Centrica Dividends - CNA

Centrica Dividends - CNA

Best deals to access real time data!
Level 2 Basic
Monthly Subscription
for only
Monthly Subscription
for only
UK/US Silver
Monthly Subscription
for only
VAT not included
Stock Name Stock Symbol Market Stock Type Stock ISIN Stock Description
Centrica Plc CNA London Ordinary Share GB00B033F229 ORD 6 14/81P
  Price Change Price Change % Stock Price Low Price High Price Open Price Previous Close Last Trade
0.08 0.2% 40.90 39.90 41.20 40.82 40.82 16:35:24
more quote information »
Industry Sector

Centrica CNA Dividends History

Announcement Date Type Currency Dividend Amount Period Start Period End Ex Date Record Date Payment Date Total Dividend Amount

Top Dividend Posts

ariane: FWIW Https://www.fool.co.uk/investing/2020/06/07/the-centrica-share-price-is-dirt-cheap-heres-what-id-do-now/ The Centrica share price is dirt-cheap: here’s what I’d do now Roland Head | Sunday, 7th June, 2020 The Centrica (LSE: CNA) share price has fallen by 55% this year. Thanks to the stock market crash, this utility stock has now lost 90% of its value since September 2013. This humbling collapse was capped last week when Centrica was demoted from the FTSE 100 to the FTSE 250. There’s clearly some risk that Centrica has become a value trap — a stock that’s cheap for good reason. However, I don’t think this is true. As I’ll explain, I believe Centrica faces temporary problems that can be fixed. After this, I expect it to become a much more valuable business. m to turn today’s market uncertainty to your advantage. Click here to claim your FREE copy now! Market leader Centrica’s main UK business is British Gas. This division supplies gas, electricity and home services, such as boiler maintenance and repairs. There’s also a smaller home solutions business in the UK, which sells connected home products, under brands such as Hive. Centrica’s battered share price makes it easy to forget how dominant British Gas still is. At the end of 2019, this business had 9.2m customers in the UK, each taking an average of two services. This means around one-in-seven of the UK population are British Gas customers. Based on the average UK household size of two people, this suggests it supplies around one quarter of UK households. This puts British Gas on a level with heavyweight consumer brands such as Tesco and Next — companies that everyone knows and many of us use. Why I think the Centrica share price is too cheap Led by British Gas, Centrica’s consumer businesses generated an adjusted operating profit of £505m in 2019. Alongside this, the group’s business division made a profit of £217m. This gives a total operating profit from energy supply and related services of £722m. This gives the group an earnings yield — a measure of profit used by business buyers — of more than 10%. I usually look for an earnings yield of at least 8%, so the Centrica share price looks cheap to me on this measure. Unfortunately, this isn’t the whole story. Centrica has a couple of problems. The first is its upstream division. This includes an oil and gas production business, plus part-ownership of the Hunterston B and Dungeness B nuclear power stations. These operations are up for sale, but this year’s market crash has delayed this process. However, I’m confident a deal will be done eventually. This should allow the group to cut its debt levels and become a consumer business with less exposure to volatile commodity prices. I think that could push Centrica shares much higher. Centrica’s share price of around 40p means the stock currently trades on just nine times 2020 forecast earnings. This figure falls to just 6.4 for 2021. The shares probably deserve to be cheap at the moment, but I don’t expect this to last forever. I think investors should look at home repair specialist Homeserve to see what could be achieved with the British Gas brand. Homeserve only supplies services, not energy. Its profits have doubled in five years and Homeserve shares currently trade on 30 times forecast earnings. In my view, British Gas’ growing services business is well positioned to take a big slice of this market. That’s why I rate Centrica as a bargain buy at current levels. Roland Head owns shares of Centrica.
