Shares Magazine – May 23, 2019

22 | SHARES | 23 May 2019

/DWZ/>ZE^

9.6% YIELD

,Zd

/ŵƉĞƌŝĂůƌĂŶĚƐ;/DͿŝƐĂŵŽƌĞƌŝƐŬLJƉƌŽƉŽƐŝƟŽŶ͘

ůƚŚŽƵŐŚŝƚƐĨŽƌĞĐĂƐƚϮϬρƉĚŝǀŝĚĞŶĚĂŶĚε͘ςй

ƉƌŽƐƉĞĐƟǀĞLJŝĞůĚĂƌĞũƵƐƚĂďŽƵƚĐŽǀĞƌĞĚďLJĞĂƌŶŝŶŐƐ

ĂŶĚĐĂƐŚŇŽǁ͕ŝƚŚĂƐĂĐŽŶƐŝĚĞƌĂďůĞĂŵŽƵŶƚŽĨĚĞďƚ

which needs servicing.

/ƚĂůƐŽŚĂĚĂƉĞŶƐŝŽŶĨƵŶĚĚĞĮĐŝƚŽĨάκςϯŵĂƚƚŚĞ

end of last year, which was a £250m improvement

ŽŶƚŚĞƉƌĞǀŝŽƵƐLJĞĂƌďƵƚƐƟůůƌĞƉƌĞƐĞŶƚƐĂƌŝƐŬ͘

ŐĂŝŶƐƚƚŚŝƐ͕ŝƚŚĂĚάϳϳρŵŽĨĐĂƐŚĂŶĚůŝƋƵŝĚ

resources on its balance sheet at the end of last

year although £220m of this was in countries

where prior approval is required to transfer the

funds abroad.

ĞŝŶŐĂƚŽďĂĐĐŽƉƌŽĚƵĐĞƌ͕ŝƚŵƵƐƚďĞƐĂŝĚƚŚĂƚ

ƚŚĞƌĞŝƐĂůƐŽĐŽŶƐŝĚĞƌĂďůĞƌŝƐŬŽĨůŝƟŐĂƟŽŶ͘^ŽĨĂƌ

ƚŚĞĐŽŵƉĂŶLJŚĂƐŶ͛ƚŚĂĚĂƐƵĐĐĞƐƐĨƵůĐůĂŝŵĂŐĂŝŶƐƚ

it but if a case were to succeed it might result in a

ƐŝŐŶŝĮĐĂŶƚůŝĂďŝůŝƚLJĨŽƌĚĂŵĂŐĞƐĂŶĚŵŝŐŚƚůĞĂĚƚŽ

further claims against the business, says Imperial.

