Holders of shares
in Intercontinental Hotels Group may want to extend their stay, the Sunday Times's Danny Fortson says. In his Inside the City column, Fortson said the owner of Holiday Inn and Crowne Plaza has returned more than $9bn to shareholders since it was de-merged from Bass in 1993. Another payday for investors could be announced on February 20th after the sale of the Barclay Hotel in New York. That may be a bit premature but Morgan Stanley analysts say the company could pay out $2bn in the next two years if it sells hotels in Paris and Hong Kong. The results are expected to rise healthily with a 10% rise in the dividend.
Buy shares of miner Rio Tinto, the Sunday Telegraph's Questor column said. Performance has recovered under new boss Sam Walsh's spending constraint and lack of big takeovers. Rio is the best long-term buy of the UK miners. The shares have gained 25% since Questor tipped them in July. If Rio keeps hitting production targets and iron ore prices hold up it is on track to pay a dividend yielding 3.5%.
Don't buy shares of Pendragon, Britain's biggest car seller, Danny Fortson advised in the Sunday Times. Pendragon shares have risen from 3p in the doom of 2009 to 35p now and it is not clear how much untapped value is left. Chief Executive Trevor Finn needs to spell out how he will increase profits without relying on higher sales. Its online operation will be important but "pump the brakes" for now.
Buy shares of pharmaceuticals company Shire, the Sunday Telegraph's Questor column wrote. Shire is all about growth so the dividend yield is meager at 0.6%. It announced the £2.6bn takeover of rare disease operator ViroPharma recently to add a treatment for hereditary angioedema to its own treatment for the condition. The deal will create cost cuts just as Shire's ADHD treatment for children faces generic competition. Profit is expected to rise 28% in the next year on income up 17%.
The Mail on Sunday's Midas column has added Berkeley Group, Northgate, Howden Joinery and 888 Holdings to its Dividend Surprises portfolio. Midas launched the portfolio in November to include the 10 FTSE 350 companies whose latest dividend payments most exceeded broker estimates. Antofagasta, Standard Life, Beazley and Carnival have dropped out. The original 10 companies have increased by almost 14% together compared with almost no change in the FTSE 350 index. EasyJet was the biggest gainer, rising 35%, and Premier Oil was the biggest disappointment, dropping 14%. Of the newcomers, Berkeley is pricy and widely admired but there could still be value to gain. Van hire group Northgate has been a great recovery story and should continue to do well as the economy recovers. Howden has gained 55% since Midas tipped it in March. Gambling company 888 is suffering from uncertainty over a new tax.
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