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M&S divi cut and Rights Issue

Practical discussions about equity High-Yield Portfolios (HYP) for income
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monabri
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M&S divi cut and Rights Issue

#204283

Postby monabri » February 27th, 2019, 1:48 pm

I mention this here in case anyone is thinking of a top up.

From the RNS.
https://www.londonstockexchange.com/exc ... 82815.html

"Concurrently the M&S dividend per share is being reset by 40% to a sustainable level from which to grow in line with earnings over time. As a result, we anticipate paying a final dividend in respect of 2018/19 of 7.1 pence per share"


"The transaction will be primarily equity financed. The Board intends to conduct a Rights Issue to raise up to £600m which will be launched in due course following the publication of our audited 2019 financial statements. The Rights Issue has been fully underwritten on a standby basis by Morgan Stanley."

Alaric
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Re: M&S divi cut and Rights Issue

#204287

Postby Alaric » February 27th, 2019, 2:09 pm

monabri wrote:"Concurrently the M&S dividend per share is being reset by 40% to a sustainable level from which to grow in line with earnings over time. As a result, we anticipate paying a final dividend in respect of 2018/19 of 7.1 pence per share"


I suppose you could take the view that although a complete catastrophe is unlikely, the share price will drop until it reaches a level where the "sustainable" dividend meets the yield requirements of potential investors.

Dod101
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Re: M&S divi cut and Rights Issue

#204288

Postby Dod101 » February 27th, 2019, 2:11 pm

And before the cut it was yielding 'only' 6.1%. Retail is not the place to be. At least the rights issue is presumably to fund the joint venture with Ocado and is not a 'distress' action.

I do not hold.

Dod

monabri
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Re: M&S divi cut and Rights Issue

#204294

Postby monabri » February 27th, 2019, 2:29 pm

Alaric wrote:
I suppose you could take the view that although a complete catastrophe is unlikely, the share price will drop until it reaches a level where the "sustainable" dividend meets the yield requirements of potential investors.


I was thinking EXACTLY the same thing!

moorfield
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Re: M&S divi cut and Rights Issue

#204298

Postby moorfield » February 27th, 2019, 2:35 pm

Dod101 wrote:And before the cut it was yielding 'only' 6.1%. Retail is not the place to be.


Here an example of where the yield tea leaves are less clear - not the dizzy heights of 9+% as CLLN, VOD, CNA which we've discussed elsewhere. I agree Retail a sector not to be entered now.

daveh
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Re: M&S divi cut and Rights Issue

#204301

Postby daveh » February 27th, 2019, 2:39 pm

Alaric wrote:
monabri wrote:"Concurrently the M&S dividend per share is being reset by 40% to a sustainable level from which to grow in line with earnings over time. As a result, we anticipate paying a final dividend in respect of 2018/19 of 7.1 pence per share"


I suppose you could take the view that although a complete catastrophe is unlikely, the share price will drop until it reaches a level where the "sustainable" dividend meets the yield requirements of potential investors.


Down 11% at the moment. M&S has been sitting at or close to the top of HYPTUSS for my portfolio for a long time now, but I've always avoided toping it up as I've been/am wary of retail at the moment as there is a great deal of competition in tis area.

Arborbridge
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Re: M&S divi cut and Rights Issue

#204305

Postby Arborbridge » February 27th, 2019, 2:52 pm

Well, I sold a tranche in 2017 and again March 2018. Oddly enough, I don't feel that much cheer (or schadenfreude) just yet as my lates price was 279p - not that much above today. Did I do the right thing? Give it five years, and I'll tell you.

Arb.

kempiejon
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Re: M&S divi cut and Rights Issue

#204309

Postby kempiejon » February 27th, 2019, 2:57 pm

Arborbridge wrote:Well, I sold a tranche in 2017 and again March 2018. Oddly enough, I don't feel that much cheer (or schadenfreude) just yet as my lates price was 279p - not that much above today. Did I do the right thing? Give it five years, and I'll tell you.

Arb.


Arb in less than 5 years you can have an idea, if you have redeployed the equivalent amount of capital was it at an equivalent yield? How is the total income that M&S would offer you this year and next compare? Did you sell your entire holding in the end? I have some unsheltered and some ISAd and would have tidied up the unsheltered but there's always been a better sale.

Arborbridge
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Re: M&S divi cut and Rights Issue

#204331

Postby Arborbridge » February 27th, 2019, 3:56 pm

kempiejon wrote:
Arb in less than 5 years you can have an idea, if you have redeployed the equivalent amount of capital was it at an equivalent yield? How is the total income that M&S would offer you this year and next compare? Did you sell your entire holding in the end? I have some unsheltered and some ISAd and would have tidied up the unsheltered but there's always been a better sale.


In this case, you are probably correct. But in general, I would reckon five years is a good time in which to assess the differences between what one actually did, and what would have happened hanging on to a recovery situation. MKS isn't a recovery, (well, some people think it is permanently in recovery mode!) so it is rather different, I admit.

BTW. I see the next holding I bought after selling MKS was Persimmon. I haven't worked through all the details, but I believe I am more of less even on capital and given the higher PSN dividend I am just about on the right side.

But it could swing the other way in five years, couldn't it... But the benefit is that I reduced my retail and added capital in a different sector.

Arb.

idpickering
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Re: M&S divi cut and Rights Issue

#204376

Postby idpickering » February 27th, 2019, 5:34 pm

This from TMF;

Is the Marks and Spencer share price a FTSE 100 falling knife worth catching after today’s news?

Shares in Marks & Spencer (LSE: MKS) are down heavily today. That’s after the high street retail giant announced a £600m rights issue and 40% cut to its final dividend to fund a much-rumoured, now-confirmed joint venture with fellow FTSE 100 constituent Ocado (LSE: OCDO).

Are the company’s plans to finally enter the home delivery market and “transform online grocery shopping for UK consumers” sufficiently robust for new investors to get involved? Or could there further share price falls to come? Let’s start by looking at today’s deal in more detail.


https://www.fool.co.uk/investing/2019/0 ... days-news/

Breelander
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Re: M&S divi cut and Rights Issue

#204382

Postby Breelander » February 27th, 2019, 5:57 pm

idpickering wrote:This from TMF;
Is the Marks and Spencer share price a FTSE 100 falling knife worth catching after today’s news?


Betteridge's Law would seem to apply here....

Breelander
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Re: M&S divi cut and Rights Issue

#221380

Postby Breelander » May 13th, 2019, 6:56 pm

In preparation for proposed the Right Issue, M&S have just sent an email announcement to all shareholders. Details here...

viewtopic.php?f=94&t=16460&p=221378#p221378

Bouleversee
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Re: M&S divi cut and Rights Issue

#221399

Postby Bouleversee » May 13th, 2019, 8:12 pm

Breelander wrote:In preparation for proposed the Right Issue, M&S have just sent an email announcement to all shareholders. Details here...

viewtopic.php?f=94&t=16460&p=221378#p221378


I don't know how they are going to manage that since one of my holdings is certificated and they don't have my email address and the other is in my IWeb ISA.

I can't say I feel inclined to take up the rights but perhaps I can be convinced. What are others going to do? I'm not persuaded yet that the tie up with Ocado will be profitable though admittedly Waitrose seem to have gone down in terms of both quality and service. I have owned M& for very many years, since the days when they were described as a quality share. Buy and forget doesn't seem to work these days; constant vigilance seems a better approach. Yet another dog in the p/fs. I worry less about the IHT bill every day.


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