Schroders Plc Announces A Huge Dividend Hike

Schroders plc (LON:SDR) sees half-year profits rise 29% and rewards its shareholders with a 23% dividend hike.

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Schroders (LSE: SDR) doesn’t seem to be too concerned about the loss of Richard Buxton, one of its star fund managers, to Old Mutual earlier this year.

No doubt helped by the strong equity markets we have seen so far this year, profits rose an impressive 29% to £228m in the first six months of 2013. The operational gearing enjoyed by most fund managers was very much in evidence, with this profit increase being delivered on the back of a 17% increase in revenues.

These figures don’t include the £385m acquisition of Cazenove Capital, which was completed in early July and will help drive Schroders Private Banking division.

Net inflows to Schroders’ funds climbed to £4.5bn, up from £2.7bn in the same period last year. However, it was very much a tale of two quarters, with £5.6bn coming in during the first three months and £1.1bn flowing out in the second quarter, as investors fretted about the possible impact of less quantitative easing in the US. The fund previously managed by Buxton also saw a big decline in assets during the second quarter.

Total funds under management now stand at £236bn, which sounds impressive but probably only ranks Schroders at about number 50 amongst global fund managers, so it has plenty of room to expand in the years ahead. Indeed, Schroders said it was confident enough about its long-term prospects to raise its interim dividend by 23% to 16p per share.

There was no specific commentary about the expected outcome for the full year, and the shares slipped back some 4% in early trading to £24. Nevertheless, Schroders has been a big winner over the last twelve months, registering a gain of around 75%.

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> Stuart does not own any share mentioned in this article.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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