dividends tend to be concentrated around the calendar year end.
Key points
Income from dividends will be lumpy with the bulk of payments coming in mid-year and a grouping of interim payments around year-end.
Do not try to smooth out income by investing in a company just because it makes payments in spring and autumn.
Do not worry if a company takes longer than others to pay the dividend – what is important is that it is a sound investment and it pays dividends at the same time each year.
Chapter 3. Where to Find Information
Company news
One of the great joys of investing in the modern era is that much of the information you need is freely available. Indeed, London Stock Exchange rules dictate that all ‘price sensitive’ information (that is, information that could affect a company’s share price) must be out in the open.
This information is disseminated almost exclusively through the stock exchange’s own Regulatory News Service (RNS), so called because it publishes information that companies are required to make public under the exchange’s regulations. This used to be the only source of announcements but in the spirit of competition other news providers are now allowed to offer alternative services. They can be identified on announcements by the three initials given for each one below in brackets.
Most companies have stuck with RNS but some use PRNewswire (PRN) and others, mainly foreign-based companies with a London listing, opt for Hugin (HUG), a European corporate communications specialist. Also authorised are Business Wire (BZW), part of Warren Buffet’s Berkshire Hathaway, and Cision (CIS), an international public relations and marketing group.
Most announcements that contain new information affecting the dividend are issued at 7 am when the market is closed and appear instantaneously on those financial websites that publish regulatory news announcements, whether from RNS or a competitor. The most important ones are results announcements and possibly trading updates. We shall look at these in more detail in the next chapter.
Less price-sensitive matters, such as setting the precise sterling equivalent of a previously announced dividend denominated in a foreign currency, may be issued at any time until the RNS service closes at 6:30 pm but usually come out during the morning.
Company websites
Your primary source of information should be the company’s own website. All official announcements made by the company must appear there. While a company may choose, in its statements, to highlight favourable rather than adverse happenings, it cannot pick and choose which announcements go on its website. They all go up there.
Furthermore, key figures such as sales, profits, earnings per share and dividends must be given for the past five years so you can see how the company has been progressing.
You will find recent annual reports, results announcements and trading updates in full on the website. Usually you will find them under a section labelled ‘Investors’ or ‘Investor relations’ or something similar.
If the company sells goods or services to the general public, the homepage will almost certainly be full of its products rather than financial information but a search around the site should soon reveal the right location. Try ‘About us’ or ‘Corporate news’.
Full, fast and long-lasting information
Not only is this the fullest information you will receive but it also has the longest life. Years after you consigned your newspaper to the recycling bin the company website will still be there.
It is also a speedy source of news, as announcements go up on the website on the day they are released, and as early as possible.
Unfortunately you cannot always be sure when an announcement will be made, although results and quarterly trading updates tend to come out at much the same time each year. The Sunday and Monday editions of newspapers carry a list of company announcements due that week, although the lists will not be comprehensive.
Any announcement usually has bullet points at the front highlighting the main points of the announcement. These bullets should give you an overview of the period covered, including the key information you want – but be wary: directors, being human, may tend to accentuate or even exaggerate the positive points and play down the negative aspects.
You should go down to the income statement and look for yourself at the figures for turnover, profits, earnings per share and dividends. One column will cover the latest reporting period and there will be a second column for the corresponding period the previous year, so you can check what progress, if any, has been made.
London Stock Exchange
One of the most important changes to the London Stock Exchange website in recent years has been the introduction of comprehensive reports on each quoted company.
Look on www.londonstockexchange.com and click on ‘Prices and Markets’ and then on ‘Stocks’. Alternatively, type ‘Company Profiles’ into the search facility. The process is a little cumbersome but you should soon get the hang of it.
You will find a five-year overview of each company’s strengths, weaknesses and financial trends.
Financial websites
Possibly the best site in terms of the amount of information easily available at no cost is InvestEgate at www.investegate.co.uk. Log on and you go straight to the current day’s UK stock market announcements. A search facility on the same page allows you to call up past announcements.
This is a particularly easy site to navigate as it is well designed and it concentrates on providing a specific range of information that is very useful for investors.
Other websites ask you to register if you want more than the brief contents of the homepage, although registration is generally free for most services. Finding your way around the sites can be daunting and the design of a site may change from time to time but take a look and see if one suits you.
Morningstar, formerly Hemscott, has the current day’s announcements in full on www.morningstar.co.uk in the Equities section, under Regulatory News. The results for all larger and many smaller companies are interspersed with Dow Jones reports providing useful interpretation of the figures.
You will need to subscribe to Morningstar’s paid-for Premium service for access to past announcements but this service does provide a good deal of other useful information, including share charts going back ten years and a comprehensive company report with figures covering turnover, profits and dividends also going back for a decade.
Other web sites with a good range of information are:
ADVFN (www.advfn.com)
MoneyAm
