WPP to Consider New Dividend Policy

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LONDON: The shares of WPP  (LSE: WPP  ) slipped 1% to 1,064 pence this morning after the advertising giant reported first-quarter sales rising 6% to 2.5 billion pounds. However, those sales increased only 2.1% when stripping out acquisitions and currency fluctuations.

The company also announced it would consider "increasing the dividend pay-out target ratio from its current level" to as high as 50% of group annual profits, from its current target of 40%.

WPP -- the world's largest advertising group, whose clients include MicrosoftProctor & Gamble and McDonald's -- revealed emerging market sales had improved 8%, offset by 1% sales declines in Europe and North America.

The company generates almost 34% of its revenues from its "Direct, Digital and Interactive" divisions, where sales increased 3% from last year, partly due to an impressive 16% boost to Digital sales.

Giving its outlook for the year, WPP commented:

Following the Group's record year in 2012, 2013 has started similarly to the final quarter of 2012, with all geographies and sectors, except public relations and public affairs, growing revenues on a constant currency basis.

The pattern of 2013 looks similar to 2012 and equally demanding, perhaps with slightly increased client confidence balancing the lack of maxi- or mini-quadrennial events. 2014 looks a better prospect, however, with the World Cup in Brazil, the Winter Olympics in Sochi and, would you believe, another United States election-the mid-term Congressionals.

The Group continues to lead the industry, in co-ordinating investment geographically and functionally through parent company initiatives and winning Group pitches.

Reflecting the "timing of acquisition payments," WPP's net debt expanded by a further 331 million pounds to reach 3 billion pounds in the first-quarter.

With a market cap of 13.5 billion pounds, the company is valued at 13 times expected earnings, and offers a prospective dividend yield of 3%.

However, if you're looking for a higher-yielding investment opportunity, there aren't many global companies whose dividend can match the long-term stability or visibility laid out by "The Motley Fool's Top Income Stock For 2013."

In fact, the Fool's choice recently revealed its dividend would increase "at least in line with the rate of U.K. inflation for the foreseeable future," and provides a market-beating 5.1% yield.

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Related Tickers

9/23/2016 12:10 PM
WPP $1821.84 Down -10.16 -0.55%
WPP CAPS Rating: No stars