Royal Mail, dividend not so attractive now

One of the major attractions of buying Royal Mail shares was the prospect of a 6-7% dividend yield thanks to the Government pricing the company to sell. This would have been nice for the private investor if you could have got more than the 227 share limit, £750 worth at IPO, but once the issue was scaled back it became less attractive as a hold. I made the point in a post a few days ago that because of the small 227 share limit it might not be worth holding on to them given the 30-40% rise in price since then. If you want more, at a less attractive dividend yield, you now have to pay for it. Some in the city seem to feel the same way.

Investors who bought Royal Mail shares for the income should sell their stakes, experts say. Before trading began on Friday, the appeal of the shares had largely been in the likely dividend stream, which seemed attractive at the price. But with the shares having soared in value, the income now looks less appealing by comparison with the instant capital gain available if you sell.

With the shares priced at 475p at the end of trading yesterday the yield works out at about 4.3pc, net of basic-rate tax, which is deducted at source. Before trading began on Friday the yield stood at 6.1pc, representing 20p a share. The yield is now on a par with income stalwarts such as Tesco or Vodafone – which, unlike Royal Mail, do not face a union battle and massive restructuring.  

http://www.telegraph.co.uk/finance/personalfinance/investing/10378410/Royal-Mail-sell-now-investors-urged-as-yield-falls-from-6.1pc-to-4.3pc.html

So, the euphoria around the Royal Mail IPO is beginning to wear off and as the price rises it is becoming less attractive as the market will inevitably focus on the issues facing the company going forward. There is also the question of whether a 4% dividend yield is attractive now when compared with other dividend payers, chances are that the risks are much higher going forward with Royal Mail. For the institutions however, a 3-4% dividend yield will still be attractive so I would expect them to continue to hoover up Royal Mail shares as the small investor sells off  their 227 shares. As an exercise in widening share ownership, if this was the Government's intention, it has largely failed. Most of the shares will end up, eventually, with institutions.

Severn Trent, bid fails, so is it now cheap?

One of the interesting things about following a bid story is what happens in the immediate aftermath when the bid is turned down and the potential buyers withdraw their offer and walk away. 

The short back-and-forth battle between Severn Trent and LongRiver Partners has come to an abrupt end, with the consortium announcing the withdrawal of its bidding interest for the water group late on Tuesday night.

The result was a sharp drop in Severn Trent's share price on Wednesday morning, down as much as 8.0% early on.

The stock surged to multi-year highs last month after the consortium - comprising Canadian investment group Borealis, the Kuwait Investment Office and Universities Superannuation Scheme Limited - first announced its intention to take over the company, the latest UK utility group to attract the attention of foreign investors.

http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?csi=10090&action=news&story_id=20958376

The bid had been increased to 2200p a share which at the current price of around 1760p means that it is now some way off what the bidders were prepared to pay, and even further away from what Severn Trent themselves seemed to think was fair value. Difficult to say what that figure is, but it looks like it must have been a number that was high enough to make the bidders walk.

However, is the company now worth around 450p less than that bid price? Leaving aside looking at the fundamentals, it is always interesting to see how the market gets hyped when there is a chance of a bid, price gets pushed up to what is thought to be as close to a sale value as possible, often higher, which makes you wonder why it was priced lower in the first place. Euphoria of the bid plays its part, bandwagon jumpers get in hoping for a quick profit, but if someone was prepared to pay 2200p now for Severn Trent does that mean it is a bargain at around 1750?

Things aren't as simple as that as quite often the bidding company over values and pays too much. A few years back, a private bidder was prepared to offer over 200p a share for HMV, a company that in stock market terms went bust and is now privately held, the recent buyer getting it and all its potential future problems on the cheap. Severn Trent isn't HMV. As a utility stock it clearly has a premium value to longer term investors.

