Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
The company has stated numerous times that they intend to increase the dividend at 3-6% for the next few years. They just increased the interim by 5%... yet here we have analysts predicting a 9% and 13% FY increase?! Do they just look at the front cover of the results or something?
Because the £50m buyback completed thus far should only have a 1.25% impact on a company with a market cap of £4,000m which is small enough to get lost in the day-to-day price fluctuations. The reason for the buyback is that management believes it's getting a good deal on the purchases for the remaining shareholders. By the end of the current £100m buyback scheme, there will be about 2.5% fewer DLG shareholders than before, this means management could increase the dividend by 2.5% and it would cost the same total amount as the previous year. Essentially the remaining shareholders get a bigger cut of the same pie which should eventually reflect in the share price but this usually requires sizable buybacks conducted over multiple years - see Next PLC for a good example of this. ATB
Matt, I'm not the poster in question but there's some useful info on page 188 of the 2020 annual report on their sensitivity analysis. For example, a 100bps increase in interest rates has a positive £438m impact on pre-tax profit whereas a 50bps increase in inflation expectations has a negative £148m impact. There are other figures on that page that are worth looking into as well. It remains to be seen what central banks will do with interest rates and where inflation will go, I just hope the positives counter the negatives and LGEN can come out ahead. Looking good here for a top-up if we can get to 250p (7% yield). ATB
I'm very pleased this is falling along with the rest of the UK market, I've got some chunky dividends being paid by LGEN and DLG over the next couple of weeks and didn't fancy paying £3+ to re-invest here. Another few days of falls like this and they'll be plenty of bargains to choose from! ??
It's smaller interim dividends for the next two quarters. 20.85p was last year's payment so it'll be that plus whatever amount IMB decide to increase it by, personally I'd be happy with a 2-3% increase given the yield. See: imperialbrandsplc.com/investors/shareholder-centre/dividends-history
Slodo, that should be £70m as the initial buyback was for £100m. If the share price stays around the £3 level we could be looking at a 2-3% reduction in shares outstanding meaning the dividend could be raised by that amount without costing any money. I'm currently on a rebased yield here of 8%+ so even small 2-3% increases do me just fine. ATB
You both should check out page 35 from the FY 2020 Results presentation as it breaks down how the figure is calculated. It's all about how much of their profit is from the current year vs. prior year reserve releases. They state in the presentation they are targeting a 50/50 split for 2021 so the part about being on "track for current-year operating profit to be more than half total operating profit" seems to me to re-affirm that this target is likely to be met. ATB
Not sure I follow the logic of why it's bad for long-term shareholders that the company is buying back shares into a falling price? The cheaper the price the more shares the £100m will cancel out. Personally, I'm glad it's been falling and hope it continues to drop all the way to the 20th of May when I can re-invest the recent div. Having said that, the trading update on 5th May may provide a bounce for those so inclined... GLA
Yes, the dividend gets posted to you, so to speak, as soon as the market opens on the ex-dividend date (Thurs 15th April). You could then sell the shares Thurs morning @ 8am or Friday and still receive the dividend.
I never said you should be pleased with anything, I'm underwater here myself. My first purchase was when it dropped through the £30 barrier, I have since averaged down and re-invested the dividends to give me a rebased cost price of around £19. That's just over a 7% div yield that has been paid without fail during a period of significant turmoil - a lot of companies knocked the dividend on the head completely! These funds have proved very useful in giving me cashflow to see my household through these difficult times as well as purchase other securities that have taken more of a beating. I guess we want different things from our investments but for me, my tobacco holdings did what they said on the tin. Tom
Baxter, I think there are other UK high yield stocks worthy of consideration too. You could take a look at BATS (8.16% div yield, recently hiked by 2.5%), Legal and General (6.66% div yield, recently committed to 3-6% annual div growth to 2024), Direct Line (6.94% div yield with chance of supplemental specials or buybacks), Chesnara (7.56% div yield, possibility of 2-3% increases). There are others as well but my point being is that for a small reduction in yield, you can split your eggs among more baskets. Sorry to hear the lockdown impacted you harshly. Good luck
Never quite understood why people complain about a share they like getting cheaper, especially when the return for companies like Imperial is via dividends rather than capital gains. When my div clears next month I'd prefer the price to be closer to £10 than to £20. If you look to the market to tell you what's something is worth you are in for a bumpy ride... the central banks will see to that. ATB
If that trend continues one of us will eventually be able to buy the entire company for a quid. The last 5 years have been really poor for all tobacco and value stocks generally. If you bought this 5 years ago you got more debt, a 4-5% div yield and a higher payout ratio. Now you are getting a yield of over 9%, lower payout ratio, less debt and surplus cash to reduce leverage quite rapidly. You also have a bloke in charge that seems to have somewhat of a plan, which is a welcome change around these parts. I think the chances of a good outcome are higher now than they were in 2016, however I could be proven wrong. Time will tell.
Just to get back to fundamentals here. What are peoples views on options regulation going forward in the US? Retail investors have managed to blow a hole in various hedge funds using them - will they still have this ability when the dust settles? The timing on IG buying a company that enables new traders to "learn how to trade options" may not have been ideal in hindsight.