It is Thursday and there are lots of announcements today. So I'll try and cover quite a bit but in brief.
Legal & General (LGEN) announced a bulk annuity contract with the TRW Pension Scheme removing £2.5 billion liabilities from TRW Automotive's balance sheet and insuring over 22,000 of the Scheme's pensioners. This £2.5 billion transaction follows the £3.0 billion bulk annuity contract with the ICI Pension Fund that Legal & General secured earlier this year, reinforcing Legal & General's position as the leading insurer in tailored pension de-risking solutions for large pension schemes. The Company said: "2014 has been a landmark year in the pension de-risking market with the two largest bulk annuity transactions in the UK, both with Legal & General. These demonstrate the strength of Legal & General's tailored pension de-risking solutions." So further good progress from Legal's in what tends to be a lumpy part of the business, while firm markets should be continuing to help their asset management and index businesses. Still looks good to me an a 4.5% yield for this year on the back of 19% dividend growth.
Marston's (MARS) announced finals for the year to 4 October 2014 which looked in line to me with the dividend up by 4.7% to 6.7 pence which at 145 pence gives a yield of 4.6% which is the main attraction for this one. They continue their roll out of new destination food led pubs, which I have to say are quite good, while closing down the more marginal parts of their estate. The balance sheet is highly leveraged at and at the period end the ratio of net debt before lease financing to underlying EBITDA was 5.4 times (2013: 5.3 times). They say they intend to reduce this ratio to below 5.0 times, principally through EBITDA growth generated from the new-build investment programme. So it is worth bearing this in mind but I'm prepared to live with it given the nature of the business here and the asset backing (NAV = 131.8 pence).
RPC Group (RPC) - is one I wrote up in more detail back in July when it was trading around 600 pence. They have today announced interims to the end of September and an acquisition which will be funded by a 1 for 3 rights issue @ 320 pence to raise £200m. The results seem fine with the dividend up by 11% on the back of adjusted earnings being up by 19% to 22.8 pence which means that if their earnings were flat in the second half they would still hit current forecasts so I reckon their might be scope for upgrades here. Meanwhile the add on acquisition is expected to enhance RPC's earnings per share in the first full financial year post Acquisition and provide a ROCE ahead of RPC's WACC, so it looks like another good acquisition for them. The shares having drifted back since the summer but are up 4% to 570 pence on the back of these announcements today. This leaves them on around 12x with a 3%+ yield before any changes to numbers from these figures and the deal, which doesn't seem too demanding for this well managed group. However, the rights issue period might throw up a better buying opportunity if after doing your own research you decided you wanted to get into this one.
So there you go three examples of real businesses serving customer needs that offer decent growing yields which, if you are prepared to accept some volatility of your capital, should over time help to grow your income and capital and protect it against the ravages of inflation. Try doing that with a Cash ISA these days paying a pittance.