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| 02.04.25 05:30:00 | Schroders emerged during the Napoleonic Wars but now faces a battle for its future |  |
| Illustration: Schroder's share price line graph with crown tumbling down it When blue-blooded fund manager Schroders opened its new headquarters near the Barbican seven years ago, it invited a suitably regal guest to do the honours. The historic money manager, which was founded during the Napoleonic Wars, invited Elizabeth II to cut the ribbon for the 308,000 sq ft office, making a major coup for the eponymous Schroders family, who have controlled the business for two centuries. Flanked by Bruno Schroder, the 85-year-old family patriarch, and chairman Michael Dobson, the late Queen’s visit marked a new dawn for the FTSE 100 giant, which was attempting to reinvent itself as a modern-day asset manager. Yet seven years on from the prestigious opening, the British financial titan is at a crossroads. Buffeted by an industry-wide downturn, Schroders is trying to plot a new course in a rapidly changing environment.Schroders invited the late Queen to officially open their new City office in 2018 - Heathcliff O'Malley Schroders’ problem had been a rapid sea change in investment markets, away from its bread-and-butter active stock picking model towards cheaper “passive” funds – like ETFs – and private capital. It has tried to keep pace by buying numerous businesses that oversee private capital, but questions remain over the success of this strategy. As a result, investors are growing weary. Shares in Schroders hit their lowest level in a decade last year, and despite a recent upswing, remain 45pc below their recent peak in 2021. For the 15 or so members who form the 14th generation of the Schroder family, and still own 44pc of the group, the financial repercussions have been severe. Their combined wealth has dropped from an estimated £4.6bn when shares peaked to about £2.4bn today – a loss of £2.2bn in under four years. Bruno Schroder, who died in 2019, has since been replaced on the board by his daughter, the billionaire heiress Leonie Schroder. Along with her cousin, Claire Fitzalan Howard, they represent the interests of the secretive Schroder family, who are no doubt keen to see the firm prosper once more. “The family wants to see a share price which is going in the right direction rather than the wrong direction – and it had been going in the wrong direction for seven years,” says Rae Maile, from Panmure Liberum.Leonie Schroder is a member of the current board and represents the interests of the secretive Schroder family - Schroders To arrest the slide, Richard Oldfield, the new chief executive who took the reins in November, has laid out a radical £150m cost-cutting plan and ambitious new financial targets. Hundreds of jobs could go as part of the overhaul, with the City abuzz with questions over whether Oldfield and Meagen Burnett, his finance chief, can turn the Schroders ship around – or whether a more dramatic break-up is needed. Story Continues “Schroders has been trying to be all things to all people, but they have missed out on the scale game,” says one industry observer. “Their clients are buying cheaper passive funds at one end, and private markets funds at the other – and Schroders is getting squeezed in the middle.” Schroders had been Britain’s leading stock picker since the 1960s when it rode the occupational pension scheme boom by managing money for the likes of the Post Office and the Marylebone Cricket Club. Such was its prestige that Michael Verey, the former chairman, once modestly declared that Schroders was “rather good at investments, having done it for a long time, and is not a bit ashamed of it”. Struggled to maintain dominance Yet despite its storied reputation, Schroders has struggled to maintain its dominance in the 21st century – as Wall Street machines like BlackRock and KKR have put the squeeze on the industry with their cut-throat American drive. Peter Harrison, who left in November after a decade as chief executive, sought to expand more into more esoteric investments such as private credit and real estate – areas he dubbed “areas of fast-flowing waters” – to keep Schroders in the race. As part of the strategy, he acquired numerous companies in a scattergun M&A offensive, spending significant sums on “alternative” fund managers like Benchmark Capital, Adveq, Blue Orchard, SPW, River and Greencoat Capital. But up against a better-resourced American private credit managers such as Carlyle and Blackstone, Schroders never appeared particularly comfortable operating away from its main strengths of stock picking and wealth management. Some say Harrison had the right idea, but the execution let him down because he didn’t put his foot on the gas. “Harrison spent a lot of shareholder funds over a long period of time buying shiny new toys which then didn’t actually deliver,” says Maile. “The areas where it has been doing well were being sidelined by Harrison, who was chasing the view of the world that said it’s all about private markets. If you did work in public markets at Schroders, you were the poor cousin.” Schroders’ current predicament is ironic because it has rarely struggled for relevance in financial markets. Blue-blooded, old school and part of the financial establishment, the history of