UK share prices watch: Dividend fears hit Vodafone
Heavyweight Vodafone (LON:VOD) is one of today’s UK share prices to watch, having tumbled in London this Monday, pressuring other UK media shares as well as the benchmark FTSE 100 index, with investors reacting negatively to a report that a dividend cut might be on the cards for the blue-chip telecoms group. British Gas owner Centrica (LON:CNA) meanwhile has surged despite a downbeat trading update.
Vodafone dips while Centrica shines
Vodafone has started the new week in the doldrums following a report in The Times that the group’s board might move to trim dividends despite having signalled in November that it would protect its payout to shareholders.
“Vodafone was the biggest faller on chatter that it would cut its dividend given hefty investment requirements for 5G,” said Russ Mould, the investment director at AJ Bell, as quoted by Proactive Investors. Vodafone has lost about five percent in early afternoon trade, compared with about a 0.15-percent drop in the blue-chip FTSE 100 index. Shares in FTSE 100 peer BT Group (LON:BT.A) are also trading lower, having given up about 2.6 percent, while ITV (LON:ITV) is 3.7 percent down.
Shares in Centrica, however, are rallying even as the British Gas owner noted that the trading environment had been challenging due to a specific set of external factors, including the negative impact from the UK default tariff cap, warmer than normal weather and falling UK natural gas prices. The company, however, reassured investors that it continues to expect to deliver its full-year targets, and said that it would update the market on its strategy in July when it is due to post its interim results.
“Management is clinging to its full year guidance but doesn’t seem to be all that confident it can achieve it. The share price reflects despair in the strategy,” Neil Wilson, chief market analyst at Markets.com, commented, as quoted by Proactive Investors, adding that unless the July update came with “a convincing strategic update”, he did not think that Centrica’s CEO Iain Conn would “be sticking around for much longer”. Centrica’s shares are changing hands about 1.7 percent higher.
Shares in British Airways and Iberia parent International Consolidated Airlines Group (LON:IAG) have built on gains in the wake of the group’s first-quarter results on Friday, shrugging off a rise in oil which normally tends to pressure airline shares as it spells higher fuel costs. IAG’s shares are about 1.7 percent up so far today. The rise in oil, however, is weighing on tour operator TUI Group (LON:TUI) which is about 4.4 percent down intraday and budged airline easyJet (LON:EZJ) whose shares are marginally underperforming the marked with about a 0.6-percent drop.
Stronger crude prices meanwhile are fuelling demand for shares in energy majors BP (LON:BP) and Royal Dutch Shell (LON:RDSA), which are up by about one percent and 1.3 percent, respectively. United Utilities (LON:UU) is marginally outperforming the index, trading about 0.3 percent higher, as it announced the appointment of Sir David Higgins as a non-executive director with effect from today, with Higgins to succeed Chairman Dr John McAdam who will step down from the Board on December 31.
Shares in Marks & Spencer (LON:MKS) are trading marginally lower in early afternoon trade even as Citi turned bullish and hiked its price target on the high street retailer. Proactive Investors quoted the broker’s analysts Adam Cochrane and Nick Coulter as commenting that the structural changes at the group had the potential to “re-invigorate the M&S business to a greater degree than investors expect”.
UK share prices to watch on Tuesday
Vodafone will stay firmly in focus as it delivers its full-year results tomorrow morning. IG reports that the telco is expected to report a 19-percent fall in annual earnings, to 9.5 cents per share, while revenue is forecast to have dipped 3.7 percent on an annual basis, to €44.9 billion. Chris Beauchamp at IG notes that the telecoms group has “beaten earnings forecasts in five of the last eight reports, but missed on revenue forecasts in five of the last eight”.
Attention, of course, will stay on the dividend, and the analyst notes that a “cut would send shockwaves through investors, who have become used to the regular and solid payouts”.
Land Securities (LON:LAND) will also post full-year results tomorrow. Asset managers Standard Life Aberdeen (LON:SLA) and St James’s Place (LON:STJ) meanwhile will be among the UK share prices to watch tomorrow, being scheduled to hold their respective annual general meetings. Shell and BP will also stay in focus as investors continue to monitor the oil price amid supply concerns.
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