The Motley Fool Previous Page


Capita: An FTSE 100 Dividend-Raising Star

http://www.fool.com/investing/general/2012/12/04/capita-an-ftse-100-dividend-raising-star.aspx

Kevin Godbold
December 4, 2012

LONDON -- In an outcome that's tough on investors, the FTSE 100 has failed to deliver a rising dividend payout over the last few years.

Just look at the iShares FTSE 100 ETF, for example. This is an exchange-traded fund that tracks the benchmark index, and we can see that the aggregate payment from Britain's top 100 companies has yet to regain its pre-recession peak:

 

2007

2008

2009

2010

2011

Dividend per Share (pence)

19.1

20.2

17.1

16.2

18.1

But some companies within London's premier index have performed well on dividends, despite these austere times, and this series aims to seek them out. One such name is Capita (LSE: CPI).

The big question is whether the company's dividend can continue to outperform its index. Let's take a closer look.

Capita is one of the U.K.'s leading outsourcing specialists. With the shares at 766 pence, the market cap is 5 billion pounds. This table summarizes the firm's recent financial record:

 

2007

2008

2009

2010

2011

Revenue (millions of pounds)

2,073

2,441

2,687

2,744

2,930

Net Cash From Operations (millions of pounds)

256

295

307

340

232

Earnings per Share (pence)

28.1

33.26

38.75

44.98

48.49

Dividend per Share (pence)

12

14.4

16.8

20

21.4

So the dividend has increased by 78% during the last five years -- equivalent to a 15.6% compound annual growth rate.

In an update released on Nov. 13, Capita sounded upbeat, citing a record 1.7 billion pounds in contract wins to that point during 2012. Apparently, that's the tip of a 4 billion pound iceberg of bids backed up by a buoyant prospect list. If that business all converts to cash flow, the prospects for the dividend look encouraging, especially when compared to Capita's