A quick update for you today as there has been a bit more news around in the last couple of days since my note on Clarkson. Yesterday we had updates from Imperial Tobacco (IMT) who put out a 9 Month Interim Management Statement confirming they were trading in line with expectations and continued to be on track to deliver their 10% dividend growth target for the year. This will put it on a yield of around 4.75% for this year and it continues to look like an attractive income stock as it scores 90 on the Compound Income Scores (CIS).
Meanwhile in Insurance we also had interim results yesterday from Admiral (ADM) which edged up its chunky dividend by 3% as UK car insurance profits increased and overseas start up losses reduced. Their comparison business did however see a decline into loss put down to lower profits from confused.com in the UK and increased investment in overseas sites. This ones offers an excellent 6% yield thanks to their shareholder friendly approach of paying speical dividends to return surplus capital not required by regulations or to fund the growth of the business. Consequently it does not look so good on traditional dividend cover and balance sheet metrics and therefore only scores 52 on the CIS but nevertheless I think it is a good operator in this area.
Today we have had a couple of updates from stocks which feature in the Compound Income Scores Portfolio. Firstly WH Smiths (SMWH) had a pre close trading update in which they said that they expect their full year results to be slightly ahead of the consensus of analysts' expectations, which is nice. This one continues to confound expectations as they manage the decline of the high street business and the travel side continues to go from strength to strength and continues to expand.
Finally Rank Group (RNK) had some final results today which look very strong as UK punters appetite for gambling seems to be showing no signs of diminishing. Thus they beat forecasts across the board with turnover +4% to £738.3m v £731.7m, earnings +18% to 14.6p v 14.3p and the all important dividend +24% to 5.6p v 5.25p for a 6.66% beat although it was achieved via a reduction in cover from 2.8x to 2.6x which is still fine.
They saw growth in both the casino and bingo venues as well as on line despite the the introduction of Remote Gaming Duty from 1 December 2014, so a good result all round. They also flagged strong cash flow which allowed them to pay down debt too. On the outlook the suggest these strong trends have continued into this year and that they expect to launch a new online platform early next year.
The shares, before any upgrades post these numbers currently stand on a fullish looking 17x with a 2.5% yield for the current year to June 2016 and they still score well on the CIS with a score of 91. So I wouldn't put you off as the business seems to be trading well and the shares have momentum (see chart below), but I'm kicking myself for not buying them personally when I looked at them under 200p. So I'm reluctant to chase them up here (anchoring in action ?) but given the score the CIS portfolio will continue to run them, place your bets.