Next week the company goes ex-dividend, so anyone buying before the ex-div date will pick up 45.5p a share. By then, given the failed bid and the current state of the markets in general, the share could fall even further. Therein lies the problem, at least in the short term Severn Trent is in a down trend and anyone buying in for the dividend may well see further falls until the dust settles and market sentiment decides it's looking cheap again and their must be other potential bidders out there. One might assume that at some stage in the future, further bids, not necessarily from the same consortium, are likely to be made in what is an attractive sector for takeovers and you have to wonder if 2200p is now the minimum benchmark for anyone interested in Severn Trent.

Tesco, up today, ready to disappoint tomorrow?

It was a surprise today to see Tesco on the rise.  Fair enough the market was up as often seems to be the case on Tuesday at the moment. A rise of 6p, 1.7% in the share price to a little over 364p might not seem much, but it comes on the eve of an IMS that is expected to disappoint. In fact, judging by what some are saying, Tesco could deliver a terrible set of figures tomorrow, a reminder of its UK profit warning back in January 2012.

Tesco’s first quarter results out Wednesday are likely to disappoint, according to Investec. 

The broker expects like-for-like sales to fall as much as 1.0% in the UK, 2.5% in Asia and 5.0% in Europe. It downgraded the stocks to a ‘sell’ rating and issued a target price of 295p. 

"The UK still lacks momentum and international is going from bad to worse," Investec analyst Dave McCarthy said. 

He said the international side of the business is a growing problem and after 15 years there is no sign of acceptable returns. 

The company’s latest results will come after the retailer last month reported its first annual profit decline in two decades. 

http://www.digitallook.com/news/20941271/Wednesday_preview_Tesco_to_report_first_quarter_results.html?username=&ac=

This analysis, especially on Tesco's international performance is a little unfair. 15 years of no sign of acceptable returns? That's pushing it considering they have been growing fairly strongly in most of their overseas markets for some time. You do wonder if Investec have a short on at the moment when they make silly statements like that.

But why the enthusiasm of the price rise today? Why would anyone be buying today if tomorrow is going to produce a bad result? Could it be that some in the know were selling today, the price being ramped up slightly to draw in as many eve of bad IMS statement mug punters as possible? In other words, the long term buy and hold retail buyers? Perhaps that is being too conspiratorial, but given the expectation of further bad news, the best Tesco shareholders can hope for in the morning is that things aren't as bad as predicted and the market reacts kindly. Chances are if the IMS is bad, Tesco could fall a lot more than the 6p it gained today. Let's see what happens in the morning.

The FTSE special dividend option

There are quite a few FTSE350 companies lining up to pay special dividends alongside their usual dividend payment over the next few weeks. Starting with ITV and Admiral who go ex-dividend tomorrow.

ITV - current price around 125p, 1.8p dividend, special dividend 4.0p - total 5.8p per share.

Admiral - current price around 1293p, dividend 21.4p, special dividend 24.1p - total 45.5p per share.

Fidessa - current price around 1793p, dividend 24.5p, special dividend 45.0p - total 69.5p per share.

Antofagasta - current price around 891p, dividend 8.4p, special dividend 52.0p - total 60.4 per share.

888 Holdings - current share price around 169.5p, dividend 3.02, special dividend 1.34p - total 4.36 per share.

You can work out the % yourself, but only 888 at around 2.5% are paying something close to the very low IR's currently available on savings with your local friendly bank.

Tesco reports, now the hard work begins.

Tesco reported this morning and while there was nothing overly dramatic in the results there was enough perhaps to raise some eyebrows going forward and see the shares sell off a little.

Bottom line is that profits are down 52% which is huge, especially for a company the size of Tesco. A year ago they were at £4 billion in pre tax profits, now it is under £2 billion. However, much of this seems to be due to one off costs.

The decision to finally pull out of the US has been confirmed at a cost of around £1.2 billion. The market knew that this write off would have to happen from pulling out.

Another £800 million has come from property write downs that they are no longer going to develop. Again, this should have been priced into market thinking as Tesco had stated that they were going to concentrate and invest in current stores in the UK.

However, the £1 billion investment in the UK side does not seem to have had a dramatic effect thus far on the bottom line. Trading profits in the UK fell 8.3% in the 52 weeks to February.

There are also difficult economic headwinds to contend with overseas in Europe and Korea.

