Five lesser-known companies worth watching
Graham Spooner, investment adviser at The Share Centre, highlights five lesser-known FTSE 100 companies worth watching.
Aberdeen Asset Management
You may not invest in one of Aberdeen's funds but that doesn't mean you're not exposed to this investment house. The company was promoted to the FTSE 100 in March last year and paid a 11.5p dividend, up by 28% on the previous year.
Spooner says: "While others in the sector have struggled, Aberdeen has continued to see solid demand for its products. Money has poured into the group's emerging market and Asia equity funds."
The largest supplier of semi-conductor intellectual property isn't a household name, nonetheless its processor technology is used in 95% of the world's mobile phones and more than 25% of electrical devices.
Spooner says: "Despite the company's strong cash flow and capital structure, we're cautious of the risks posed by Intel and the health of the global economy."
Spooner says this company's products are "highly specialised but used in every day products, such as suncream, deodorants and face creams, giving a defensive element to the business".
This is the world's largest primary producer of silver and its share price performed strongly in the last six months of 2012.
"Industrial demand for silver is likely to come from manufacturers of solar panels, plasma televisions and batteries and should offset the decline experienced from the photography sector," says Spooner.
This pharmaceutical company has grown and diversified its product portfolio and geographic reach. Spooner says: "Sales of medicines for rare diseases have been benefiting the group and keeping it on track with its sales growth targets."
A market-weighted index of the 100 biggest companies by market capitalisation listed on the London Stock Exchange. It is often referred to as “The Footsie”. The index began on 3 January 1984 with a base level of 1000; the highest value reached to date is 6950.6, on 30 December 1999. The index is “weighted” by how the movements of each of the 100 constituents affect the index, so larger companies make more of a difference to the index than smaller ones. To ensure it is a true and accurate representation of the most highly capitalised companies in the UK, just like football’s Premier League, every three months the FTSE 100 “relegates” the bottom three companies in the 100 whose market capitalisation has fallen and “promotes” to the index the three companies whose market capitalisation has grown sufficiently to warrant inclusion. Around 80% of the companies listed on the London Stock Exchange are included in the FTSE 100.
If you own shares in a company, you’re entitled to a slice of the profits and these are paid as dividends on top of any capital growth in the shares’ value. The amount of the dividend is down to the board of directors (who can decide not to pay a dividend and reinvest any profits in the company) and they will be paid twice yearly (announced at the AGM and six months later as an interim). Dividends are always declared as a sum of money rather than a percentage of the share’s price. Although dividends automatically receive a 10% tax credit from HM Revenue & Customs (HMRC), which takes the company having already paid corporation tax on its profits into account. Dividends are classed as income and, as such, are liable for personal taxation and so shareholders have to declare them to HMRC.