Proactive Investors - Run By Investors For Investors
Markets

Lloyds and other ex-dividends to knock 11 points off FTSE 100 on quiet Thursday in the City

Away from the ex-divs, Saga, Electrocomponents and EntertainmentOne are all due to come to the market with trading updates or results
lloyds bank
An investor who buys shares on or after the ex-div date isn’t entitled to the next dividend payment

Lloyds Banking Group PLC (LON:LLOY) and ten other blue-chips are set to go ex-dividend on Thursday.

That means investors buying shares in Lloyds, and others such as Direct Line Insurance Group PLC (LON:DLG) and Taylor Wimpey PLC (LON:TW.), won’t be entitled to the latest dividend pay-outs.

The ex-divs will wipe 11 points off the FTSE 100, according to Reuters data.

As for company news, it’s set to be relatively quiet for a Thursday in the City, although Saga PLC (LON:SAGA) and Electrocomponents PLC (LON:ECM) are both due to update the market, while EntertainmentOne Limited’s (LON:ETO) final results are out.

Saga's dividend in focus

Saga provides holidays, healthcare and financial services to over-50s, but it’s the group’s home and motor insurance business which is the real money maker.

Insurance underpins group cash flows and accounts for almost all of the company’s profits, although lower premiums dented performance in the first half.

Profits from that division feed into the dividend, although there has been concern over that of late: JP Morgan Cazenove recently questioned the sustainability of shareholder returns as margins come under pressure from increased competition.

The other concern is debt, which is due to creep up over the next couple of years as the group invests in new cruise ships.

Given that much of Saga’s focus is on the insurance market, it is perhaps unsurprising that boss Lance Batchelor is reportedly looking to sell two of its package holiday businesses, Titan and Destinology.

Slowdown at Electrocomponents to stabilise

FTSE 250-listed electronic components distributor Electrocomponents will issue a short interim management statement on Thursday, covering trading trends for the full-year ending 31 March.

In a preview, analysts at UBS said: “As growth trends up to end-Jan are already known, the new information will be i) implied trading in Feb/Mar (we expect a slight further slowdown), and ii) any update on profit expectations for the year (we are in-line with consensus).”

They added: “After +10% organic revenue growth in Q-end Jun’18, and +10% growth in Q-end Sep’18, Electrocomponents reported a slowing to +6% for the 4-mths-to-Jan’19. However, commentary suggested that growth within Jan’19 itself was +7%.”

The analysts said Electrocomponents will likely only comment on profit expectations for full-year 2019, with the UBS forecast for pre-tax profit of £211mln in-line with the consensus of £210mln.

Peppa Pig still bringing home the bacon for EntertainmentOne

EntertainmentOne has been signing high margin streaming deals for the likes of its Peppa Pig cartoon series, and growing licensing and merchandising have been bringing home the bacon for now, but the shift from distribution to production in the Film & TV unit needs to be closely watched.

In a preview of the FTSE 250-listed firm’s trading update, also due on Thursday, Sophie Lund-Yates, equity analyst at Hargreaves Lansdown said: “A pillar of future success is eOne’s ability to nurture a reputation as a producer of quality TV, which third parties will pay for.

“This division only makes up a small chunk of profit at the moment though, and the shift to content creator won’t happen overnight. With results in the division expected to be weighted to the second half, it’s one to keep an eye on.

She added: “Lastly, with the current library worth US$2bn, and a recent spate of M&A in the industry, there’s always the outside chance someone could make a bid for eOne at some point. We can’t know for sure if, or when, this could happen, but we think investors should watch this space.”

Significant events expected on Thursday April 4:

Trading updates: EntertainmentOne PLC (LON:ETO), Electrocomponents PLC (LON:ECM)

Finals: Saga PLC (LON:SAGA), Hunters Property PLC (LON:HUNT), Smart Metering Systems PLC (LON:SMS)

Ex-dividends to knock 11 points off FTSE 100 index: Lloyds Bank PLC (LON:LLOY), Direct Line Insurance Group PLC (LON:DLG), Ferguson Plc (LON:FERG), Hikma Pharmaceuticals PLC (LON:HIK), Melrose industries PLC (LON:MRO), Pearson PLC (LON:PSON), Smith & Nephew PLC (LON:SN.), St James’s Place PLC (LON:STJ), Taylor Wimpey PLC (LON:TW.), DS Smith PLC (LON:SMDS), Smiths Group PLC (LON:SMIN)

Economic data: US weekly jobless claims; US Challenger job cuts


© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use