One big plus today is the continued growth online, up 13% with £3 billion of sales which at the very least will be a reminder to Morrisons that they need to get a move on to get online as they fall further behind.

Another plus is that in these low savings rates times, Tesco has maintained its dividend at around 4%.

For Tesco the hard work now really begins as one would expect these one off write downs to have little further effect going forward. Once out of the US, Tesco needs to get it right in the UK and then hope that any down turn in Europe isn't too severe. Then there's Korea, small overall, but still a dent on profits, with the prospect of war with the North always it seems just over the horizon.

The market will now be concentrating on the pay off from that £1 billion investment in the UK. Going forward Tesco needs to show that it has got this right. If it has then Tesco remains a decent recovery play going forward, but there is still enough doubt, especially as the UK is a very mature market where it might be difficult for the company to get back the market share it has lost. It should be remembered that Tesco had 30% of this market a few years ago and is still the market leader by some way. Getting back to 30% in itself will be a difficult job and remains the reason why ultimately Tesco has to develop elsewhere which despite the US failure includes overseas.

Ladbrokes, losing the race

Ladbrokes today updated the market on its first quarter performance. A red flag could be seen before anything was read as the announcement stated "Early release of 1st quarter results".  Early release?  Could spell trouble and it did.

Ladbrokes had always planned for a reduction in group operating profit during the quarter due to known taxation and cost headwinds in UK Retail and the expected H2 weighting of growth in Digital revenues.

This reduction has however been exacerbated by softer trading than expected in Q1, particularly in the second part of the quarter, during which we saw a number of one off factors including; a significant reduction in profit from Cheltenham, lower revenues from high value gaming customers and a proportionately higher impact from horseracing cancellations.

When coupled with the revised 2013 outlook for our Digital business following our deal with Playtech we now expect group operating profit for the year to be at the bottom of the existing market range, in light of which the Q1 IMS has been released today.

http://www.digitallook.com/news/rns/20826495-10046/LAD-Early_Release_of_1st_Quarter_Results_html?ac=,&username=,

So not good and the share price, down around 8% today reflects that. However, the middle paragraph above makes you wonder why Ladbrokes felt the need to get their announcement in early, especially as rival William Hill is due to report on Friday.

Is Vodafone a screaming buy?

At least is it a screaming buy for the long term buy and hold investor? There is a case to be made for saying that this is one company which has an ace up its sleeve which could see the share price go a lot higher if ever the value of its 45% share of Verizon Wireless is unleashed.

This is a company that back in the tech boom days, when it was seen as a more of a growth story, did see its share price get to around the 400p level, but that was back in 2000. Since then it hasn't really got close to that price level and as it is now seen as more of a mature company, as such it's not unreasonable to expect to see its price based on a more sensible valuation of its fundamentals. However, Vodafone has one big advantage which in terms of its potential share price appears to be totally overlooked and that is the share of Verizon Wireless that it owes.

The Vodafone share price has recovered recently partly on the back of some deal or takeover being on the cards with Verizon for Vodafone's stake in the company. It is clear that the two companies find it difficult to live in harmony with each other and that both sides might just be edging towards some kind of mega deal that would, or at least should have a dramatic effect on Vodafone's share price.

The key fact seems to be this.  Vodafone is valued at a market cap of around £92 billion, but some estimates put its 45% share of Verizon at more than that. In other words, Vodafone's current valuation seems to totally discount the Verizon share, which is quite remarkable when you think about it. This is effectively what US hedge fund manager David Einhorn said back in January when he increased his stake in Vodafone.

http://www.businessinsider.com/greenlights-david-einhorn-bullish-on-vodafone-2013-1

In the meantime Vodafone will no doubt continue to pick up a sizeable yearly dividend from Verizon until the two parties decide what they are going to do. Until that happens its clear that Vodafone is holding a strong hand with its 45% stake, a potential £90+ billion of value which the market seems to be ignoring.

Update 03/04/13;

Can you be sure of Esure?

It is often the sign of a bull market that you see more IPO's coming to the market. Yesterday was the final day for anyone interested in buying shares in Insurance company Esure to register their interest.

