Dividends

Cash is the real prize in oil-patch showdown

26 April 2019

Forget diversification and other strategic chimeras as the rationale for Chevron and Occidental’s $38 bln battle for shale driller Anadarko. It’s all about sating oil investors’ irrational fixation on dividends. Bigger Chevron can pay more, Occidental has the greater need.

Aviva dividend move ends new CEO’s brief honeymoon

7 March 2019

The UK insurer will adopt a flexible approach to payouts rather than distributing a fixed ratio. Investors might have been less vexed had Maurice Tulloch, a company veteran who got promoted, been more specific on what he planned to do with the wiggle room apart from cutting debt.

Plunging GAM shares belie elusive value

13 December 2018

With shares down 80 pct this year, the Swiss asset manager could be a takeover target. Cost savings alone are worth more than its market value. Yet uncertainty may lead clients to pull money, leaving a buyer with little. Fund group valuations are especially blurry in a panic.

GE’s new boss struggles to find the bottom line

30 October 2018

The ailing conglomerate missed sales and earnings estimates and notched a $23 bln loss after a massive power writedown. A 90 pct dividend cut will conserve much-needed cash and shows CEO Larry Culp is serious. Still, there’s little evidence of a turnaround in sight.

AB InBev debt detox points to flat future

25 October 2018

The Bud owner halved its dividend to pay down a debt mountain from buying SABMiller. This should free up $4 bln annually, but it could take eight years to hit its leverage targets. Any more trouble in emerging markets will mean an even longer wait for clear heads.

Lloyds offers shareholders a binary Brexit dare

22 October 2018

The UK bank may buy back 2 billion pounds-worth of stock next year, according to the Financial Times. That could boost annual returns to nearly 15 percent and justify as much as a 40 pct boost to Lloyds' share price – as long as the UK can avoid a messy split from Europe.

Thames Water’s nationalisation barrier has a leak

3 September 2018

The utility is reining in dividends and spending 12 bln pounds to restore ropey infrastructure. Given a Labour government under current opposition leader Jeremy Corbyn might nationalise the sector, caution is wise. But Thames’ inability to cut bills still leaves it an outlier.

Brexit dividend will be cashed in euros

6 July 2018

Nine months before Britain is due to leave the European Union its departure terms remain unclear. Prime Minister Theresa May’s latest plan cannot provide the certainty businesses seek: hence the shifting of investment and people elsewhere. Banks look set to lose whatever happens.

HSBC capital surplus may be hiding in plain sight

26 June 2018

The Asia-focused bank’s shareholders are disappointed by new CEO John Flint’s pledge to merely maintain dividends. A Bank of England review of capital rules is one reason to be cautious. But even with tougher requirements, HSBC could still afford to substantially raise payouts.

Fiat Chrysler investors fear capital-junkie return

1 June 2018

Shares fell 7 pct despite boss Sergio Marchionne's pledge to pay a dividend, cut costs and double profit by 2022. The new plan also includes 9 bln euros for electric cars and a U.S. finance unit. That may worry owners that the CEO’s successor could fall off the spending wagon.

UK slide raises Santander’s modest bar to success

24 April 2018

Net profit in its British unit dropped 21 pct, blotting the Spanish bank’s solid first quarter. Strong growth in Brazil and Spain, however, more than made up for Brexit-related jitters. More of the same should allow Santander to hit its full-year earnings and dividend targets.

Legal woes could impair SocGen’s 2020 vision

29 March 2018

The French lender says it is close to settling with U.S. regulators over investigations relating to Libya and Libor. A sanctions-busting probe could pose a sterner test, though. Any fine above 1.8 bln euros could threaten SocGen’s capital target – and put pressure on dividends.

Ares tax switcheroo may attract few copycats

15 February 2018

The manager of $106 bln in alternative assets is going to pay U.S. corporate tax rather than elect for partnership treatment. That should boost its investment appeal – and, for Ares, the numbers add up. The likes of Blackstone, with lumpier earnings, probably have less to gain.

Intesa dividend pledge depends on Italian growth

6 February 2018

The country’s biggest bank promises 6 bln euros of net profit in 2021 thanks to a push into wealth and insurance products. If CEO Carlo Messina keeps his word, payouts to shareholders over the next four years will be 50 percent higher. But only if there are no upsets at home.

UK pension watchdog needs new tools, and backbone

24 January 2018

Prime minister Theresa May vowed to punish groups that fail to protect retirement benefits, like collapsed outsourcer Carillion. New tools could include fining companies or curbing payouts. But the regulator can do more with the powers it already has to make companies fill gaps.

GE’s shaman exorcises ghosts of false expectations

13 November 2017

It doesn't take much imagination at work to grasp John Flannery's approach to the $178 bln conglomerate. He has halved the dividend, cut earnings guidance and questioned GE's portfolio of industrial assets. Next up is a total restructuring of GE's bloated, under-engaged board.

Belt-tightening gives Tidjane Thiam breathing room

2 November 2017

The Credit Suisse boss delivered an 80 pct jump in third-quarter pre-tax profit despite lower revenue. An activist seeking to break up the Swiss lender can point to a misfiring investment bank. But cost-cutting and higher wealth management earnings give Thiam the upper hand.

Shell and BP stuck incinerating shareholder value

2 November 2017

After years adjusting to cheap oil, Shell and BP are beating earnings estimates and throwing off enough cash to cover dividends. BP will soon be buying back shares, too. It’s a start. But even if prices hold up, it will be years before their returns top their cost of capital.

BT’s dividend signal faces interference

1 November 2017

The British telco has pledged to keep lifting payouts to shareholders despite the burden of pension payments, rising capex and sports rights. Dividends could suck up almost all its free cash over the next three years. A 6 percent yield suggests investors think it’s at risk.

GSK’s new CEO held hostage by dividend cult

26 October 2017

The British pharmaceutical company’s market value slid by 6 bln pounds after Emma Walmsley suggested big deals and dividends might not be compatible. Being flexible is perfectly rational – unlike investors craving for high payouts at the potential expense of growth.