M&G PLC’s (LON:MNG) dividend appeal is waning according to HSBC, which also sees people investing less and spending more as the UK economy recovers more from Covid-19 lockdown restrictions.
A good run for the shares in the investment manager means it is now yielding 7.6% for 2021, against 9% at the end of March.
Speculation about an approach from Schroders has died down and though the group is well-placed in the UK savings and asset management sector, inflows are being constrained by the lack of face-to-face adviser meetings.
M&G’s free cash flow is expected to peak in 2023, which leaves little room to increase the dividend over the medium term so the dividend profile is less attractive now, hence a downgrade to hold from buy and modest upside to a new target price of 250p.
St James Place PLC (LON:STJ) is also downgraded to hold from buy, with its share price now reflecting the expected growth rates.
Shares in M&G dipped 0.9% to 232.2p and St James by 1% to 1,488p