"Investments in UK funds recently saw a first monthly inflow, after 41 consecutive monthly outflows"
Phew!
Thought we might have done two seasons without an inflow. |
Anyone wanting to find yield amongst a spread of blue chips might find the 11% discount and enhanced yield here enticing:
Henderson High Income Investment Trust (HHI) - yield 6.5% at 164p.
Top Holdings
(31.12.2024)
Rank Largest holdings %
1 British American Tobacco 4.80
2 HSBC 3.40
3 Imperial Brands 3.20
4 Rio Tinto 2.90
5 Unilever 2.90
6 RELX 2.70
7 Shell 2.60
8 3i Group 2.20
9 NatWest Group 2.20
10 BP 2.20 |
 Which Stocks Will Be Europe’s Dividend Stars in 2025?
Stellantis, Nordea Bank, and Orange are some of the stocks with the highest dividend yields at the start of 2025.
Christopher Johnson
17 January, 2025 | 2:35PM
Christopher Johnson: Last week, we identified which UK stocks could be 2025 dividend stocks.
But are there standout dividend payers in Europe too?
Looking at Morningstar data, we found the top three undervalued and high yielding European dividend payers.
Italian American car manufacturer Stellantis has a dividend yield of 12.81% and paid an annual dividend of €1.55.
CJ: The company is currently trading at €12.33, below Morningstar’s fair value estimate of €18.90. After a nearly 40% fall in the share price over one year, this explains the move in a dividend yield above 10%. Stellantis owns brands ranging from Chrysler to Fiat, and was the UK’s bestselling electric van manufacturer in 2024. However, in November of last year, the company announced it could close its Luton van plants in April.
Now the bank comes in second place. The leading Nordic bank has an 8.3% dividend yield. Nordic Bank is currently trading at around 128.15 Swedish krona, below Morningstar’s fair value estimate of 152 Swedish krona. Morningstar analysts are bullish on Nordea because the bank’s management has successfully addressed the declining income and slowing profitability it faced in recent years. Nordea is now tapping into investments in private banking in Norway and Sweden, and by regaining momentum on mortgages.
CJ: French telecommunications giant Orange has an annual dividend yield of 7.27% and pays an annual dividend of 0.72 cents.
Orange is currently trading at €10.08, marginally below Morningstar’s fair value estimate of almost €13.40.
Morningstar analysts back the company because it is a leading telecommunication provider in France.
They say it owns the best mobile and fixed line networks and enjoys long standing relationships with the French government.
Orange also has a growing footprint in Africa, an advantage that puts it ahead of its European competitors.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies. |
Added Dunelm (DNLM) to my watch list, apparently on a yield around 9% (part special each year). Update shows slightly lower revenue growth but margin improvement so still seemingly trading in line. |
Good article Waldron but a shame it doesn’t cover anything on demand. |
Oil Majors Borrow Billions for Buybacks as Production Wanes
By Alex Kimani - Jan 21, 2025, 7:00 PM CST
US oil drilling activity has dropped to near post-pandemic lows due to low oil prices and cost inflation, with the rig count falling for over two years.
Oil companies are prioritizing shareholder returns through dividends and buybacks, even resorting to borrowing to fund them, rather than investing in new drilling.
Structural changes in the US shale industry, including a focus on efficiency gains and consolidation, are making it difficult to rapidly increase production even with deregulation efforts.
Oil Rig
Oil prices fell for the second consecutive day on Tuesday, with market experts attributing the decline to the bearish nature of President Trump’s “Drill, Baby, Drill” agenda on oil prices. True to word, Trump signed an executive order on Monday repealing former President efforts to block oil drilling in the Arctic and along large areas off the U.S. coasts. Trump also repealed a 2023 memo that barred oil drilling in some 16 million acres (6.5 million hectares) in the Arctic. However, it’s going to take a lot more to lure oil executives to ramp up oil production.
The latest Baker Hughes survey has revealed that U.S. oil drilling has declined dramatically to just one rig above its post-pandemic lows. Active oil drilling rigs fell by two w/w to 478 in the latest survey, leaving activity just one rig above its post-pandemic low; 149 rigs below November 2002’s post-pandemic high and 73 rigs lower than at the time of President Trump’s 2017 inauguration.
