Dividends have lesser volatility as compared to earnings. Therefore, long term investors with less risk appetite prefer these stocks for regular income or reinvest dividend for cumulative growth. Here are insights about two dividend stocks for a longer time horizon.
Switzerland-based Ferguson Plc (FERG) is a holding company, which provide the distribution of heating and plumbing products. The group is a specialist distributor and has served more than one million clients who are aided by the group's 35,000 associates. With 19 distribution centres and 2,280 branches spread over three areas, the company intends to bridge the gap between the geographically scattered customers and the large supplier base.
A final dividend of 145.1 cents per share was declared recently by the group. Shareholders will be paid the dividend on 28th November 2019. The ex-dividend date is on 24th October 2019.
FERG-Financial highlights for FY19
The company delivered a robust trading result for the financial year 2019. The United Kingdom, heating and plumbing markets were flat, while in Canada, the residential markets stayed tough. In FY19, the company’s statutory revenue increased by 6.1 per cent to $22,010 million as compared with the financial year 2018 of $20,752 million. Statutory profit before tax, after exceptional changes, increased to $1,324 million against $1,187 million in FY18. In FY19, the statutory profit attributable to shareholders reduced to $1,108 million against the $1,267 million in FY18. Statutory basic earnings per share stood at 481.3 cents.
On an alternative performance measures basis, the ongoing revenue stood at $21,771 million, up by 4.4 per cent on an organic basis and 7.9 per cent ahead at constant exchange rates. The ongoing trading profit stood at $1,601 million, up by 7.5 per cent from the previous year at constant exchange rates. Headline earnings per share increased by 16.4 per cent to 517.4 cents as compared to 444.4 cents in FY18. Net Debt to adjusted EBITDA stood at 0.7x in the financial year 2019.
The company recommended a final dividend of 145.1 cents per share which makes the total dividend of 208.2 cents per share, an increase of 10 per cent from the last year.
The company has shown decent financial performance in the financial year 2019. The company’s revenue from its US and Canada business has increased, but its revenue from the UK business has declined. The company operates in several locations and any shift in the political and economic policy can hinder the group’s operating performance. In the upcoming year, the group’s Board expects to make additional good progress. The business is well-positioned with decent order book strength. The company stay focused on maximising the gross margin expansion, strong cash generation, organic revenue growth rate, and tight cost control.
FERG-Share price performance
On 24th October 2019, while writing at 10:55 AM GMT, Ferguson Plc shares were clocking a current market price of GBX 6,392 per share; which was less by 1.72 per cent in comparison to the last traded price of the previous day. The company’s market capitalisation was at £14.74 billion at the time of writing.
On 23rd October 2019, the shares of FERG have touched a new peak of GBX 6,536.00 and reached the lowest price level of GBX 4,594.00 on 26th March 2019 in the last 52 weeks. The company’s shares were trading at 2.20 per cent lower from the 52-week high price mark and 39.13 per cent higher than the 52-week low price mark at the current trading level as can be seen in the price chart.
The stock’s traded volume was hovering around 100,826 at the time of writing before the market close. The company’s 5-day stock's average daily traded volume was 481,583.40; 30 days average traded volume- 576,892.77 and 90 days average traded volume – 545,183.64. The volatility of the company’s stock was 17 per cent lesser as compared with the index taken as the benchmark, as the beta of the company’s stock was recorded at 0.83.
The shares of the company have delivered a positive return of 8.18 per cent in the last quarter. The company’s stock surged by 29.64 per cent from start of the year to till date. The company’s stock has given investors 22.44 per cent of positive return in the last year.
The company has been consistent in paying dividends to investors in the recent years, the company’s highest dividend yield has been of 3.59 per cent (FY08).
ITV PLC (ITV) is a London, the United Kingdom-headquartered integrated producer broadcaster (IPB). The group creates, owns and distributes high-quality content on multiple platforms globally, and owns 13 of the regional licenses and sells advertising on behalf of all licences, making it the largest family of commercial channels in the UK. The company's operations are differentiated in two segments: Broadcast & Online and ITV Studios.
An interim dividend of 2.6 pence per share was declared recently by the group. Shareholders will be paid the dividend on 02nd December 2019. The ex-dividend date is 24th October 2019.
ITV-Financial highlights for H1 FY19
In H1 FY19, the company’s total revenue reduced by 5 per cent to £1,749 million as compared with the corresponding period of the last year, due to a decrease in total advertising revenue of 5 per cent and total non-advertising revenue of 6 per cent. Total external revenue decreased by 7 per cent to £1,476 million against the £1,593 million in H1 FY18. Adjusted EBITA was down by 13 per cent to £327 million as compared with the same period in 2018. Group adjusted EBITA margin reduced to 22 per cent against the 24 per cent in H1 FY18, while statutory EBITA decreased by 16 per cent to £310 million in H1 FY19. Diluted adjusted EPS stood at 6.2 pence, a decrease of 13 per cent against the 7.1 pence in H1 FY18. Interim dividend per share was 2.6 pence and remained flat against the previous year same period. On 30th June 2019, net debt declined by £48 million to £1,082 million against the £1,034 million.
The company remains in line to deliver full-year 2019 revenue guidance and the targeted revenue by the year 2021 of £100 million. While the performance in the financial year 2019 is expected to be impacted by the ongoing political and economic uncertainties and its impact on the demand for advertising, over the year, the group expects to deliver decent organic revenue growth in ITV Studios and double-digit growth in online revenue.
ITV-Share price performance
On 24th October 2019, while writing at 11:00 AM GMT, ITV PLC shares were clocking a current market price of GBX 135.60 per share; which was less by 1.52 per cent in comparison to the last traded price of the previous day. The company’s market capitalisation was at £5.52 billion at the time of writing.
On 14th Nov 2018, the shares of ITV have touched a new peak of GBX 161.30 and reached the lowest price level of GBX 102.65 on 26th June 2019 in the last 52 weeks. The company’s shares were trading at 15.93 per cent lower from the 52-week high price mark and 32.09 per cent higher the 52-week low price mark at the current trading level as can be seen in the price chart.
The stock’s traded volume was hovering around 2,050,714 at the time of writing before the market close. The company’s 5-day stock's average daily traded volume was 15,552,232.20; 30 days average traded volume- 13,285,391.73 and 90 days average traded volume – 12,121,130.28. The volatility of the company’s stock was 5 per cent higher as compared with the index taken as the benchmark, as the beta of the company’s stock was recorded at 1.05.
The shares of the company have delivered a positive return of 29.60 per cent in the last quarter. The company’s stock surged by 10.29 per cent from the start of the year to till date. The company’s stock has given investors 10.15 per cent of a negative return in the last year.
The company has recently been consistent in paying dividends to investors, the company’s highest dividend yield has been of 6.41 per cent (FY18).
Comparative chart of FERG and ITV
(Source: Thomson Reuters)
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