No not General Election policies but Company results in brief. First fags represented by Imperial Tobacco (IMT) which has announced interim results to 31 March 2015. The highlight for me is the delivery of the promised 10% dividend growth which is the main attraction of this one in addition to the current yield of 4.5% from this years expected dividend of 140.5p.
Otherwise it does not score so well on cover, operational quality (margins and ROCE) or estimate revisions. Pensions come from Legal & General (LGEN) plus funds, annuities and other savings and other financial products. They saw continued strong growth and in contrast to Aberdeen yesterday, strong in flows to their asset management division. I continue to like this one and it has come back by around 10% from recent peaks and therefore now offers an expected dividend yield of just over 5% based on the forecast dividend for the year of 13.1p which represents growth of 16%. On the food front we have had poor results, as expected, from Sainsbury's (SBRY) which included a slightly smaller than forecast reduction of 23.7% in the dividend based on their 2x cover policy. On this basis a further reduction in the dividend is therefore expected for next year too. On this basis and given the on going dividend cuts and the competitive nature of the industry with the main players being squeezed by the discounters, I continue to steer clear of this sector. Finally on the food front I mention in passing Finsbury Foods (FIF) the AIM listed £100m market cap firm which is evolving into one of the largest speciality bakery groups in the UK. It is also one of the stocks that made it into the Mechanical CIS Portfolio which launched recently. They seem to be on a roll at the moment with their latest acquisition to follow on from the Fletchers acquisition they did late last year. The latest one is something called Just Desserts which they have bought from the receivers which sounds like a good idea, although may be concerning that it went bust in the first place? Any way they say this is part of the escalation of Finsbury's entry into the food service cake channel and in particular the high growth national coffee shop segment. This is in line with their channel diversification strategy, indicated at the recent acquisition of Fletcher's in 2014. So it seems like a sensible add on which also brings some more diversification by product and customer and helps to reduce their dependence on the main food retailers a little. The shares appear to offer value with a sub 10x PE and a well covered yield of just over 3%, however they don't seem to be the highest quality business in the world operationally. I note also that they only recently reintroduced dividends, although they have been and are forecast to grow rapidly. In addition they have had a poor recent earnings revision trend which is something else I do not like to see and this has brought the score down on this one recently from top decile to 69 currently. So a bit of a mixed bag and it will be interesting to see if this latest acquisition can turn the estimate revisions around but it is hard to tell because they provide little in the way of financial detail on the deal. Finally as we look forward (?) to the election and all the hours of TV coverage do look out for Charlie Brooker's Election Wipe tonight and Paxman on Channel 4 with David Mitchell the comedian for an alternative take on it on election night. if you are really bored, as I touched on Finsbury Foods today you could always check out the new series on the BBC called Inside the Factory: How Our Favourite Foods Are Made in which they looked at appropriately Bread last night and with Chocolate featuring tonight.
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