(www.moneyam.com)
Digital Look (www.digitallook.com).
Stockbrokers
Online and traditional stockbrokers will normally have their own websites. However you may need to have an account with them to gain access to information. Also the information available tends to vary enormously and research on individual companies normally has to be paid for.
Stockbrokers are geared up primarily to providing a share dealing service and you should pick one that provides the service you want at the best price rather than the one with the most company information freely available on its website.
However, one site worth noting is Selftrade at www.selftrade.co.uk which carries RNS announcements in its Market News section.
Newspapers
Even the Financial Times (FT) has insufficient room to carry reports on all the announcements made each day so newspapers cannot be relied upon to provide the comprehensive cover found on financial websites. In any case, the news is a day old by the time you read it while websites tell it as it happens.
Nonetheless, the FT, The Times, The Daily Telegraph, The Independent and The Daily Mail all provide well-written reports of major financial happenings including company results and they usually provide analysis and possibly investment advice on at least two companies.
Magazines
The two main investment magazines of interest to dividend investors are the Investors Chronicle and Shares. These are published weekly, Shares on Thursday and Investors Chronicle on Friday, and are available on newsstands or by subscription through the post.
They provide detailed analysis of selected companies and tips on shares to buy.
If you feel this would be useful, buy a copy of each and decide which you prefer. Do remember that, while both magazines try to minimise the time between writing articles and publication, there is inevitably a greater time lag than with newspapers and if you are thinking of following up a tip you should check that nothing adverse has happened at the company in the past two or three days and what the current share price is.
Summary
Our main source of information on dividends, and the first place we should look for such information, is the results announcements. The annual report is also useful, although it is on the whole mostly a confirmation of what has already been published in results for the full year. We consider what information is available and how it is presented in the next chapter.
Key points
All price-sensitive information, including news that could affect dividends, must be released for general consumption, usually before trading starts at 7 am.
Company news announcements may stress the good news and play down adverse factors.
Chapter 4. Results Announcements and Annual Reports
The main source of information on dividends is the results announcements that are issued, in most cases, after the half year and full year. Companies paying four dividends a year are slightly different and we will look at them separately later in the chapter.
Most results are announced between three weeks and three months after the end of the period. Larger companies tend to report more quickly because although they have more figures to add up they have greater resources to cope with the task.
In the majority of cases the announcement will start with a brief summary and/or a series of bullet points outlining the key items in the results, such as turnover and profits. Since the board will naturally want to put the most bullish items at the top of the report, we would hope to see some reference to the dividend.
As an example, the interim results for retailer Next covering the six months to the end of July 2011 and issued on 14 September began thus:
Results for the Half Year Ended July 2011
In a difficult year Next has proven resilient. Group revenue for the first half was 3.6% higher than last year and profit before tax was up 8.5% on a continuing basis. The business remains strongly cash generative and continued buyback of shares further enhanced growth in earnings per share, which were 18.6% ahead of last year. The interim dividend increases by 10% to 27.5p per share. Financial highlights from our continuing business are as follows:
revenue up 3.6% to £1,565m
profit before tax up 8.5% to £228m
earnings per share up 18.6% to 98.3p
net debt of £640m and committed facilities of £918m
interim dividend up 10% to 27.5p per share.
We should be suspicious but not paranoid if there is no mention of the dividend in the bullet points, or if the company launches straight into its report without picking out the salient facts. It could mean that there is no dividend or that the dividend has been held at a low level. However, it has to be said that some companies inexplicably hide their light under a bushel, so in such cases we will need to check further down the announcement to ascertain what the situation is regarding the dividend.
Back to the Next announcement.
The interim dividend has been raised by 10%, which is obviously great news. Companies tend to be cautious at half year, especially if their business is in any way seasonal. Although Next, selling fashions and homewares, is not as dependent on Christmas as some retailers, it still sells more goods in its second half to the end of January.
Furthermore, retailing was at the time suffering from rising costs and falling consumer confience so a 10% increase in the interim dividend was a real vote of confidence in itself. We can see from the bullet points that earnings per share were actually up by more than the dividend, so the dividend increase looks well justified and sustainable.
The final dividend, which as we noted in an earlier chapter is almost always larger than the interim and is often twice as large, may not be increased by the same percentage. Nonetheless, we can normally work on the basis that it will be, barring unforeseen circumstances.
By the time that the interim results are out any company will already have seen the first few weeks of second half trading and may, depending on the line of business it is in, have a good idea of how orders are flowing in.
One other point mentioned earlier also applies here: if the company is rebalancing its dividends to achieve a different proportion between the interim and the final, then we must tailor our expectations for the final dividend accordingly.
We should look for further clues in what the key executives say in the announcement. Usually the chairperson, the chief executive, the finance director or any combination of