Insurance firm esure has set a price range of 240p to 310p per share ahead of its much-anticipated London initial public offering.

The mid-point values the company - founded and chaired by Peter Wood, one of Britain's wealthiest entrepreneurs - at £1.1bn.

The home and motor insurer said it would repay "all of esure's outstanding debt" with the £50m it hopes to raise from the sale of new shares.

http://news.sky.com/story/1061865/esure-sets-price-range-ahead-of-flotation

There is talk that the starting price will be around the 270p mark, which if true puts it on a dividend yield of around 6% and prospective P/E of around 10, lower than its market peers. The last big insurance company to float was Direct Line, which also offered a yield of around 6%. There were doubts about Direct Line, but since the IPO the share price has been a steady riser, although the bull run recently should have helped it. Chances are Esure could also be a steady performer, at least while markets are good, and the prospective yield does look good for income seekers at a time of low IR's for savings on cash.

IPO's though seem to be back in fashion, as we also have estate agent Countrywide coming to market this week as well.

Britain's biggest estate agent, Countrywide, is poised to sell its shares in an initial public offering on Wednesday at the highest possible price it had planned for, in a further sign that the UK housing market is gaining momentum.

The company is preparing to offer its shares at the top end of the range – 330p to 350p a share, up from an initial 260p-350p – two unnamed sources told Reuters.

http://www.guardian.co.uk/business/2013/mar/18/countrywide-flotation-optimism-housing-market

Not sure about that UK housing market momentum, but it's perhaps typical of an estate agent it wants the highest price possible at float, so not as attractive for income seekers as Esure.

Aviva disappoints, another big dividend yield bites the dust

Aviva reported to the market this morning numbers that probably came as a bit of a shock.

Shares in Aviva crashed 15pc in early trading on Thursday after the insurer revealed a 44pc cut in its final dividend from 16p to 9p, reducing its total dividend from 26p last year to 19p for 2102 – a drop of 27pc.

Aviva said it had rebased the dividend to give certainty to shareholders and reduce debt, putting the insurer in "a sound position for the future".

Pension funds, fund managers and small investors, who have held the company's shares because of its 7pc dividend yield, were expected to offload the shares on Thursday.

RSA Insurance upset investors last month by lowering its dividend by 33pc. The surprise cut resulted in a 14pc drop in the insurer’s share price in a single day.  

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/insurance/9914400/Aviva-shares-tumble-as-slashes-dividend.html

Like RSA Insurance, Aviva had been sitting on the attraction for investors of a big dividend yield for some time, but there was always talk of underlying problems, a "value trap" in the making and thus today's reduction in the dividend shouldn't really come as a total surprise. Anyone who shifted their funds out of RSA into Aviva a few weeks ago will have been hit hard by this double whammy.

Another Vodafone downgrade comes in

Just when Vodafone investors thought their share price might be in the process of making a recovery, market sentiment moves towards the negative side again. First, the news that Vodafone might bid for Kabel Deutschland didn't seem to please the market and now a broker downgrade, a fairly substantial one comes in.

...broker downgraded issued by Sanford C. Bernstein & Co.

Analysts at the brokerage moved Vodafone's stock from Market Perform down to Underperform - while also issuing a swinging cut to their target share price.

VOD's target now sits at 135, down from 170.

Vodafone’s European assets, which account for about 40 percent of the group operating profit, may shrink by 23 percent in the next three years, Bernstein said.

http://www.economy-news.co.uk/shares/share-price-drivers/2767-vodafone-group-plc-shares-downgraded-4543545

Meanwhile, Vodafone continues to buy up its own shares as part of its buyback plan. One assumes they don't think it will go to 135p, otherwise it might be best to wait to get a better price. On the other hand, companies probably don't try to time the market in the same way traders or investors might do, Vodafone no doubt feels that long term there will be value in buying at the current levels between 160 and 170p.

Vodafone - "damned if they do, damned if they don't".

http://www.economy-news.co.uk/shares/share-price-drivers/2730-vodafone-share-report-and-strategic-vision-questions-443545

Will Vodafone disappoint?