the group is entwined with the history of Britain. Founded in London by Johann Heinrich Schröder, a member of a prosperous Hamburg family, Schroders was for centuries a major British merchant bank, ranking alongside the Rothschilds, Kleinworts and Warburgs in terms of prestige. It originally financed cotton imports from the US before the Civil War, and later the construction of the London Underground and the Channel Tunnel. But in 2000, the Schroder family, then led by George Mallinckrodt and Bruno Schroder, severed that link. They sold the banking business to Citigroup, leaving it as a standalone fund manager. Despite the risks, their bold gamble paid handsome dividends. Assets under management at Schroders swelled from £132bn in 2000 to over £300bn just before Harrison took over in 2015. Since then, assets under management have jumped again to an astonishing £780bn. Yet this increase has masked hidden issues threatening the business. Last year, clients pulled more money than they put in, with many ditching their stock market investments for private capital. That has raised questions over what Schroders wants to be and whether it has the right strategy. “They’re not trying to be KKR. They’re trying to be like a version of Partners Group or Hamilton Lane in the US,” says one fund industry expert, referring to groups that sell private assets to deep-pocketed pension funds and charities. Oldfield has pledged to get a grip on Schroders’ private capital units, known as Schroders Capital, training up the 40 or so specialist salesmen who explain the fiendishly complex products to investors to increase investment flows. While assets under management have increased from £46bn in 2020 to £70bn today, inflows have slowed over the past two years. He has also dialled down expectations, pointing to the likelihood of lower inflows into the private markets business over the next three years. Fund management ‘runs through Schroders like a stick of rock’ But what if Oldfield’s plan to ride both horses in public and private markets fails? As another option, David McCann, a Deutsche Numis Research analyst, says Schroders could ditch its in-house fund manager completely and become a standalone wealth manager. Schroders added to its blue-blooded credentials a decade ago when it bought Cazenove Capital, a one-time broker to Elizabeth II and formerly chaired by David Mayhew, a former Etonian once dubbed one of Britain’s most respected bankers. Today, Cazenove caters for the super-rich, with customers requiring a minimum of £3m just to get through the door. Splitting off the fund managers and focusing on blue-ribbon Cazenove would leave Schroders as a “simpler, but market-leading wealth management business”, McCann says – with the cash generated from the sale handed out to shareholders. Such a move would mirror Mallinckrodt and Bruno Schroder’s turn-of-the-century decision to ditch its banking business – a bold gamble that paid off handsomely. Yet some are not convinced. “Fund management runs through Schroders like a stick of rock. It’s not as easy to do as it sounds,” says another City source. Oldfield has also played down the idea, pointing out that Cazenove relies heavily on Schroders’ fund management division. Yet Schroders needs to keep running to stay in the race. In 1901, banking scion Herman Kleinwort said of the group: “They are fond of big deals and do a lot of speculation.” The Schroder family, its 6,200 staff and the City of London itself will all be hoping that Oldfield pulls off his ambitious overhaul to help the historic fund manager rediscover some of that former magic. View Comments |
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| 24.03.25 12:10:52 | Hedge funds bet against builders, financial firms and energy in Europe, says Goldman Sachs | |
| By Nell Mackenzie LONDON (Reuters) -Global hedge funds sold European stocks for the second straight week in a row with a focus on the region's financial, materials, energy and industrial companies, Goldman Sachs data for the week ending March 21 showed. Hedge funds as a group have had more positions that European stocks would fall rather than rise in four of the last five weeks, the note said. A short bet is a wager that the value of an asset will decline. Germany, Italy, the Netherlands, Denmark, and UK were the most net sold markets last week, the bank's prime brokerage said in a private note to clients and seen by Reuters. The short wagers were driven primarily by picking out single stocks rather than positions tracking broader stock indices. Nine of 11 stock sectors were net sold on the week, led by building and construction materials-focused companies, as well as firms in the financials sector, Goldman Sachs said. Crowded European short positions in February included asset manager Schroders as well as home improvement company, Kingfisher, data and tech firm Hazeltree said in a separate report published on March 19. Hazeltree's report is based on data globally from about 700 asset management funds, it says. Hedge funds have added to those bets against Schroders and Kingfisher this month, according to UK regulatory disclosures. Funds which have bet against Kingfisher in March include AKO Capital, Man Group, Kintbury Capital and Marshall Wace, the regulatory disclosures from the UK's Financial Conduct Authority show. Kintbury Capital also opened a short bet against Schroders in March, according to the disclosures. Energy firm Petrofac was listed by FCA disclosures as the UK-listed company with the largest short positions as a proportion of the company's outstanding stock. These were held by Helikon Investments and investment manager TFG Asset Management. Kingfisher, Petrofac and Schroders declined to comment. Among the hedge funds, Man Group and Marshall Wace declined to comment. AKO Capital, Helikon Investments, TFG Asset Management and Kintbury Capital did not immediately respond to a request for comment. (Reporting by Nell Mackenzie; Editing by Tommy Reggiori, Chizu Nomiyama, William Maclean) |
