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Highlights
- Engine and carmaker Rolls Royce Holdings PLC recently reported a return to profits in its H1 2021 results after it suffered major losses in 2020 due to pandemic concerns.
- It reported an underlying operating profit of £307 million in H1 2021, compared to a loss of £1.63 billion in H1 2020 due to cost cutting measures, strong performance in its defence business and other factors.
- Rolls Royce may resume making dividend payments once the aviation sector bounces back.
As several companies have reinstated divided disbursements following an improving macro-economic scenario, investors are increasingly eyeing their regular dividends paying stocks to resume dividend payments.
However, companies that are part of the most affected sectors may resume making dividend payouts once it starts recovery.
In this article, we take a closer look at UK based aerospace engine maker and luxury car manufacturer Rolls Royce Holdings PLC (LON: RR), which is a constituent of blue-chip index FTSE 100 and its dividend scenario after it returned to profits in H1 2021. It had suffered major losses in the previous year due to the pandemic.
Rolls Royce’s (LON: RR) share price performance
Rolls Royce shares last traded at GBX 110.88 on 7 September, when the FTSE 100 index, which it is a part of, closed at 7,149.37.
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Rolls Royce’s current market cap stands at £9,277.99 million, and its one-year return to the shareholders is 43.28 per cent as of 7 September 2021.
Has Rolls Royce made any dividend announcement?
The engine maker reported its H1 2021 interim results recently. It returned to profit in the first half of FY 2021, reporting an underlying operating profit of £307 million, compared to a loss of £1.63 billion in H1 2020.
The reversal was attributed to cost cutting measures, strong performance in its defence business and recovery of order intake in its power systems division.
The company has not reported a dividend payout since its last dividend payment of 4.6 pence per share on 6 January 2020 due to the aviation sector being severely affected during the pandemic.
Rolls Royce did not make any dividend disbursements in H1 2021, however, the company reported receiving £14 million of dividends from its various joint ventures and associates in H1 2021, compared to £28 million in H1 2020.
Bottom Line
As the aviation sector slowly recovers, Rolls Royce may be able to continue its positive momentum. However, if the UK heads for another lockdown, it could be a setback to the improvements the company had made in H1 2021.
Stocks such as Rolls Royce may resume making dividend payments as the aviation sector recovers.
