Next PLC (LON:NXT) and Kingfisher PLC (LON:KGF) should be sharing positive news on dividends soon, according to RBC Capital Markets.
Cash returns have historically been a key component of shareholders in the retail sector and they are about to be back, analysts reckon.
READ: UK retail industry to lose £8bn in profits as COVID-19 accelerates shift to online shopping
Next could announce details on cash returns at the second-quarter results on 4 August or at the interims on September 29.
“We believe that Next remains flexible but would like to run with less debt than in the past. It has a £325mn bond repayable in October which Next has stated it intends to re-pay without issuing another bond. We estimate Next should generate surplus cash of c.£400mn this year which it could return to shareholders,” the Canadian bank said.
Similarly, Kingfisher is expected to release news on its half-year results on 21 September, with potential for £1bn worth of dividends.
Looking at the wider retail sector, analysts trimmed the price target for B&M European Value Retail SA (LON:BME) from 580p to 575p after the latest trading update was “a bit softer than our estimate for UK LFL and space contribution, no doubt affected by very mixed weather in June versus another tough comparable”.
Nonetheless, the discount retailer “offers a strong rollout story in the UK” while it “appears to be making good progress in France”, so RBC sees potential for “multi-year, higher than consensus cash returns”.
Shares in Next dipped 1% to 7,772p, Kingfisher was flat at 366.2p and B&M rose 1% to 551p on Monday at noon.