Firstly, ITV (ITV) has recently released results. The good news is that it has raised the full-year dividend from 7.8p for 2017 to 8p for 2019. It is a small rise, but a rise nonetheless. The other good news is that the shares were struggling around 130p ahead of the numbers and rallied to 136p – so someone thinks that the market had under-expected. I note also that Liberum set a target price of 240p – a whopping 76% above the current mark which either shows they are complete geniuses or utter fools. Obviously I think it is the former…. Viewing was up 3%, online was up 32% but advertising struggled in a weaker environment. In terms of financials, revenues came in 2.6% up, operating profit was up 8.1%, pre-tax profit was up 13.4% and basic earnings per share were up 14.7%, although the statement of comprehensive income showed a 15.8% decline. That all seems healthy enough, but I note that ITV should have done well given the football world cup. The downbeat note about advertising is a bit of a worry, but that is the world in which ITV lives. Importantly (for me) those profits were turned into cold hard cash to the tune of 88% and net debt – for a company with a current market cap of £5.5 billion, remained happily low at £0.93 billion. The rise in the dividend to 8p seems well covered enough with earnings per share of 11.7p although a bit more leeway would be nice. But the board was confident to offer a small increase, which is good news. It will be interesting to see how online viewing continues to grow and ITV generates income from it, and the launch this week of Britbox will be worth noting even if some have already dismissed it. My overall view is that not much has changed on the surface: ITV is still generating cash from viewers and making tv shows. If Carolyn McCall can capitalise on other areas then so much the better. And that dividend is now sitting at 5.9%, which is fairly attractive.
Shares in BT (BT.A) had a bad week last week and closed down at 214p. It seems that the high dividend yield is again being questioned and apparently a change of accounting standards transfers more debt onto the balance sheet at a formal level – even though nothing has actually changed in the business. Well, with a new-ish chairman and a new CEO I guess if the divi is going to be chopped the time is about now. But I am more inclined to think that a sense of continuity will prevail and the divi will simply be held at least until we get an inkling of what the new CEO intends to change. I’m hanging in.
Likewise Centrica (CNA) which, for all the worries over its dividend, still seems intent on maintaining it. Centrica is in a sector under great pressure and has had a few problems of its own to deal with. The impression I get is that this looks to be a low point and eventually things will get easier. If the dividend is being met now (even if only just) then as things get better the payout will be seen as affordable again. And to underline the point, the results (on 21 Feb) may not have been to everybody’s liking but the dividend was held again at 12p for the year.
Finally Vodafone (VOD), which is still in the doldrums. It may have overpaid for 5G licences but tak of selling off the masts and now deals to share networks looks sensible. I wish I had kept my powder dry, but I wonder whether Vodafone might be through the worst. As for another stock, I am very tempted by an old favourite of mine, Centamin (CEY). It is a gold miner in Egypt and recent numbers did not impress but it is paying a good dividend and I fancy that gold producers are going to prosper. More on that one anon.
Filed under: ITV, BT, Centrica, Vodafone, FFI Holdings, Ted Baker, caption contest, Abcam, gold, Woodlarks
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