While the Vodafone share price has recovered a little ground in recent weeks, to some degree on the back of the euphoric start to the year in the FTSE, its results to be announced tomorrow have been awaited with some question marks hanging over what is likely to be reported. Could the downward trend continue if Vodafone comes in lower than expected? It looks like the market is ready to be disappointed.

Vodafone Group is expected to post 'growth deterioration' in its financial results Thursday.

Last month Deutsche bank lowered its recommendation from ‘buy’ to ‘hold’ citing concerns about the telecom company’s worsening cash returns.

"We forecast growth deterioration through calendar 2013 with the outlook for financial FY14 set to confirm declining free cash flow (FCF), no further dividend-per-share (DPS) growth and a scaled down buyback to avoid increased leverage."

Deutsche Bank said it anticipates organic service revenues to falter further this year, with a return to positive growth unlikely until 2014.

It also reduced its target price for the shares from 225p to 175p.

http://www.digitallook.com/news/20674165/Thursday_preview_Vodafone_Group_to_report_growth_deterioation.html?username=&ac=

"Growth deterioration" doesn't sound good, but a lot will depend on how much deterioration and it does have its Verizon Wireless investment to help it out, although it appears to be talk around a possible Verizon buyout of Vodafone that seemed to be helping the share price recently. Would Verizon seriously consider a bid for Vodafone? Can Verizon afford it?

A better than expected report tomorrow could see Vodafone continue to recover from its lows in the 150's, worse than expected and we may see 155 tested again over the next few weeks. It will be interesting to see what the charts look like by the end of tomorrow.

Vodafone chart before recent recovery below.

http://sevenpillarstrading.blogspot.co.uk/2012/12/no-christmas-love-for-vodafone.html

Tesco, Sainsbury and Morrison update.

Next week is a big week for the three big food retailers in the FTSE100.  All three of Tesco, Sainsbury and Morrison are due to report updates, telling us how things went over the Christmas period. All three have a lot to gain and potentially lose depending on what they report.

It has been approximately a year since Tesco reported its UK profit warning that resulted in a share slump of around 20% in a day.  Having almost touched a price of 300p over the summer, the share price has been in recovery mode on the back of a huge investment in its UK operations and its recent announcement that it is to look again at the loss making US operation Fresh and Easy. It is expected that Tesco will either scale this down massively, take on a US partner or more likely sell up completely. The market is probably looking for a further announcement on this when the company reports on 10th January. As the share price has been going up recently the good news may already be in the price, but don't be surprised if there is a further up-rating should it be announced that they are pulling out of the US. If that is also accompanied by an improvement in its UK results, then market sentiment of the good variety may suddenly be with Tesco.

Some popular posts from 2012

Here are some of the more popular posts, in terms of hits, from the last year (or 6 months or so that the blog has been going).

It would appear that we all like something that is free, even better if it is helpful as well. There are quite a few good free online trading, investment magazines and when I find something new I add it to the list.

Something for free - online trading/investment magazines

What time frame are you trading/investing in

Should you follow the news?

Vodafone

Dividend Payers

Technical Analysis

US Fiscal Cliff

Should Vodafone cut its dividend?

One of the few things that Vodafone has going for it at the moment for investors is its dividend. The current dividend yield is between 6-7%, helped by the potential of growing payments to the company from its investment in Verizon Wireless. So, it will perhaps come as a surprise, especially to Vodafone investors, that at least one view from the city seems to be suggesting that the company should cut its dividend. Here's what Nomura had to say in a release today.

"Paying an inflated ordinary dividend has been discredited as a way to reward shareholders, it restricts strategic flexibility and it leaves Vodafone dependent on Verizon Wireless cash flows which compromises its ability to negotiate with Verizon. A review of cash return policy is overdue, we believe."

http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?csi=10097&action=news&story_id=20580488

So, reading between the lines are they saying cut the dividend? Invest the money elsewhere in the business? Nomura does seem to think that the licence renewal for a company like Vodafone could act as a drag on the company and its share price for years to come.

