Against a downbeat backdrop, these mid-caps are giving dividend hunters something to smile about.
Posting half-year results, the South West Water-owner Pennon said it would increase its dividend by a “sector-leading” 4.9% to 11.70p a share for payment on 5 April. The award comes on top of the £1.5 billion it paid to shareholders in July through a special dividend stemming from the sale of waste management business Viridor.
Over half of Pennon's shareholders are UK pension funds, savings, charities and individuals, with more than half of the group's 2,500 strong workforce also being stakeholders.
Pennon said its continued dividend policy of CPI inflation plus 2% reflects confidence in its sustainable growth strategy and outperformance on key industry metrics. Interim results from the new Bristol Water owner published today showed a 4.3% rise in pre-tax profits to £90.4 million, after revenues lifted 21.8% to £389.3 million.
- Pennon sees record water demand as population rises
- Discover how to be a better investor here
- Check out more top UK shares
Chief executive Susan Davy backed the “relentless approach” to improving operational performance, which in turn meant customer bills are lower than they were 10 years ago. She added that the sector-leading dividend policy recognised the “ongoing loyalty” of shareholders.
Pennon, whose shares trade with a dividend yield of 2.6%, fell slightly in the FTSE 250 today.
Fellow second-tier stock discoverIE rose 4% after the designer and supplier of customised electronics components announced a dividend of 3.35p a share, which represents a 6% rise on last year and 13% improvement on two years ago.
Its half-year profits lifted 14% to £6.4 million, with revenues and earnings now well ahead of the pre-Covid period. Despite supply chain and currency headwinds, it has a record order book of £198 million and is on track to deliver full-year results ahead of previous expectations.
The shares jumped 35p to 1012p, although Peel Hunt has a price target of 1,200p based on optimism for the company's high-growth markets and potential firepower to make further acquisitions. The group employs about 4,500 people, including in China, Sri Lanka and India.
- Omicron: new wave of queasiness hits the markets
- Friends & Family: ii customers can give up to 5 people a free subscription to ii, for just £5 a month extra. Learn more
Other dividend developments today saw ingredients business Treatt (LSE:TET) announce a 32% jump in its full-year payout to 5.5p a share for payment on 17 March. The award comes after the FTSE All-Share company traded well ahead of its original expectations, with profits up 41.3% to £20.9 million as it helps customers meet demand for healthier, natural products.
Chairman Tim Jones said the business continues to go from strength to strength. He added: “We have a solid business model, a clear strategy and exciting opportunities as markets reopen, new trends emerge, and we enter new territories.”
Topps Tiles (LSE:TPT), meanwhile, has reinstated its dividend after announcing plans to pay 3.1p a share on 31 January, representing a 4.9% yield. The move came as the UK's largest tile specialist returned to the black with a profit of £14.3 million, having grown revenues by 18% to £228 million in the year to 2 October.
Trading has been robust in the opening weeks of the new financial year after like-for-like sales growth of 18.4% over two years ago. Management caution about trading headwinds meant shares fell 4.6p to 58p, but broker Peel Hunt believes the stock remains cheap after sticking to its target price of 100p.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.