The rig count has been in a downwards trend for over two years, with companies’ strategies remaining relatively conservative and productivity gains allowing output growth with fewer active rigs. Commodity experts at Standard Chartered have predicted that drilling will remain subdued in 2025, primarily because oil prices remain too low in real terms to justify expansion during a period of significant cost inflation.
Falling profits are likely to override oil companies’ attempts to rapidly ramp up U.S. oil output. Two years ago, the Biden administration urged U.S. companies to increase production in a bid to bring down fuel prices. Back then, oil prices were hovering around $100 per barrel and oil companies were raking in record profits. However, last year witnessed a sharp slowdown in non-OPEC+ supply growth from 2.46 mb/d in 2023 to 0.79 mb/d in 2024, primarily caused by a reduction in U.S. total liquids growth from 1.605 mb/d in 2023 to 734 kb/d in 2024, with low oil prices disincentivizing more drilling. StanChart expects this trend to continue, with U.S. liquids growth expected to clock in at just 367 kb/d in 2025 before slowing down further to 151 kb/d in 2026.
Over the past five years, oil and gas companies have been returning a bigger chunk of their profits to shareholders in the form of dividends and share buybacks. With oil prices declining over the past two years, these companies have resorted to borrowing more to keep their shareholders happy. Indeed, Bloomberg reported in late October that four of the world’s five oil “supermajors” saw fit to borrow $15 billion to fund share buybacks between July and September. According to a Bloomberg analysis, ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX), TotalÉnergies (NYSE:TTE), and BP (NYSE:BP) wouldn’t have enough cash on hand to cover the dividends and share buybacks their investors are demanding, let alone increase their capital expenditure to drill more.
“Borrowing to buy back shares isn’t uncommon in the oil business,” Bloomberg explained. “But a dimming outlook for oil prices next year means the cash shortfall is apt to continue over the longer term,” at a time when investors’ expectations for immediate returns continue.
Changing Dynamics
There are other structural and technical challenges that could limit how quickly the U.S. Shale Patch increases oil production under Trump. According to commodity experts at Standard Chartered, U.S oil production, and particularly unconventional (shale oil) production, has changed significantly from the time Trump first took office in 2017.
StanChart points out that U.S. crude output clocked in at 13.40 million barrels per day (mb/d) in August 2024, an all-time high above the previous record of 3.31 mb/d set in December 2023. U.S. crude production has increased by 4.7 mb/d since the pandemic-era low of May 2020; however, it’s just 0.4 mb/d higher than the pre-pandemic high of November 2019, working out to an annual production growth rate of just 80 thousand barrels per day (kb/d) over this timeframe.
StanChart notes that the dynamics of U.S. shale oil production make long-term supply increases difficult to maintain, noting that the country’s oil production is dominated by a few majors and independent producers, alongside private companies, rather than a national oil company as is often the case with many OPEC producers. These companies have largely left behind their trigger-happy, drill-baby-drill days and adopted strict capital discipline, eschewing rapid production increases in favor of returning more capital to shareholders in the form of dividends and share buybacks. StanChart also points out that extensive M&A activity in the sector has reduced the number of operating companies, changing the landscape from a patchwork of small producer acreages to larger contiguous acreage. This new modus operandi allows for complex drilling and completion techniques, including multi-pad wells with extremely long lateral sections that are able to optimize spacing and associated infrastructure. These drilling and completion efficiency gains have allowed production to continue growing despite a decline in rig count.
StanChart’s views appear to match those of Goldman Sachs’. According to GS, technological and efficiency gains have accounted for virtually all growth by the Texas-New Mexico shale basin since 2020; however, the bank has warned that “the Permian is maturing, and its deteriorating geology will weigh on the production of crude oil down the road.” The Permian rig count has declined nearly 15% from last year’s April high to 309 currently, and is 30% lower than its 2018-2019 average, Goldman Sachs has revealed. Earlier, GS predicted that the Permian rig count will be below 300 by the end of 2025.
By Alex Kimani for Oilprice.com |
THANKS Ale
All the best for 2025
MAY YOUR DIVIS GET EVER BIGGER |
Share buybacks: are we getting value for money?
Tue 11:24am by Roland Head
stockopedia
Share buybacks have become hugely popular in recent years. By buying back their own shares and then cancelling them, companies can engineer an increase in earnings per share in excess of any increase in total profit.
In theory, the resulting increase in both earnings and earnings growth will support a higher share price and a higher price-to-earnings (P/E) rating.
