Those interested in dividends might be disappointed, if the following turns out to be correct. According to a report on Proactive Investors:
For Barclays, Deutsche raised its target price to 234p from 210p. It also expects Barclays to unveil a progressive ordinary dividend per share and a £500mln buyback in 2018.
"Though we struggle to see Barclays as a ‘dividend’ yield stock (yields have historically been lower than banks like Lloyds, and capital generation lower), buybacks would help improve earnings per share and thus earnings upgrades," it said.
It cut its dividend forecasts for 2018 to 4p from 5p. For 2019 Deutsche lowered its dividend estimate to 5p from 8p and predicts a buyback of £1bn. In 2020 the Deutsche’s dividend expectation reduced to 6p from 12p while the buyback is projected to be £1bn.
On litigation matters, Deutsche Bank expects £1.5bn in 2018-19 to cover a probe by the Department of Justice over the suspected fraudulent sale of mortgage securities and other investigations.
Adjusted pre-tax profit is forecast rise to £5.3bn in 2018 from £4.3bn in 2017 and expected to grow to £6.2bn in 2019 and £6.8bn in 2019 [recte: 2020].
In the long run, buying back meaningful quantities of shares probably makes sense if it's trading below book value. I think they last bought back shares in 2006 and probably paid over £6 or £7!
The company's market cap is almost £33 billion, so a £0.5 billion buyback in 2018, £1 billion in 2019 and £1 billion in 2020 would total £2.5 billion or over 7.5 percent of the company's outstanding shares at today's valuation. We'll see how accurate it turns out to be!