Rolls Royce slashes divi by half but now is the time to buy

12th February 2016

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Rolls Royce has slashed its dividend but experts argue that now could be the best time to buy.

 

Final results announced by Rolls Royce showed profits fell 12% to £1.4 billion in 2015 from £1.6 billion the year before. It also cut its dividend by half but despite the news shares jumped 14% this morning.

 

The Share Centre investment research analyst Helal Miah said the shares were still a good buy for investors willing to ride out any market bumps.

 

‘As widely expected by the market, Rolls Royce announced this morning that it has slashed its final dividend payment by 50% to bolster its finances – the first time it has cut the dividend in 25 years,’ he said.

 

‘However, the good news is that the company has managed to avoid a further profit warning and commit to a progressive dividend policy going forward. Investors will appreciate that its new chief executive Warren East has again highlighted plans to push ahead with cost cuts and simplify the company’s operations.’

 

Miah said the structural changes meant he retained his ‘buy’ recommendation on the stock.

 

‘Investors should be prepared to ride out the volatility that the stock is likely to face as market conditions in aerospace look more uncertain,’ he said. ‘This may now be a stock for the contrarian investor seeking a balanced return and willing to accept a medium level of risk.’

 

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