The broker estimates Vodafone's spectrum bill to be at least £1.5bn annually for 2013-2016 (year-end March) and £20bn over 10 years. For the current financial year (ending March 2013), spectrum costs will be around £3bn, reducing controlled cash flow to £2.2bn, well below the dividend cost (£4.9bn).

Is the Vodafone dividend safe? Probably for now as I suspect that any announcement of a dividend cut on top of all the other perceived bad Vodafone news would see the share price going lower given the poor sentiment that surrounds the company at the moment. However, the fact that one city voice is suggesting, in their words, that "paying an inflated ordinary dividend has been discredited as a way to reward shareholders", suggests that Vodafone has a lot to do to improve sentiment towards it going into 2013.

No Christmas love for Vodafone

Despite the FTSE continuing to show a desire to rise as we go into the Christmas period, one company that just happens to be one of the biggest market caps in the index,Vodafone, just cannot seem to do anything to find any market love.

Vodafone's share price has been in a relentless fall, a look at any chart on more or less any time frame shows a series of red with just occasional hints of blue (or green in the case of the charts below), the latest fall this week coming because the market feels that Vodafone overpaid for its Dutch 4G airwave licence. With other countries, including the UK, getting ready to sell their licences there is a feeling that cash strapped Governments will raise the bar as high as they can get away with and telecoms companies like Vodafone will get taken for a ride.

Whatever happens, this is just another in a long line of bad news flow, at least as interpreted by the market, to further hit the share price. However, the warning signs were there in the charts, especially after the share price was  up to over 190p a few months ago, a potential top could be seen and since then it's been one of the most slowly grinding relentless sell offs in the FTSE index. Both the Weekly and Monthly chart look pretty ugly. Even worse, the fall looks in its early stages on the Monthly chart. If there is a saving grace for the moment it is that support is at the current 156-158 level and the price has just touched the 200 dma on the Weekly chart.

This is still a falling knife and even though Vodafone is in the market to buy its own shares right now with the Verizon dividend (Vodafone begins buyback), it isn't doing much thus far to prop up the ailing share price. Still, I suppose they might consider they are buying cheap. Charts suggest it might just get cheaper.

Charts:

Vodafone, where's the bottom?

So, Vodafone had another bad day on the markets today. It has just about replaced Tesco as the unloved big behemoth FTSE100 company of the moment by the city. The share price has been consistently falling since hitting a high of around 192p back in August, closing today at a little over 162p.

This morning Vodafone gave its half year report and typical of a company that didn't need to surprise anyone with something that would hit the share price further, the company delivered a nasty surprise.

The Group incurred a total impairment charge of £5.9 billion in relation to the carrying value of goodwill of its operations in Spain and Italy as a result of challenging market conditions and adverse movements in discount rates.

There's that word again "challenging".

Not even the news that a Verizon dividend would actually be payable at the end of the year was enough to save further falls.

Verizon Wireless

VZW, our US associate, achieved organic service revenue growth of 8.0%* in H1 and 7.8%* in Q2. Our share of profits from VZW was £3.2 billion, up 27.4%* year-on-year. VZW's net debt declined from US$6.4 billion at 31 March 2012 to US$1.9 billion at 30 September 2012, despite spending US$3.7 billion (net) on the acquisition of spectrum in H1.

On 12 November 2012 VZW declared a dividend of US$8.5 billion (£5.3 billion), of which Vodafone's share is US$3.8 billion (£2.4 billion). The dividend is due by the end of the 2012 calendar year. The Group intends to commence a £1.5 billion share buyback programme after receipt of the dividend.

http://www.digitallook.com/news/rns/20493394-10097/VOD-Half_Yearly_Report_html

Is WM Morrison the new Tesco?

At least in the eyes of the city when it comes to being down on a food retailer? WM Morrison is a company which seems to be attracting negative news around the city right now. It looks like the ground is being prepared for disappointment around this one when it updates the market next week. The share price has been falling, brokers have lowered just about everything to do with the company, but is the worst priced in?

