market

Aviva drags down FTSE on dividend disappointment


Aviva said it would move from a dividend policy targeting a payout of half its earnings per share to a ‘progressive’ policy it said would likely result in more modest rises.

The insurer said the change would give new chief executive Maurice Tulloch ‘greater flexibility to implement his strategic agenda while protecting the current dividend per share for our existing shareholders’.

Aviva announced a final dividend of 20.75p per share, taking the 2018  payout to 30p, up from 27.4p the previous year.

‘Management admitted that some of the challenges were of their own creation such as the farce over their preference shares last March,’ said Helal Miah, investment research analyst at The Share Centre. ‘They also encountered difficulties over the new migration of their financial adviser platform to a new supplier affecting service standards.’

The FTSE 100 was also dragged down by a number of stocks trading without entitlement to their latest dividend. 

Rio Tinto (RIO) tumbled 321p, or 7.2%, to £41.57, with the entirety of that fall explained by trading without entitlement to the $4.23 (322p) upcoming bumper special and final dividends.

The FTSE 100 has been pulled down as many stocks traded without entitlement to their next dividend, while insurers Aviva (AV) and Admiral (ADM) fell on disappointing earnings.

BHP Group (BHP) and Evraz (EVR) were also trading ex-dividend, falling 2.7% to £17.31 and 4.9% to 580.2p respectively. Housebuilder Persimmon (PSN) also traded ex-dividend, with the shares falling 5.9% to £22.90.

 

Admiral shares also dipped 4.3% to £20.96, with better-than-expected earnings for 2018 down mainly to Ogden rates, used to work out personal injury claims.

Schroders’ (SDR) earnings also disappointed, with shares in the asset manager down 4.2% at £26.41.

Melrose (MRO) shares advanced 3% to 185.3p as the turnaround specialist’s full-year adjusted pre-tax profit nearly tripled, helped by its takeover of British engineer GKN.

The FTSE 250 stumbled 152 points, or 0.8%, to 19,208 with Greggs (GRG) shares edging down 0.1% to £18.10.

This came despite the fact the high street baker saw sales top £1 billion for the first time, as it continued to ride a boom following the launch of its vegan sausage roll.

Greggs has also been growing its dividends and the value of its stock has nearly doubled since last summer.

‘The vegan sausage roll has the hallmarks of being a fad and its huge publicity success could prompt management to focus on more product innovation to try and repeat this trick,’ said AJ Bell investment director Russ Mould.

‘That could easily backfire if new products aren’t a hit and could also be a distraction to management who should be focused on the day-to-day business.’

The FTSE Small Cap moved down 12 points, or 0.2%, to 5,467, with  Countrywide (CWD) tumbling 14.3% to 9p as losses at the estate agent widened, while Brexit uncertainty weighed on transactions.

Earlier this week it was reported the estate agent had been fined a record sum for failing to carry out proper money-laundering checks. 

Despite a revamp of its management team, an attempt at emulating online property company Purplebricks and an emergency fundraise, Countrywide’s efforts at a turnaround do not seem to have gained traction.

A third profit warning in less than six months halved the value of shares of Alternative Investment Market-listed clothing retailer Quiz (QUIZ), now at 15p.

Heavy discounting on its stock has hit margins, with broader economic headwinds also cited as having an effect.

Online revenues increased by 16.2% in the first two months of the year but this was offset by an 11.1% decrease in revenue from its UK standalone stores. Full-year earnings guidance was slashed from £8.2 million to £4.5 million.

Neil Wilson, chief market analyst at Markets.com, pointed out that as expected revenues for 2019 had only been downgraded from £133 million to £129 million ‘highlighted the extent to which this is more a margin problem than a sales one’.

The pound weakened against the euro and dollar, down to $1.315 versus the US currency. 



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.