to

the timing of the purchase, the
Company was able to save the
interim dividend that would have been due on the
1.24 million shares and with the historically low
interest rates this provided the Company with a
higher return than it could have achieved on the
money held in the bank and is therefore, earnings

enhancing to the benefit of all our shareholders.”

Haynes Publishing describes itself as a market leader in the production and sales of automotive and motorcycle repair manuals, as well as a range of other DIY titles, and books on motor sport and leisure vehicles.

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