discodave4: From the FT: couple of interesting points of view- is the 5p div going to be paid (don't know pay date), and mention of a rights issue.Bryce Elder 7 HOURS AGO Print this page6Centrica has given away more in special dividends than its current £1.8bn stock market capitalisation. Payouts that followed a 1999 share consolidation and its 2004 disposal of the AA, the breakdown service, had a total net value about 16 per cent higher than the British Gas owner's market value.Largesse with shareholder returns is a symptom of Centrica's history. An army of small investors - a legacy of the group's 1986 privatisation - has kept dividends mandatory throughout the two decades since its demerger from oil explorer BG Group and Transco, the network company that became National Grid. Two cheques a year proved sufficient to distract from Centrica's misguided forays into upstream oil and gas and smart-home technology, while its core market of residential power supply was descending into a cut-throat price war.Even a pandemic has not forced a permanent change of course. Centrica cancelled its 2019 final dividend of 3.5p a share this month, complaining as it always does about regulatory price caps, but has yet to mention this year's scheduled 5p payout. Believing this cash might arrive demands blind optimism but the share price performance, down more than 60 per cent this year, would suggest optimism is in short supply.This year presented Centrica with a perfect storm. Demand has collapsed, with Jefferies analysts estimating that UK electricity consumption has fallen 15 per cent since the start of the lockdown in late March. Customer bad debts will inevitably tick higher as the recession deepens, yet competition for any account remaining solvent has continued to be fierce, with some customers being paid to use electricity. Regulator Ofgem has sent nagging letters about not disconnecting non-payers but has yet to offer compromises on price controls or sharing the bad debt burden.This harsh environment gives Centrica's new management team, chairman Scott Wheway and chief executive Chris O'Shea, a narrowing choice of options for how to repair its balance sheet. Oil's collapse has already forced Centrica to pause the sale of its majority stake in upstream business Spirit Energy and will probably stymie attempts to dispose of its UK nuclear generation fleet.Central to the problem is Centrica's credit rating, which has to be defended at all costs. A one-notch downgrade would require up to an extra £500m to be sunk into the energy trading business as collateral demands increase, according to Jefferies estimates. While Moody's reaffirmed in March that Centrica's credit rating was staying at two notches above junk, the key criteria of retained cash flow and funds from operations can only have deteriorated since.Centrica has also dropped a commitment to keep net debt below £3.6bn. Net borrowings can be expected to move well in excess of three times earnings before interest, tax, depreciation and amortisation over the next few months, leading investors to speculate that one of the first actions by new management may be a rescue rights issue. A cash call would be Centrica's third since 2008.Yet such concerns might prove overblown. Debt levels are uncomfortable but so long as lenders maintain support the problem does not require an urgent fix. There are no significant debts falling due before 2022 and liquidity looks healthy, with Centrica reporting £600m of unrestricted cash and a £2.7bn undrawn credit line at the end of March. Competitors are highly unlikely to have similar resources.Does that make Centrica a post-crisis recovery play? Possibly.According to Credit Suisse analysts, cancelling dividends would make Centrica's balance sheet robust enough to withstand a deeper recession than in 2009, when bad debts totalled £350m. Working capital will be drained by more than £500m if 10 per cent of customers fail to pay their bills for three months, the analysts forecast, though the effect should ease in tandem with lockdowns.A return to normality by the end of 2021 should move Centrica out of the red zone for a ratings downgrade, Credit Suisse says. By that time the company should have been able either to restart the sale of Spirit or retain the business, which makes sense again in a group context if oil trades above $34 a barrel, the broker says.Centrica's current market value is nearly equal to the £1.7bn it collects each month from customers. For a clear market leader, this is not normal. It is a business that needs a fundamental reset in a sector that needs a regulatory rethink. But at a time when competitors are likely to be suffering deeper stress, new management at least has a fighting chance of effecting a turnround. As a first step, shareholders should help out by letting go of their dividends. 
