by Peter Lees
8. February 2011 23:57
The latest set of figures from BG Group were good and ahead of expectations, but what really interested me was the commitment to its growth strategy, with increased production targets from its key Brazilian and US assets. This should, in turn, feed through to increased dividend payments. This again emphasises why I prefer the growth offered by the likes of BG as opposed to the more modest potential offered by ‘big oil’.
Elsewhere too there seems to be a clear trend of rewarding equity investors with increased payouts. For example, we have seen increased dividends from a number of Lloyds Brokerages syndicates and Xstrata have just announced an increased payout, which will now start to put pressure on the other UK listed miners such as BHP Billiton, Rio Tinto and Anglo-American. Imperial Tobacco also recently announced that 50% of profits will be distributed to shareholders, with the intention of increasing this ratio in the coming years.
Are we seeing an increased appetite for equities?
The recent oversubscribed placing of Harbinger’s 14% holding in Inmarsat (it took under an hour) along with placings from a number of resource stocks including Indus Gas, seem to indicate that investors are now starting to look at the potential of equities compared to the risks associated with bonds in an environment where inflation is on the rise. The emphasis though continues to be on quality rather than quantity.
