British Gas-owner Centrica PLC could return up to £4.5 billion to investors by 2026, according to research from Barclays.
The broker made the prediction after running the numbers on Centrica’s cash flow and debt in the years ahead.
“With infrastructure cashflow of around £1 billion covering the £1 billion dividends through to 2026, we estimate annual net cash rising by c.£500 million per annum after dividends, reaching a net cash position of £3.5 billion by December 2026,” the broker said in a note.
“Return of this cash together with the £1 billion dividend payout would result in £4.5 billion returned to shareholders, or a return of 60% of the current market capitalisation by December 2026,” Barclays added.
The broker has raised its price target to 200p from 160p. It sees sustainable earnings in the core division of around £800 million from 2026, equivalent to EPS of 11-12p.
Barclays' rating of 'overweight' remains unchanged. Shares in Centrica were 1% lower at 137.59p, reflecting the weak overall market.