If carried out correctly, share buybacks can represent an attractive investment opportunity for a business and its shareholders. But as I’ll explain, this is not always the case. Other motivations may drive some executives’ buyback decisions.
The sums of money committed to buybacks are often large and can exceed the cost of a company’s annual dividend. This means shareholders are swapping potential cash special dividends for the less certain benefits of a shrinking share count.
I think it’s worth considering more closely what buybacks mean for shareholders and how we can gauge whether they are likely to represent an attractive use of a company’s capital.
Dividend vs buybacks
A dividend is a cash payment that you or I will receive in our brokerage account.
This payout reduces the book value of the company in line with the amount of cash spent, but shareholders are no poorer. We have our share of this cash and can do with it as we wish.
A dividend is truly a return of capital to shareholders. The same description is often applied to buybacks, but I think this is somewhat misleading.
When a company buys back its own shares, it expends cash, but shareholders do not receive it.
In theory, the benefits of the buyback will mean that the remaining shares become more valuable, both in terms of their market price and their intrinsic value.
However, reality often falls far short of this rose-tinted ideal.
Consider drinks giant Diageo (LON:DGE), historically seen as a good stock for long-term investors.
Between June 2021 and June 2023, Diageo spent £3.7bn buying back 98.8m shares at a weighted average cost of 3,708p. Very roughly, that was about 160p per share, equivalent to a yield at the time of about 4.3%.
Shareholders could have received that cash, but they didn’t. Today, the company’s shares are trading over 35% lower, at 2,335p.
Diageo’s net debt has risen by around £2.7bn… |
Aleman, Purchased also. Looks good value atm ! |
Results at NESF in a week's time and the yield has risen to 11.6% after going ex-dividend today. I've topped up my small holding. |
FSFL is another solar farm company with a little battery storage thrown in. Current yield is about 9.7%. I can't quantify the risk on it but I think the same can be said for a lot of these green energy farm type companies that have geared up a bit in times of lower rates. |
It's also among my holdings, Aleman;who really knows with these infrastructure ITs, but my feeling is it's a dividend bargain. Good luck. |
Opened a small position in NESF on a yield of 11.1%. Although subject to the vagaries of interest rates, energy prices and weather, I can't see an immediate threat to the yield. |
A simple resource but could be useful. |
Thanks Ken. |
Tag57.
The answer is simple. Aleman’s link is to the superb aic website. aic is the official trade body for Investment Trusts. The obvious place to start is from their home page, but this link is ideal for access to info on every Investment Trust and every Investment Trust sector:- |
Thanks Aleman.
The list would be more helpful to also include NAV change / total return over say the last 5 years so we could see at a quick glance what the true returns are from this list. |
Aleman
21 May '24 - 10:55 - 693 of 693
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UK dividends grow modestly, but cash is still king
25 April 2024
One-off payments will drive dividends in 2024, according to Computershare’s latest Dividend Monitor.
By Matteo Anelli,
Senior reporter, Trustnet
UK dividends increased 4.9% to £15.6bn in the first quarter of 2024, the latest Computershare Dividend Monitor report revealed.
However, most of this growth was driven by one-off payments. Underlying dividend growth remained steady at 2% – a “healthy but unexciting” trend, which will continue for most sectors throughout the year, reflecting a sluggish global economy, Computershare said.
With prospective yields on UK equities stuck at 4%, income-seeking investors may gravitate towards higher-yielding bonds and cash, said David Smith, manager of the Henderson High Income Trust.
“The UK equity market is attractively valued but cash and bonds are now greater competition for investors’ capital. The advantage that equities provide is inflation protection through dividend growth, but that is likely to be relatively low this year,” he said.
But there is light at the end of the tunnel for equity income investors. Things are expected to improve throughout the second half of this year as cost pressures ease, interest rates are cut and economies start to recover, driven by real wage growth and a more buoyant consumer.
Computershare experts upgraded their headline forecast from £93.9bn to £94.5bn in total payouts for 2024 – a 4.3% year-on-year increase against the previous forecast of 3.7%.
Most of this will be driven again by special dividends, which Computershare expects will be significantly larger than in 2023. Regular dividends are expected to be worth £89.5bn, up 1.5% year-on-year on a constant-currency basis. |
h ttps://www.trustnet.com/news/13412451/uk-dividends-grow-modestly-but-cash-is-still-king |
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