forwood: Jefferies are bad news bears, seeing the glass more than half empty. The more well regarded analysts do not agree with that assessment. They say the bad news is already on the price, that CNA is well positioned to get through a prolonged lockdown and emerge stronger than others. Their target prices are much higher. Barclays capital........................ overweight CNA target 50 14 Apr Goldman Sachs........................... neutral CNA target 42 14 Apr UBS..................................... buy CNA target 105 3 Apr Investec, one of the top 3 UK analyst brokers overall and also in the top 3 of energy analysts say: Target price falls to 55p, but they consider the damage is already in the share price and maintain a Buy rating. 21 April
forwood: dd spouting complete nonsense as usual "liquidity may be okay for covering debts but still doubt they have enough cash headroom to cover costs". Jefferies not in the list of respected broker analysts. This didn't get much attention when posted earlier so I'll post again. Top 10: JP Morgan Chases and Co Bank of America Merrill Lynch Credit Suisse Barclays capital......................... overweight CNA target 50 14 Apr Citigroup Goldman Sachs............................ neutral CNA target 42 14 Apr Morgan Stanley AllianceBernstein L.P UBS....................................... buy CNA target 105 3 Apr Nomura Holding Inc That is US centric, though of course all operate over here and we see Goldman and Barclays have both rated CNA a lot higher than Jefferies and HSBC. At http://www.analystawards.com/ the Refinitiv Broker & Analyst awards go a little deeper and for the UK as a whole they name Rank....Firm.............No. of Awards 1.......Numis Securities........11 2.......J.P. Morgan Cazenove....10 3.......Investec Securities......8 In the energy sector name the top 3 analysts are named : Rank, Analyst, Firm 1...Alsford, Michael, Citi Research 2...Thompson, James, J.P. Morgan Cazenove 3...Gallagher, Brian, Investec Securities For what its worth, my broker is Investec. They are not allowed to give me equity research from others but are able to paraphrase it. Investec bank view is: "FY20 looks set to be cataclysmic for Centrica's EPS, and they have cut their Div/share estimate to 3p/share, with the previous 5p/share level not reached until FY24E. Target price falls to 55p, but they consider the damage is already in the share price and maintain a Buy rating."
maywillow: Sean Farrell Sharecast News 22 Apr, 2020 13:09 22 Apr, 2020 13:09 Jefferies cuts Centrica rating as headwinds loom British Gas Centrica 30.36 13:10:16 22/04/20 -1.54% -1.00 Centrica faces major headwinds and will not pay a dividend in 2020, Jefferies said as the broker downgraded the struggling energy provider to 'hold' and slashed its price target. FTSE 100 5,724.34 13:10:20 22/04/20 1.48% 83.31 FTSE 350 3,188.03 13:10:20 22/04/20 1.34% 42.27 FTSE All-Share 3,149.24 13:10:19 22/04/20 1.31% 40.80 Demand for energy from businesses will be lower than expected and Centrica's bad debts will be higher because of the Covid-19 lockdown, Jefferies said. It reduced its recommendation on the British Gas owner's shares to 'hold' from 'buy' and cut its share price target to 29p from 50p. Jefferies reduced its estimate for Centrica's earnings per share for the second time since March, cutting another 30% off its forecast for 2020-2022. This brings the broker's total reduction for Centrica earnings to 55% since 11 March with about 70% of the downgrade caused by bad debts and 25% to lower demand. Centrica's liquidity position is healthy but its balance sheet is precariously positioned, Jefferies analyst Ahmed Farman said. The company might be able to preserve its Baa2 credit rating but this looks risky, he said. As a result, no dividend per share (DPS) is expected in 2020 and the 2p payout pencilled in by Jefferies for 2021 looks uncertain, Farman said. To build confidence around a dividend policy Centrica should reduce its balance sheet leverage by between £0.5bn and £1bn – or more in a "dowside scenario", he argued. "Our extensive assessment of Centrica’s historical working capital and bad debt trends suggest that material headwinds are ahead," Farman said "We also expect no DPS payment for FY20. Centrica may hang onto its Baa2 rating for now, but we see limited support for the rating under a more protracted crisis." Centrica is under new management as it faces pressure on its finances from the Covid-19 crisis. The FTSE 100 company cancelled its dividend, cut capital spending and delayed the planned sale of its Spirit Energy business in early April to cushion the impact of rising bad debts and weak demand. With the planned sales of Spirit and UK nuclear power plants looking unlikely, an alternative source of funds would be to sell Centrica's north American energy supply business Farman said.