Panmure Gordon expects the downgrade cycle will continue at supermarket chain Morrisons, with the group seen under-performing the market all the way into fiscal 2014.

The broker is forecasting third quarter (Q3) like-for-like sales will have declined by 0.1%, which will put pressure on the profit & loss account.

"It has already announced Q1 and Q2 like-for-like sales declines of 1.0% and 0.9% (ex-petrol) respectively. Q3 has a slightly tougher comparable, but we look for a decline of 1%. New space is expected to add around 2.1% to sales growth in H1 [first half], so total sales growth should be just over 1% (ex-petrol). The last Kantar data for the 12 weeks to September 30 had Morrison growing at 0.0%, so the risk to our forecast seems to be on the downside," Panmure Gordon reckons. 

www.digitallook.com

Does the above suggest that any slight bad news will result in a Tesco "profit warning" price fall type day for Morrison next week? Tesco fell almost 20% on the back of a poor showing in its UK market back in January, could the same happen to Morrison if the numbers are even slightly lower than expected? Even though the P/E and dividend yield for Morrison are not that demanding right now, but if the market sees a profit warning coming in then the shorters could have a field day next week.

Direct Line, are the Sid's back?

Back in the 1980's when privatization was all the rage for the Conservative Government, Sid was chosen as the campaign name of the imaginary ordinary bloke in the street who just might be interested in buying into the nationalised industries that were being sold off.  Millions joined in, often selling for a quick profit as they were priced to sell, BT, UK water, and British Gas to name but three (UK Water ad below).

Such IPO's, especially ones where the public are invited to buy are now rare.  Direct Line Insurance is the latest big IPO, which while not owned by the Government, is owned by RBS the bank saved by the taxpayer from going under back in 2008. In effect, the Government does still own 83% of  RBS and it wouldn't be around today if it wasn't for the taxpayer.

Tesco v Sainsbury

Earlier this week the big FTSE100 food retailers Tesco and Sainsbury squared off with updates to the city concerning their recent trading. Now that the dust has settled, it's pretty clear that Sainsbury came out the winner in the eyes of the city

Here are a few highlights from Sainsbury's 2nd quarter trading statement.

Total sales for second quarter up 4.3 per cent (4.4 per cent excluding fuel)

Like-for-like sales for second quarter up 1.9 per cent (1.9 per cent excluding fuel)

Total sales for the first half up 4.0 per cent (4.1 per cent excluding fuel) and like-for-like sales up 1.7 per cent (1.7 per cent excluding fuel)

Tesco on the other hand produced its half yearly report which while more or less meeting expectations didn't sparkle the share price, in fact the opposite. Fresh broker downgrades seem to have flown in, pushing the share price lower towards 300p.

Group sales up 1.4% to £36.0bn* (up 3.2% at constant rates); Group sales exc. petrol up 1.6% (up 3.7% at constant rates)

Statutory profit before tax down (11.6)% to £1.7bn; Underlying profit before tax down (8.5)% to £1.8bn

Group trading profit of £1.6bn, down (10.5)% - UK down (12.4)% to £1.1bn; International down (17.1)% to £0.4bn; Tesco Bank up 114% to £94m

Underlying diluted EPS reduction of (7.9)%

Interim dividend per share maintained at 4.63p

Group capital expenditure brought down from £2.1bn to £1.6bn; on track for a full year reduction to c.£3.2bn

Stats from digitallook.com.

Vodafone and the Verizon dividend mystery

The Vodafone share price has been in a bit of a slump recently, nothing dramatic but a few fears have crept in as to whether this FTSE100 behemoth can maintain its current growth, certain negatives coming out of Europe suggesting that it might be heading for tougher times.  Vodafone offers a pretty good dividend yield currently around 5.5% but could rise to 7.5% next year.  This does not include the special dividends that shareholders have been getting courtesy of its 45% stake in US based Verizon Communications. However, in the last week or so the share price has fallen in part because of a fear that Vodafone will not get a dividend from Verizon this year.  It appears there is nothing substantial or factual to support this, just one of those stock market rumours that tend to emerge and effect a share price from time to time.