It has been a long wait for Firstgroup shareholders to get their hands on dividend cash – four years to be precise.
Meanwhile investors in its rival transport group Stagecoach, are seeing a five per cent dividend yield.
So it wasn’t a huge surprise to see Firstgroup chairman Wolfhart Hauser face down a shareholder who questioned the strategy of once again withholding a payout as the group keeps working to improve its net cash position.
Reassuringly for Mr Hauser, and his 11-strong board, there was much support in the room for its strategy.
Analysts have not been so supportive. After the group’s share price fell six per cent in a single session in May upon news that the dividend would not be reinstated, Shore Capital said reinstatement was “long overdue”.
In fact, Firstgroup hasn’t paid out to shareholders since a rights issue in 2013. Its cash generation in the last financial year improved to £147 million from £36m, net debt is down nine per cent, but remains at £1.3 billion.
Mr Hauser sternly pointed out that reinstating the dividend had not been an objective for the year, so even though all objectives were met, it couldn’t have been assumed a dividend would follow. Focusing on creating sustainable net cash is the board’s priority, he said.
Given the decent share performance in the last year (it is up more than twenty per cent) the improvements in the cash position, and chief executive Tim O’Toole’s assertion that Firstgroup should be a dividend paying stock, it would seem investors need only be patient for a little longer.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here