MARKET REPORT: Kainos shares soar 25% after dividend promise, as investors cheer sign that payout downswing could be turning a corner
Investors cheered a promising sign that this year’s dividend downswing could be about to turn a corner.
Dozens of Britain’s biggest listed companies have cancelled, deferred or delayed payouts after the pandemic threw their businesses into disorder, striking a blow to pensioners and savers who rely on them for income.
But software firm Kainos and oil and gas group Cairn Energy were rewarded handsomely for their decisions to hand money back to shareholders. Belfast-based Kainos rocketed 25.3 per cent, or 209p, to 1036p after it pledged to pay a one-off dividend or 6.7p per share – around £81m in total.
It said trading boomed so much in the first four months of its financial year that it will bump up annual turnover and profits. The group, whose customers include a number of NHS trusts and government departments, also said it will now go back to its original dividend schedule.
And things are going so well that it will give back furlough funding. Cairn, meanwhile, struck a deal to sell its entire interest in a contract area in Senegal to Russia’s Lukoil for up to £310m.
It will return at least £195m as a special dividend afterwards.
Cairn has never paid a regular dividend – its model relies on investing in projects, selling them and handing the money back to shareholders in one-off payments.
But netting a sale during a time of extreme turmoil and lower prices in the oil market will be music to energy shareholders’ ears. Cairn shares rose 6.3 per cent, or 7.8p, to 132.3p.
Talktalk shares will be in focus today after it emerged the budget broadband provider rejected a takeover bid valuing it at double its current price. The firm was approached by top shareholder Toscafund last year with a go-private bid.
It would have valued Talktalk at 135p per share, or £1.5billion, compared to its share price of 74.8p yesterday (down 3.9 per cent, or 3p), valuing it at £857m.
But Toscafund’s advance was spurned because it ‘failed to provide sufficient value for shareholders’, according to Sky News.
Both the FTSE100 and FTSE250 started the week lower as dives in holiday and travel-related stocks failed to be offset by gains from precious metal mining shares, which rallied as gold prices reached a record high.
Overall, the blue-chip index fell 0.3 per cent, or 18.94 points, to 6104.88, while the FTSE250 fell 0.6 per cent, or 106.9 points, to 17157.94.
Shares in Chile-focused copper miner Antofagasta rose 3.7 per cent, or 37.5p, to 1066.5p after reports that the union of workers at one of its mines had reached a contract deal with the company, averting the risk of strikes. On the mid-cap index, Ascential swung to a £78m loss after the pandemic forced it to cancel or rearrange a swathe of major events such as the Cannes Lions marketing festival.
Interest in digital versions of some of its events couldn’t stop it falling prey to the same difficulties that have plagued rival firms that also organise corporate shindigs, such as Relx (up 0.6 per cent, or 10.5p, to 1681.5p) and Informa (down 2.3 per cent, or 9.4p, to 391.5p). Shares fell 8.8 per cent, or 26.2p, to 272p.
Elsewhere, struggling guarantor lender Amigo was granted more time to sort out its borrowings. It has been struggling with its debt amid investigations, complaints and a boardroom row. It was down 8.5 per cent, or 0.68p, at 7.32p.
Small-cap farming equipment maker Carr’s Group climbed 4.6 per cent, or 5.75p, to 130.75p after it bagged a new board member. Kristen Eshak Weldon, who sat on the executive committee at agricultural trading giant Louis Dreyfus Company, will join as a nonexecutive director in October.