ITV now offers a prospective dividend yield of 5.6%

ITV dividend forecast 2017

ITV (LON: ITV) (ITV.L) released a trading statement this morning.

Entitled “ITV remains on track to deliver,” the company stated that it was “confident in the underlying strength of the business.”

While total external revenue for the nine months to the end of September fell 1%, revenue at ITV studios increased 9% and revenues in the online, pay & interactive division rose 8%. This to me suggests that the company’s strategy of rebalancing the business is paying off. Chairman Sir Peter Bazalgette commented:

We will enter 2018 in good shape with a strong operating performance underpinned by a robust balance sheet, and we look forward to the arrival of our new CEO, Carolyn McCall, early in the New Year.”

Share price fall

Yet the market didn’t like the statement, and the stock was down around 7% at one stage. It’s recovered slightly to now trade around 150p, a long way off the 250p it was trading at in January last year. At the current share price, ITV’s forward looking P/E ratio is just 9.6. Furthermore, the shares now offer a formidable dividend yield.

5.6% dividend forecast

Indeed, with City analysts forecasting a dividend payout of 8.36p for 2017, a rise of 16% on last year, the prospective yield on offer is a high 5.6%. Earnings of 15.6p are expected, which would give a dividend coverage ratio of 1.9 times.

I bought shares in ITV back in September, so I am down on my purchase price. While that’s obviously frustrating, I am bullish on the dividend prospects here and I believe that the current share price offers strong long-term value.

Disclosure: Edward Sheldon, CFA owns shares in ITV. 

This article is provided for general information only and is not intended to be investment advice. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

More from Edward Sheldon, CFA

Three dividend stocks that offer great value right now

The FTSE 100 might be trading at a high level but good...
Read More

Leave a Reply

Your email address will not be published. Required fields are marked *