FTSE slips below 7,000 despite Shell and Unilever divi boost

Both Shell and Unilever raised their dividends in a morning of strong quarterly updates, helping the FTSE 100 break through the 7,000 level again before falling back.

The FTSE 100 climbed back over 7,000 after dividend rises from NatWest, Royal Dutch Shell and Unilever, before falling back in afternoon trading to trade fractionally down on the day.

Blue chip equities were up as much as 0.59% this morning as income investors reacted positively to the news of increased shareholder payouts, but closed down 0.03%, or 2 points lower, at 6,961.

10:01) FTSE breaks 7,000 on big dividends

The FTSE 100 edged over 7,000 as income investors cheered the decision by Royal Dutch Shell (RDSA) to raise its dividend after a strong first quarter.

The main market jumped 41 points, or 0.59%, to reach 7,004 after struggling for a week to reach the milestone.

It was helped by Shell’s decision to increase its quarterly dividend by 4% after its shock cut last year, its first since the Second World War. Shares rose 1.3%, or 17p to £13.35 after profits jumped to $3.2bn in the first quarter, up from $393m in the final three months of 2020, as oil prices climbed.

Adam Vettese, analyst at eToro, said ‘we think there is a lot more to come’ for income seekers.

‘The great news for investors is that this story isn’t over. Shell’s share price is still significantly lower than it was two years ago, at barely half the value. As we get back to normality, demand for oil is going to continue to bounce back.’

Unilever (ULVR) results also pleased investors and the shares advanced 3.5%, or 142p, to £42.20, as the consumer goods giant reported sales in the quarter were up 5.7%, encouraging it to increase dividend payments by 4.1% to 37.6p.

Citywire A-rated Steve Clayton, manager of the HL Select UK Income Shares fund, which owns shares in Unilever, said the group ‘will never be the fastest growing business in a portfolio, but it is one of the most dependable’.

‘Over time, the value of those dividend payments and steady growth in the scale of the business add up,’ he said.

Smith & Nephew (SN) leaped to the top of the blue chips after adding 5.99%, or 89p, to £15.74 after the medical equipment manufacturer reported first quarter revenue was up and it is benefiting from the vaccine rollout and the restarting of non-urgent surgery.

The FTSE 250 managed to add 60 points, or 0.27%, to trade at 22,499 with Tullow Oil (TLW) riding high at the top of the mid-caps, adding 8%, or 3p, to trade at 53p after launching a $1.8bn bond offer in a bid to move out the maturity date of its debt. It also secured a $600m loan as part of its debt refinancing.

Lancashire (LRE) climbed 4.7%, or 32p, to 712p as the insurer reported its strongest ever first quarter premiums for 2021, as they climbed 46.1% year-on-year to $354m. The insurance group also reported that total Covid-19-related loss estimates remained unchanged.

Trust news

Marwyn Value Investors (MVI ) leaped 4.4% to 118p as the heavily discounted small companies fund reported that the extension to its Financial Conduct Authority deadline remains in place for its 2020 annual results which it will aim by the end of June.

Aberdeen Standard European Logistics (ASLI ) gained 1.1% to 113p as annual results showed a 13.6% increase in the value of its warehouse portfolio last year, underpinning a total shareholder return of 26% when dividends of 4.96p per share are included.

Princess Private Equity (PEY ) added 18p or 1.6% to £11.45 after revealing a 7.3% rise in net asset value in March, driven largely by a payout from French property management and real estate services provider Foncia.

RTW Venture Fund (RTW ) rose 1% to $2.10 after the sterling-denominated US biotech fund announced plans for a sterling share class that would make it eligible to join the FTSE indices. Annual results showed the portfolio soared 54% last year, beating the Nasdaq Biotech index which rose 27%, although shareholder returns were more subdued at 37%. A share issue is being considered to raise money for new investments.

Greencoat UK Wind (UKW ) firmed 0.8p or 0.6% to 133p as a rise in short-term power prices – reversing the trend of recent years – added 1p to net asset value per share. First quarter NAV was unchanged at 122.2p, however, as increased corporation tax took 2p off asset value. The issuance of shares  at a small premium also supported the NAV. The income fund is targeting quarterly dividends totalling 7.18p per share this year.

 

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