sarkasm: ISA investors! Should you buy or sell this 5.4% FTSE 100 dividend yield before February? Royston Wild Fool.co.uk24 January 2020 There’s a galaxy of great dividend shares I think you should buy before the beginning of February. Some of these look particularly irresistible at current prices. I wouldn’t consider splashing the cash on Centrica (LSE: CNA) shares any time soon, though. Full-year results are scheduled for February 13 and I fear that a shocking set of trading numbers could be in the offing. I’ve often talked about the rate at which British Gas is haemorrhaging customers. It’s something that the energy giant has failed to get a grip on as tough economic conditions have encouraged more and more households to switch suppliers. Centrica’s customer base shed another 107,000 accounts in the four months to October, its most recent update in late autumn showed. The energy supplier was able to find some crumbs of comfort in that most recent release. It said that the rate of energy supply net losses “was lower than in the first half of the year and significantly lower than in 2018, despite continued high levels of price competition and market switching.” But I’m not convinced that this marks a turning point for Centrica, and latest Energy UK data shows why. According to the trade association, the number of energy switchers in the UK hit another fresh annual record in 2019. This came in at 6.4m and represented a 9% year on year rise. Worryingly for the established suppliers, though, switching activity seems to have accelerated again in the latter part of the year. In December some 519,343 customers changed provider, Energy UK said, up 12% on an annual basis. Double trouble It’s probably no surprise that City analysts are tipping a 38% dip in annual profits at Centrica for 2019. It might not shock you that they’re expecting a BIG reduction in the dividend, too. A 5p per share reward is expected for 2019. Rewards have recently come in at 12p. Those with a glass-half-full approach to life might still be encouraged to invest, however. A rock-bottom forward P/E ratio of 10.1 times is complemented by a gigantic 5.4% dividend yield, after all. Broker consensus suggests that Centrica might finally be about to bounce back too, a 32% earnings rebound predicted for 2020. Too much risk Recent share price action suggests that a lot of optimists have been piling back in. Over the past six weeks Centrica’s share price has leapt 25%. Buying activity was helped by the Tory general election win that vanquished the possibility of nationalisation of utilities firms by a Labour government. That said, I consider recent buying of Centrica shares to be a bit too bold. The business will likely have to engage in some hefty, profits-crushing reductions to stop its customers heading for the exits. And the ‘success’; of the price cap means that further regulatory action could be around the corner (the government estimates that households have shaved £1bn off their bills in 2019). I fully expect Centrica to endure another year of significant profits pressures in 2020. The post ISA investors! Should you buy or sell this 5.4% FTSE 100 dividend yield before February? appeared first on The Motley Fool UK. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
maywillow: Piched from the other thread Https://simplywall.st/news/an-intrinsic-calculation-for-centrica-plc-loncna-suggests-its-50-undervalued/ PT Corticeira Amorim, S.G.P.S., S.A. (ELI:COR) Earns Among The Best Returns In Its Industry GB Do Directors Own 4D pharma plc (LON:DDDD) Shares? GB How Do DCD Media Plc’s (LON:DCD) Returns Compare To Its Industry? GB Does Coats Group plc (LON:COA) Have A Particularly Volatile Share Price? GB How Does Centamin plc (LON:CEY) Fare As A Dividend Stock? LSE:CNA An Intrinsic Calculation For Centrica plc (LON:CNA) Suggests It’s 50% Undervalued Simply Wall St June 28, 2019 Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card! Today we’ll do a simple run through of a valuation method used to estimate the attractiveness of Centrica plc (LON:CNA) as an investment opportunity by taking the foreast future cash flows of the company and discounting them back to today’s value. I will use the Discounted Cash Flow (DCF) model. It may sound complicated, but actually it is quite simple! Remember though, that there are many ways to estimate a company’s value, and a DCF is just one method. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. View our latest analysis for Centrica Is Centrica fairly valued? We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company’s cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren’t available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today’s value: 10-year free cash flow (FCF) estimate 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Levered FCF (£, Millions) £650.82 £739.78 £912.81 £1.06k £812.00 £663.23 £580.62 £532.13 £502.98 £485.54 Growth Rate Estimate Source Analyst x6 Analyst x9 Analyst x8 Analyst x2 Analyst x1 Est @ -18.32% Est @ -12.46% Est @ -8.35% Est @ -5.48% Est @ -3.47% Present Value (£, Millions) Discounted @ 6.55% £610.82 £651.66 £754.67 £824.06 £591.36 £453.34 £372.48 £320.40 £284.24 £257.52 Present Value of 10-year Cash Flow (PVCF)= £5.12b “Est” = FCF growth rate estimated by Simply Wall St After calculating the present value of future cash flows in the intial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 10-year