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| 16.03.25 08:53:44 | Schroders (LON:SDR) Is Paying Out A Dividend Of £0.15 | |
| Schroders plc (LON:SDR) has announced that it will pay a dividend of £0.15 per share on the 8th of May. This makes the dividend yield 5.6%, which will augment investor returns quite nicely. See our latest analysis for Schroders Schroders' Projected Earnings Seem Likely To Cover Future Distributions Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last payment made up 81% of earnings, but cash flows were much higher. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business. Looking forward, earnings per share is forecast to rise by 40.2% over the next year. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 61% which would be quite comfortable going to take the dividend forward.LSE:SDR Historic Dividend March 16th 2025 Schroders Has A Solid Track Record The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the annual payment back then was £0.0986, compared to the most recent full-year payment of £0.215. This implies that the company grew its distributions at a yearly rate of about 8.1% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained. Dividend Growth May Be Hard To Achieve Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, initial appearances might be deceiving. Schroders has seen earnings per share falling at 2.6% per year over the last five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited. In Summary Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company has been bring in plenty of cash to cover the dividend, but we don't necessarily think that makes it a great dividend stock. We don't think Schroders is a great stock to add to your portfolio if income is your focus. Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Without at least some growth in earnings per share over time, the dividend will eventually come under pressure either from competition or inflation. Very few businesses see earnings consistently shrink year after year in perpetuity though, and so it might be worth seeing what the 11 analysts we track are forecasting for the future. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View Comments |
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| 08.03.25 08:22:35 | Schroders Full Year 2024 Earnings: Beats Expectations | |
| Schroders (LON:SDR) Full Year 2024 Results Key Financial Results Revenue: UK£3.02b (up 1.0% from FY 2023). Net income: UK£417.0m (up 7.4% from FY 2023). Profit margin: 14% (in line with FY 2023). EPS: UK£0.26 (up from UK£0.25 in FY 2023).LSE:SDR Earnings and Revenue Growth March 8th 2025 All figures shown in the chart above are for the trailing 12 month (TTM) period Schroders Revenues and Earnings Beat Expectations Revenue exceeded analyst estimates by 1.0%. Earnings per share (EPS) also surpassed analyst estimates by 2.9%. Looking ahead, revenue is expected to decline by 2.4% p.a. on average during the next 3 years, while revenues in the Capital Markets industry in the United Kingdom are expected to grow by 4.0%. Performance of the British Capital Markets industry. The company's shares are up 10% from a week ago. Balance Sheet Analysis While earnings are important, another area to consider is the balance sheet. See our latest analysis on Schroders' balance sheet health. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View Comments |
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| 07.03.25 07:02:30 | Schroders PLC (SHNWF) Full Year 2024 Earnings Call Highlights: AUM Growth Amidst Profit Challenges |  |
| Net Operating Income: Stable despite net outflows in Institutional and Solutions business. Operating Expenses: Contained to a 2% increase. Operating Profit: Down despite 4% growth in AUM. Assets Under Management (AUM): Finished the year 4% higher at GBP778.7 billion. Gross Inflows: GBP129.7 billion, the highest since 2020. Net Operating Revenue Margin (Solutions): 11 basis points. Schroders Capital Gross Fundraising: GBP10.8 billion, 16% of opening AUM. Wealth Management Operating Profit: Increased by 15% year-on-year. Capital Surplus: Increased from GBP551 million to GBP838 million. Profit Before Tax: GBP558 million, up 14%. Final Dividend: Proposed at 15p per share, total dividend of 21.5p for the year. Warning! GuruFocus has detected 8 Warning Signs with SHNWF. Release Date: March 06, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Schroders PLC (SHNWF) reported a 4% growth in Assets Under Management (AUM) to GBP778.7 billion, driven by strong markets and investment performance. The company achieved record gross inflows of GBP129.7 billion, the highest since 2020, indicating sustained