/ƚĂĚĚƐ͚͗ZĞŐĂƌĚůĞƐƐŽĨƚŚĞŽƵƚĐŽŵĞ͕ƚŚĞĐŽƐƚƐŽĨ

ĚĞĨĞŶĚŝŶŐƐƵĐŚĐůĂŝŵƐĐĂŶďĞƐƵďƐƚĂŶƟĂůĂŶĚŵĂLJ

ŶŽƚďĞĨƵůůLJƌĞĐŽǀĞƌĂďůĞ͛͘

Therefore a 9.6% yield may say less about the

ĐŽŵƉĂŶLJ͛ƐƐŚŽƌƚͲƚĞƌŵĞĂƌŶŝŶŐƐƉƌŽƐƉĞĐƚƐĂŶĚŵŽƌĞ

ĂďŽƵƚŝƚƐůŽŶŐͲƚĞƌŵůŝĂďŝůŝƟĞƐ͕ŵĞĂŶŝŶŐŝŶǀĞƐƚŽƌƐ

ƐŚŽƵůĚĚĞĐŝĚĞĨŽƌƚŚĞŵƐĞůǀĞƐǁŚĞƚŚĞƌ/ŵƉĞƌŝĂůĮƚƐ

ƚŚĞŝƌƉĞƌƐŽŶĂůĂƉƉĞƟƚĞĨŽƌƌŝƐŬ͘

2100

2400

2700

3000

IMPERIAL BRANDS

2018 2019

^dEZ>/&ZE

8.5% YIELD

,Zd

^ƚĂŶĚĂƌĚ>ŝĨĞďĞƌĚĞĞŶ͛Ɛ;^>Ϳ forecast dividend

ĨŽƌƚŚŝƐLJĞĂƌŝƐϮϮ͘ϭƉ͕ƉƵƫŶŐƚŚĞƐŚĂƌĞƐŽŶĂ

ƉƌŽƐƉĞĐƟǀĞLJŝĞůĚŽĨΘ͘ρй͘tŚŝůĞƚŚŝƐŝƐŶ͛ƚĨƵůůLJ

ĐŽǀĞƌĞĚďLJĞĂƌŶŝŶŐƐŽƌĐĂƐŚŇŽǁ͕ĂƚƚŚĞĞŶĚŽĨůĂƐƚ

year the company had £1.3bn of cash and liquid

resources and £1.6bn of distributable reserves

ĂŐĂŝŶƐƚĂĚŝǀŝĚĞŶĚƉĂLJŽƵƚŽĨũƵƐƚάϯκρŵƐŽƚŚĞƌĞŝƐ

more than enough cover.

/ƚ͛ƐĂůƐŽǁŽƌƚŚƉŽŝŶƟŶŐŽƵƚƚŚĂƚƚŚĞĮƌŵŝƐďƵLJŝŶŐ

ďĂĐŬƐŚĂƌĞƐ͕ǁŚŝĐŚŝŶĐƌĞĂƐĞƐƚŚĞƚŽƚĂůƐŚĂƌĞŚŽůĚĞƌ

ƌĞƚƵƌŶ͘ĐĐŽƌĚŝŶŐƚŽƚŚĞĂŶŶƵĂůƌĞƉŽƌƚƚŚĞĞƋƵŝƚLJ

ǀĂůƵĞŽĨŝƚƐƐƚĂŬĞƐŝŶƋƵŽƚĞĚĐŽŵƉĂŶŝĞƐWŚŽĞŶŝdž

;W,EyͿ͕,&ƐƐĞƚDĂŶĂŐĞŵĞŶƚĂŶĚ,&>ŝĨĞ

ǁĂƐƌŽƵŐŚůLJάκ͘ρďŶĂƐŽĨDĂƌĐŚƚŚŝƐLJĞĂƌ͘dŚĂƚ

ĐŽŵƉĂƌĞƐǁŝƚŚĂĐƵƌƌĞŶƚŵĂƌŬĞƚǀĂůƵĞŽĨάς͘ρďŶĨŽƌ

the whole group.

>ŝŬĞǀŝǀĂŝƚŚĂƐŶŽĚĞďƚĂŶĚŝƚƐƉĞŶƐŝŽŶƐĐŚĞŵĞ

is in surplus to the tune of £1.1bn.

,ŝƐƚŽƌŝĐĂůůLJǁĞ͛ǀĞďĞĞŶŶĞŐĂƟǀĞŽŶ^ƚĂŶĚĂƌĚ>ŝĨĞ

ďĞƌĚĞĞŶ͛ƐŝŶǀĞƐƚŵĞŶƚĐĂƐĞ͕ǀŽŝĐŝŶŐĐŽŶĐĞƌŶƐĂďŽƵƚ

ŽƵƞůŽǁƐĨƌŽŵŝƚƐĨƵŶĚƐĂŶĚƚŽƵŐŚĐŽŵƉĞƟƟŽŶĨƌŽŵ

lower-cost funds.

,ŽǁĞǀĞƌ͕ƚŚĞƐŚĂƌĞƐĚŽůŽŽŬĐŽŵƉĞůůŝŶŐŽŶĂ

ƐƵŵͲŽĨͲƚŚĞͲƉĂƌƚƐďĂƐŝƐ͘^ƚŽĐŬďƌŽŬĞƌEƵŵŝƐƐĞĞƐ

ĨƵƚƵƌĞĐĂƚĂůLJƐƚƐĨŽƌƚŚĞƐƚŽĐŬĂƐďĞŝŶŐĨƵƌƚŚĞƌ

ĚŝƐƉŽƐĂůƐŽĨŶŽŶͲŽƉĞƌĂƟŶŐĂƐƐĞƚƐ͕ƚŚĞŽŶŐŽŝŶŐ

ĞĸĐŝĞŶƚĞīŽƌƚƐ͕ŐƌĞĂƚĞƌĨŽĐƵƐŽŶƚŚĞŐƌŽǁŝŶŐ

ĂŶĚƉŽƚĞŶƟĂůůLJŚŝŐŚǀĂůƵĞƉůĂƞŽƌŵďƵƐŝŶĞƐƐĂŶĚ

ƉŽƐƐŝďůĞůŽŶŐͲƚĞƌŵŽƉĞƌĂƟŶŐďƵƐŝŶĞƐƐƌĞĐŽǀĞƌLJ͘

260

320

380

STANDARD LIFE ABERDEEN

2018 2019