government bond rate of 1.2%. We discount the terminal cash flows to today’s value at a cost of equity of 6.5%. Terminal Value (TV) = FCF2029 × (1 + g) ÷ (r – g) = UK£486m × (1 + 1.2%) ÷ (6.5% – 1.2%) = UK£9.2b Present Value of Terminal Value (PVTV) = TV / (1 + r)10 = £UK£9.2b ÷ ( 1 + 6.5%)10 = £4.90b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is £10.02b. In the final step we divide the equity value by the number of shares outstanding. This results in an intrinsic value estimate of £1.72. Relative to the current share price of £0.86, the company appears quite undervalued at a 50% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula – garbage in, garbage out. LSE:CNA Intrinsic value, June 28th 2019 LSE:CNA Intrinsic value, June 28th 2019 The assumptions The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don’t agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company’s future capital requirements, so it does not give a full picture of a company’s potential performance. Given that we are looking at Centrica as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we’ve used 6.5%, which is based on a levered beta of 0.800. Beta is a measure of a stock’s volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Next Steps: Although the valuation of a company is important, it shouldn’t be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to “what assumptions need to be true for this stock to be under/overvalued?” If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. What is the reason for the share price to differ from the intrinsic value? For Centrica, I’ve compiled three relevant aspects you should further examine: Financial Health: Does CNA have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk. Future Earnings: How does CNA’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Are there other high quality stocks you could be holding instead of CNA? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the LON every day. If you want to find the calculation for other stocks just search here. We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
ariane: PROACTIVEINVESTORS Calum Muirhead 13:08 Thu 19 Sep 2019 Centrica PLC Centrica a “value wildcard”, says Jefferies as it ups to buy The US broker said the shares were trading at a 50% discount to the sector after a torrid 2019 marred by profit warnings and a savage dividend cut Centrica PLC - Centrica PLC “value wildcard”, says Jefferies as it ups to buy British Gas owner Centrica PLC (LON:CNA) is a “value wildcard” with a steep discount to the rest of the sector, according to analysts at Jefferies, who on Thursday upgraded the stock to ‘buy’ from ‘hold’. The US broker, which has the FTSE 100 firm pegged with a 90p target price, said the shares were currently trading at around a 50% discount to the sector after a torrid 2019 that has seen the firm issue a multitude of profit warnings, swing to a net loss in its first half, lose its chief executive Iain Conn and slash its generous full-year dividend by more than half to 5p. READ: Centrica chief executive to depart after slump into losses and dividend cut Unsurprisingly, this has resulted in a sharp plunge in the share price, which has tumbled around 45% since the start of the year. However, analysts said a new strategy presented in July, which will involve the disposal of the group’s Spirit Energy business and its 20% stake in UK nuclear by 2020 alongside spending cuts, would leave its balance sheet “in better shape”, support 3% EBIT margins in Centrica’s UK Home energy business, which includes British Gas and Hive Energy smart monitoring, and leave its dividend “well-underpinned”. As a result, the new strategy, alongside the discounted share price, left Centrica’s stock with an “attractive221; risk-reward profile, Jefferies said, adding that even if it reached their 90p target the group would still trade at a 30% discount to the sector with a dividend yield of 5.6% as opposed to 5% among its peers. The shares began to heat up in early afternoon on Thursday, rising 2.7% to 74.8p.
ariane: 7% yields! Are these FTSE 100 dividend stocks investment traps or the key to retirement riches? Royston Wild | Wednesday, 7th August, 2019 | More on: CNA SSE Happy retired couple on a beach Image source: Getty Images. In days gone by, investment in utilities plays like Centrica (LSE: CNA) and SSE (LSE: SSE) was seen as a safe way to build a brilliant nest egg for retirement. Electricity’s role as an essential commodity in Western societies meant that long-term earnings could always be guaranteed. And this meant that dividends could be relied upon to rise each and every year too. What a difference a few years can make, though. The dominance of the Big Six suppliers in the market has crumbled, amid the emergence of dozens of independent, promotion-led suppliers. And this is continuing to have a disastrous impact on these traditional operators. Data last week showed customer numbers at Centrica’s British Gas division fell by another 178,000 in the six months to June, a result which contributed to it booking an operating loss of £446m for the period. This followed news that energy accounts at FTSE 100 rival SSE dropped another 70,000 in the three months to June. Cap attack The introduction of the price cap in January has proved a particular bugbear for operators. An increase in the level of maximum tariffs worsened customer losses in recent months. And today Ofgem