client interest across all capabilities. Schroders Capital nearly doubled its revenue contribution, with gross fundraising reaching GBP10.8 billion, highlighting strong demand in private equity and private debt. The Wealth Management segment demonstrated excellent performance with a 15% increase in operating profit, now contributing 27% of the group's operating profit. Schroders PLC (SHNWF) is committed to a transformation plan aimed at simplifying operations and achieving GBP150 million in cost savings by 2027, with a focus on profitable growth. Negative Points Despite AUM growth, Schroders PLC (SHNWF) reported a decline in operating profit, highlighting challenges in converting asset growth into profit. The company experienced net outflows in its Institutional and Solutions business, particularly due to the Scottish Widows mandate, impacting overall performance. Performance fees and carry were down GBP21 million compared to the previous year, reflecting challenges in achieving consistent fee income. The company's three-year investment performance fell to just under 60%, indicating struggles in some absolute return-focused strategies. Schroders PLC (SHNWF) faces margin pressure in public markets due to a shift in client demand towards lower-margin fixed income products and global equity strategies. Q & A Highlights Q: Can you explain the fee margin decline for mutual funds and the outlook for JVs and associates, particularly in China? A: (Meagen Burnett, CFO) The decline in mutual fund fee margins is due to a shift in client appetite towards more fixed income products and global equity strategies. Regarding JVs and associates, particularly in China, we will discuss this more in the strategy session, but we see potential for stabilization and growth. Story Continues Q: What is the current comp-to-revenue ratio, and how does it relate to talent retention and cost efficiency? A: (Meagen Burnett, CFO) The comp-to-revenue ratio was 46.4% this year, consistent with prior years. While talent retention is crucial, we are focusing on a cost-to-income ratio for guidance, aiming for a more disciplined approach to costs. Q: Can you provide details on the margin increase in private assets and the capital available for investment? A: (Meagen Burnett, CFO) The margin increase in private assets was driven by a shift in private equity mandates. Regarding capital, we have GBP838 million available, which will be used for organic growth and strategic investments. Q: What are the expectations for Schroders Capital flows and the impact of interest rates on Wealth Management? A: (Richard Oldfield, CEO) Schroders Capital aims to increase fundraising, with a focus on private equity and infrastructure. In Wealth Management, interest rates are stable, and we retain about 50 basis points from interest earnings, with no major impact expected. Q: How does Schroders plan to stabilize public markets revenue, and what are the assumptions for flows and margins? A: (Johanna Kyrklund, CIO) We aim to stabilize public markets revenue by focusing on nine market-leading capabilities. We expect growth in global equities and unconstrained fixed income, with some margin attrition due to client demand shifts. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. View Comments |
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| 06.03.25 15:09:50 | Schroders ‘needs to do better’, says new chief | |
| Schroders’ new chief executive said “the business isn’t broken but it needs to do better” as he outlined plans to save hundreds of millions PREMIUM Upgrade to read this Financial Times article and get so much more. A Silver or Gold subscription plan is required to access premium news articles. Upgrade Already have a subscription? Sign in |
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| 28.02.25 06:06:27 | Schroders CEO plans reboot under pressure from founding family, sources say | |
| By Amy-Jo Crowley, Iain Withers and Stefania Spezzati LONDON (Reuters) - When Schroders CEO Richard Oldfield presents his revamp of the 221-year-old British fund manager next week, one group of investors will be watching more closely than usual: the founding family. Oldfield, at the helm since November, is expected to outline cost cuts and prioritise areas where Schroders is growing, such as wealth and private markets, according to three people close to the firm. Some representatives of the influential Schroder family have challenged executives to improve the company's performance faster after a poor run of earnings, the sources said. Schroders' stock fell 25% last year, a third straight annual decline that returned share prices to 2020 levels. Oldfield, who joined Schroders as finance director in 2023, has the board's backing and will be given time to pursue his strategy, according to two of the sources. Schroders' shares have risen 15% this year ahead of the review. Schroders declined to comment. The family holds significant sway at the company, with a 44% stake and two representatives on the board, including Leonie Schroder, the daughter of late City grandee Bruno Schroder who held the seat for 56 years before her. The board is having to contend with a rapidly changing industry and is challenging executives about the trajectory of the firm, the people said. The likes of BlackRock, Vanguard and Amundi have hoovered up assets