The Sage Group Proposes 200 Million Special Dividend

LONDON -- The shares of Sage  (LSE: SGE  ) rallied 3% to 350 pence during early London trade this morning after the financial software company reported a 7% jump in six-month pre-tax profits to 185 pounds.

Sage -- which develops accountancy software for smaller businesses -- proposed a 200 million pound special dividend, worth 17 pence per share. The company also recorded an exceptional accounting charge of 196 million pounds relating to the disposal of "non-core products."

Sage has spent several years shifting toward a software-subscription business model, which now represents over 70% of the company's sales. Recurring revenue from subscriptions expanded 6%, while one-off software license sales declined 3%. Sage's total revenue for the period improved 5% to 708 million pounds.

Sage chief executive Guy Berruyer commented:

We delivered good growth in recurring revenues, in line with our strategy. We continue to drive significant change through the business, which is delivering results in the face of continued macroeconomic headwinds.

We are encouraged by our performance, which we expect to sustain for the remainder of the year, and we remain confident that we will deliver on our strategic and financial goals.

We are delighted to have returned almost £1 billion to shareholders since October 2011, without compromising our ability to invest.

With a market cap of 4 billion pounds, Sage's shares trade at 16 times expected earnings, and offer a prospective dividend yield of 3.2%.

Of course, whether that valuation, today's results, and the future prospects for small businesses all combine to make shares of Sage Group a buy remains your decision.

However, if you're looking for a higher-yielding investment opportunity, you may want to look at "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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10/21/2016 12:09 PM
SGE $722.43 Down -0.07 -0.01%
Sage Group CAPS Rating: No stars