announced fresh changes to the cap in more bad news for Centrica et al. This time around, the regulator’s slashed the cap in a bid to reduce average household bills by around £75 per annum. This might slow the rate at which customers of the Big Six move elsewhere, sure, but clearly it will do little for these suppliers’s profit levels. As the boffins at Warwick Business School have commented: “The way energy companies are expected to compete simply isn’t working. Last year we saw eight energy companies fail and the merger between SSE and nPower fall apart. The collapse of Economy Energy and Brilliant Energy this year has caused more concern and uncertainty for customers and showed 2019 has been no easier for energy companies.” No wonder Centrica’s share price has fallen to fresh 22-year lows below 70p today. Big dividends Glass-half-full investors are hoping that the planned departure of chief executive Ian Conn in 2020 will signal an end to Centrica’s dismal run. A new chief with new ideas might plug some of the holes, I agree. But it’s hard to see how another exec might stop the boat from continuing to sink. The introduction of the price cap; new steps to make the switching process easier; the emergence of a flood of cheaper suppliers; and a shocking fall in wholesale energy prices. These are all problems which Conn’s replacement, like the man they will displace, will have to face down. And judging by the collective failure of the Big Six to deal with these issues, well, the omens certainly aren’t great. Centrica cut the dividend again last week on its murky profits outlook, and in my opinion it’s unlikely to prove the last time it will do so. So forget about its 7.2% forward yield, I say. And give SSE’s corresponding dividend yield of 7.4% a miss too. I think these utilities should be avoided at all costs. The Motley Fool UK
la forge: CHEERS WHATUPS Is the Centrica share price heading for 110p again? [Fool.co.uk] Alan Oscroft Fool.co.uk2 July 2019 Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office. Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office. Centrica (LSE: CNA) has been regularly popping up in my stock filters these days, making me wonder if it’s finally time to buy. Shares in the owner of British Gas have recently fallen to a 21-year low, but can they really keep on sliding? What do I mean by stock filters? I regularly run a scan of the FTSE 100, checking on various fundamental measures. I look for stuff like low P/E, high dividends, good dividend cover, low PEG, all kinds of things. And, increasingly, Centrica makes the cut. Looking for undervalued dividend stocks, the other day I narrowed the FTSE 100 down to those with a dividend yield of 5% or more, cover by earnings of at least 1.3 times, and a P/E that’s no higher than 14. And Centrica made the cut. Earnings rebound? Earnings at Centrica are expected to fall again this year, but analysts have EPS starting to climb again in 2020. That would put the stock on a forward P/E of around 11 for the current year, dropping as low as 8.5, based on next year’s forecasts. There’s a dividend cut on the cards for this year too, after the firm had maintained its 12p per year for four years in a row while earnings were falling. And as an aside, that’s something I don’t like to see — companies that stubbornly keep their dividends going until it’s almost too late. Sadly, it’s a very common thing. But I’d much rather see dividends paid more variably as, and when, the cash is there to cover them reliably. Anyway, even with forecasts suggesting the payout will be slashed to around 7.8p this year, and then nudged down to 7.5p next, that would still provide yields of 8.7% and 8.3% for the two years, respectively. Dividend cover Cover by earnings wouldn’t be great. But we’d be seeing 1.33 times by 2020, if these predictions are close to the truth, and that wouldn’t be too bad in the energy sector where dividends are generally only modestly covered. This isn’t a picture of a company bouncing with health I’m painting here. But, at the same time, it looks like it could be passing the bottom of its poor spell. I can’t help feeling there’s more pessimism in the share price than is justified. Let’s imagine a 25% upside and a share price rising to 112p. That would bring those P/E predictions to undemanding levels of 14 and 11 for the two years, respectively, and the dividend yields would drop to 7% and 6.7%. That would still represent a very desirable income level. Trading In its most recent trading update in May, Centrica told us things remain tough, but that it’s still on track for its cash flow and net debt guidance, with £250m of efficiency savings and £500m of non-core divestments expected by the end of the year. Net debt should still be around £3bn-£3.5bn, and I see that as the biggest risk right now. Interim results are due on 30 July, and debt will be the first thing I’m looking for. Would I buy Centrica shares? No, because of my cautious investing approach, and because these days I won’t buy recovery stocks until I’ve seen them recover. But for a bolder contrarian investor, I reckon Centrica could be worth a close look now.
ADVFN Advertorial
Your Recent History
Register now to watch these stocks streaming on the ADVFN Monitor.

Monitor lets you view up to 110 of your favourite stocks at once and is completely free to use.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20200716 17:38:05