Stock market report: water giant Pennon ramps up dividend
In a world where global politics turns on its head overnight and there are mass demonstrations on the street, qualities like being safe and dependable are highly valued.
So step up Pennon, the owner of South West Water which today reliably committed to paying its dividend, lifting the payout 6.6% to 43.77p and saying it will grow it at 2% above inflation over the next five years. Utility stocks are typically reliable divi payers, but with many in the Footsie scrapping payouts Pennon’s commitment was welcomed.
But the firm said that annual profits had risen despite a 6% fall in revenues and margins were eroded in its wholesale arm. Shares fell 44p to 1149p.
It also said the sale of its waste management business Viridor to private equity giant KKR for £4.2 billion is on track to complete in early summer.
The biggest cloud on the horizon is the current effective ban on tourism, hitting the South-West.
The company has taken a £9 million bad debt charge for customers unable to pay their bills.
Hargreaves Lansdown analyst Steve Clayton said: “At a time when many businesses are under great pressure, Pennon’s financial strength is most welcome. The stock offers investors the prospect of rising real income out to at least the middle of the decade.”
The FTSE 100 was flat, off 0.43 points at 6,381.98 as investors weighed up a cluster of global factors — from the George Floyd protests, the ongoing virus crisis and expected fresh quantitative easing from the European Central Bank today — and called it a score draw.
Banks HSBC and Standard Chartered’s Asian listed shares lifted after the lenders controversially backed the new China security laws governing Hong Kong, allaying concerns about their businesses getting hurt by any potential political crossfire in their largest market. In London HSBC was off 1p at 401p and StanChart was up 5p at 432p.
Pharma giant AstraZeneca — currently working on a Covid vaccine — was on the rise, up 98p to 8694p after inking a partnership with US life sciences group Accent Therapeutics on a cancer treatment. Astra will pay $55 million up front with more than $1 billion in milestone payments.
Shares in asset manager Intermediate Capital Group were off 55p at 1331p after it posted a step up in net assets, but profit fell more than a third as valuations were hurt by the virus crisis.
Biotech firm Avacta today became the latest company to jump on the fundraising merry-go-round. The group enlisted finnCap, Zeus Capital and New York broker Beech Hill to help raise £45 million for it to develop a Covid-19 saliva test designed to give a result in minutes. The firm also signed a distribution deal with Medusa19, a company established by Boohoo’s founder Mahmud Kamani and Zeus’s founder Richard Hughes. Shares rose 4.5p to 143p.
