Vodafone, Taylor Wimpey and EasyJet

“The FTSE 100 is maintaining a calm manner on Tuesday, trading flat at 7,713. Strength among insurers and housebuilders is offset by weakness in telecoms and mining,” says AJ Bell Investment Director Russ Mould.

Vodafone

“Standing down after a decade at the helm, Vodafone’s chief executive Vittorio Colao has struggled to do much for the share price under his leadership.

“For all the tributes from the mobile telecoms firm for his ‘outstanding tenure’ the share price is up just 23% over that time against a 45.2% advance for the FTSE 100.

“Of course, this ignores the significant sums returned to shareholders through dividends and share buybacks and the performance of the shares under Colao may not reflect any failings on his part.

“After all, Vodafone is an established player in a mature market and has few levers to pull for growth. This is reflected in the guidance alongside full year results for low-to-mid single digit organic growth for the year ahead.

“Ultimately Colao’s successor, current chief financial officer Nick Read, could also be running to stand still.”

Taylor Wimpey

“Housebuilder Taylor Wimpey has become the latest name in the sector to outline plans for an ambitious capital return.

“With enhancements to the ordinary and special dividend, the £600m total payment planned for the 2019 financial year implies a yield of around 9%. The pledge is underpinned by a target to maintain margins at current levels and to increase return on assets.

“Yet the sector’s extremely generous dividends aren’t going to last forever and shareholders shouldn’t get accustomed to high levels of income year in, year out.

“Bar some economic uncertainty around Brexit, conditions for housebuilders are very supportive in terms of government policy and low interest rates. However, Taylor Wimpey will need to prove to investors it can deliver the targeted level of performance even when the backcloth is not so helpful.”

EasyJet

“A bumper first half set of results and various new initiatives like a loyalty scheme and investment to properly develop a holiday business would suggest a new lease of life for low-cost airline easyJet.

“Passenger numbers have gone up, it is making money from each person flying and costs are only increasing by a small amount. Furthermore, forward bookings are ahead of last year. All in all, chief executive Johan Lundgren has every reason to be smiling on this sunny day in May.

“Admittedly some of the recent performance was helped by reduced capacity from other airlines, but easyJet is clearly doing something right to be pushing up the important performance metrics.

“It’s the simplest things that sometimes work and a loyalty scheme certainly could be easy to roll out and help improve customer stickiness.

“The holiday investment also looks interesting with city breaks, ski and beach holidays, although that is clearly as competitive a market as the airline industry.

“EasyJet has the advantage of a well-known brand and, given that travellers already have strong trust in the business for the flying side, getting them to add accommodation in the same transaction could be an easy win for the group as long as the price is right.”

These articles are for information purposes only and are not a personal recommendation or advice.