U.K. Mega Caps Earnings And Dividend Update

Includes: AZN, BBL, GSK, NGG
by: Steven Dotsch

The UK company results season for the year ended December 31, 2011 is in full swing and a number of companies we are following closely at Dividend Income Investor.com have issued management statements, such as:

BHP Billiton (NYSE:BBL)

While revenues rose 9.7 percent to $37.5 billion, BHP Billiton reported a 5.5 percent slide to $9.94 billion (£6.25 billion) in attributable half-year profits. Analysts had been expecting the world's biggest miner to post a net profit of around $10 billion for the second half of 2011.

BHP Billiton is forecasting "modest growth" in the coming quarters from both the US and Japan, still recovering in activity following the impacts of the March 2011 tsunami, while China, "after an extended period of policy tightening," was seeing an expected slowdown in fixed asset investment and industrial production.

BHP Billiton is upping its interim dividend by 20 percent to US 55¢ going ex-dividend on 2 March with payment due on 22 March. The sterling conversion will be announced in due course.

AstraZeneca (NYSE:AZN)

AstraZeneca will be paying a final dividend of US $1.95 for which the sterling conversion is 123.6 pence, going ex-dividend on 15 February with payment due on 19 March. This makes a total for the year of US $2.80, up an inflation-beating 9.8% on the US $2.55 paid in 2010.

In sterling terms, the 2011 total is 175.5 pence, up 8.6% on the 161.6 pence paid in 2010, still well ahead of inflation.

Net cash distributions to shareholders totalled $9.4 billion but only 40 percent of that, $3.8 billion, was paid out in dividends. The remaining $5.6 billion, was spent on share buybacks.

GlaxoSmithKline (NYSE:GSK)

GSK announced a final quarterly dividend of 21 pence plus a 5p supplemental payment following the sale of several subsidiaries, for a total of 26p. This goes ex-dividend on 15 February and is payable on 12 April.

The total for the financial year, including the special payment, is 75 pence against 65 pence in 2010 for an above inflation rate increase of 15.4%. Stripping out the 5 pence special payment, the normal dividend total of 70p is still up an inflation beating 7.7% on last year.

Gearing is now an alarming 112 percent. It could have come down if GSK had decided to use some of its £2.2 billion buyback cash to pay off some debt instead.

National Grid (NYSE:NGG)

National Grid reported for the period from 01 October to 30 January delivering solid operational and financial performance. And for the whole year to 31 March they expect more of the same.

The current year is the last for National Grid's existing dividend policy, which targets to grow the payout by 8 percent per annum.

For 2013 they expect to raise it by 4 percent over the 39.28 pence anticipated for 2012, which would be 40.85 pence. From April 2013 a new dividend policy will be announced once the outcome of the latest regulatory situation is clarified.

Disclosure: I am long NGG, BBL, GSK.

Disclaimer: We run the Dividend Income Portfolio, which owns a shareholding in BHP Billiton Plc, GSK Plc and National Grid Plc, purchased when the shares were historically undervalued as per our valuation methodology.