Each quarter, global index provider FTSE Russell reviews constituents in its index series. As in football, this leads to some stocks being relegated and others getting promoted. Here are the four firms expelled from the FTSE 100 index in the 30 August review.
FTSE reject #1: abrdn
Based in Edinburgh, abrdn (LSE: ABDN) was formerly known as Standard Life Aberdeen before losing its vowels.
The global asset manager’s shares were relegated to the FTSE 250 index in August 2022, before returning to the FTSE 100 in December. History has repeated itself, as the group has been rejected from the elite index once again.
At the current share price of 166.1p, abrdn’s market value has dropped below £3.2bn. However, it manages almost £500bn of assets for individual and institutional investors.
What’s more, its 2023 dividend will be 14.6p, matching 2022’s payout. This works out at a juicy dividend yield of 8.8% a year. I don’t own abrdn shares, but that cash payout might be worth me investigating in future.
FTSE flop #2: Hiscox
Provider of niche insurance Hiscox (LSE: HSX) also lost its FTSE 100 status. The Anglo-Bermudan group was in the Footsie for only seven months before a market value under £3.5bn saw it ejected again.
At 1,001p, shares in the Lloyd’s of London underwriter are up 11.5% over one year, but down 40.6% over five years. At the current price, the stock is £2 below its 2023 high of 1,201p on 3 May. However, it is nearly a fifth (+19.7%) above its 52-week low of 836p on 13 October 2022.
Hiscox stock has tumbled since 30 May, largely due to to first-half weakness in its retail unit. I’ve never owned Hiscox shares, but I might take a look at them sometime soon.
Reject #3: Johnson Matthey
Having been founded in 1817, Johnson Matthey (LSE: JMAT) is a 205-year-old speciality chemicals and sustainable technologies company. At the current share price of 1,632.24p, the group is valued at just £3bn, well short of the level needed to remain in the FTSE 100.
At their 52-week high on 3 February, the shares peaked at 2,384p, but then plunged to their 2023 low last Friday (25 August). The maker of catalytic converters is investing in clean-energy projects, including hydrogen fuel, making it popular with ESG (environmental, social, and corporate governance) investors.
Lower platinum group metal (PGM) prices have hit Johnson Matthey’s earnings, but the FTSE firm held its dividend at 77p a share — a dividend yield of 4.7% a year.
FTSE faller #4: Persimmon
Last but not least of the FTSE 100 fallers is UK housebuilder Persimmon (LSE: PSN) — in which my wife owns shares. At the current share price of 1,075p, the group’s market value of £3.4bn means it also misses the cut.
At its 52-week high, this stock peaked at 1,531p on 2 February, before plunging to its 2023 low of 953p on 7 July. The shares have been hammered by falling home sales and house prices, driven down by rising interest rates.
Over one year, this stock is down 27.2% and has crashed by 55.8% over five years. But some investors see Persimmon as a recovery play, given that its stock hovers at March 2013 levels. So perhaps it will return to the FTSE 100 one day?
