IN THE BACK
STOCKS
STEADY
READIES
With income investors trying to protect themselves
against any more unpleasant surprises, Canaccord
Genuity’s Simon McGarry looks at three stocks
with a history of consistent dividend growth
I
t is becoming increasingly difficult to find a stable
source of income, considering that investment
grade corporate bond yields are near all-time lows
and dividends have been put under pressure by rising
equity markets.
In 2014, dividends grew faster than earnings, putting
payout ratios at 15-year highs (and by extension,
cover at 15-year lows). It’s therefore not surprising
(4.3 per cent yield)
Interserve is an international
support services and construction
company. The shares have fallen by
20 per cent in the past 12 months,
putting them on just 9.1x/8.3x
the 2015/2016 earnings. It yields
4.3 per cent despite having raised
dividends at an annual rate of 5 per
cent over 15 years. The market is
clearly concerned over Interserve’s
exposure to the Middle East
construction and energy industries.
However, this fall looks excessive
considering that 81 per cent of the
group’s revenues come from the
UK and the prevalenc HوZYB