through low-cost passive funds, leaving mid-sized fund firms including Schroders losing clients and raising doubts about their long-term independence. Schroders' core business remains actively managed stocks and bonds, but it has tried to bulk up in areas that generate higher fees, including in wealth and private markets, aided by acquisitions including wealth manager Cazenove in 2013, and infrastructure investor Greencoat in 2021. Its wealth assets under management have grown more than two-thirds since 2020 to 121.3 billion pounds. Founded in 1804 when Johann Heinrich Schroder, a member of Hamburg's elite, joined forces in London with his brother Johann Friedrich, Schroders financed transatlantic trade before moving into corporate finance and managing investments for the well-heeled. In more recent times, Bruno Schroder represented one wing of the family for decades, while the late George Mallinckrodt, who married Bruno's sister Charmaine and later became executive chairman, represented the other. Mallinckrodt's son Philip took over his seat, before his sister, Claire Fitzalan Howard, succeeded him in 2020. Story Continues The large family ownership has historically been seen as a steadying force - Bruno was close to long-time CEO Michael Dobson - that shielded management from the demands for rapid action seen at many listed companies. FAST-CHANGING LANDSCAPE With a market value of 6 billion pounds and 777 billion pounds in total assets under management, Schroders could prove too big for many potential European buyers or partners. Asset management combinations have proven difficult, even as European consolidation picks up with France's BNP Paribas snapping up AXA's investment arm, Natixis agreeing to combine with Italy's Generali, and Germany's Allianz looking to sell its investment unit. The people close to Schroders caution not to expect a big strategic shift soon even though Oldfield, who has already cut around 200 staff and more than halved the executive committee, recently said standing still is "not an option" for the company. Ultimately, pressures on asset management's "squeezed middle" should prompt a more "radical approach" at Schroders, such as selling its asset management business to focus on wealth, said David McCann, an analyst at Deutsche Numis. Schroders is also likely to face questions about French money manager Tikehau Capital, which in February leapt into its top five shareholders after amassing a 5% stake, regulatory filings show. Tikehau has said it sees potential for "commercial collaboration" with the FTSE 100 firm, without elaborating further, and called Schroders "one of the best remaining global brands" in an industry it expects to change "very fast". A person close to Tikehau said its main interest was in Schroders' private markets business while a spokesperson declined to comment further. Schroders' third quarter report underlined its problems, as it warned four departing clients would withdraw around 10 billion pounds. It more recently picked up a 5.2 billion pound sustainable investment mandate from St James's Place in January, but investors will still need convincing, analysts say. "It's been a double whammy", said Mandeep Japgal, analyst at RBC, referring to declining investor confidence and earnings expectations. "The strategy is likely to maintain a focus on private assets, solutions and wealth. It's just about reigniting the growth within those areas." ($1 = 0.7915 pounds) (Editing by Tommy Reggiori Wilkes, Kirsten Donovan) View Comments |
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| 16.01.25 20:33:57 | Schroders to cut 3% of workforce, Bloomberg News reports | |
| (Reuters) -British asset manager Schroders is planning to lay off about 3% of its workforce, Bloomberg News reported on Thursday, citing a person familiar with the matter. The company is cutting about 200 jobs that are mostly in technology, the report said. "Our priority is to re-position the business at pace, as we transition to growth," a Schroders spokesperson told Reuters in an emailed statement. The reported move comes two months after new Schroders CEO Richard Oldfield cut the size of the asset manager's executive committee from 23 to 9, after taking over from long-standing boss Peter Harrison. (Reporting by Gnaneshwar Rajan and Mrinmay Dey in Bengaluru; Editing by Shailesh Kuber) View Comments |
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| 16.01.25 20:12:44 | Schroders to Cut 3% of Workforce in Bid to Revive Growth | |
| (Bloomberg) -- Schroders Plc plans to cut as much as 3% of its workforce, as new Chief Executive Officer Richard Oldfield looks to revive the UK’s largest standalone asset manager. Most Read from Bloomberg These Homes Withstood the LA Fires. Architects Explain Why NYC Commuters Get New Way to Dodge Traffic: $95 Helicopter Rides Will Americans Ever Lose Their Taste for Telework? Chicago Agency Pitches $1.5 Billion Plan to Fix Transit Woes Churches, Cinemas — and Moon Artifacts — Top List of Endangered Monuments The firm is cutting about 200 jobs that are mostly in technology, according to a person familiar with the matter who asked not to be identified discussing private information. This is one of the first major changes from Oldfield, who took over from long-time CEO Peter Harrison in November. “Our priority is to reposition the business at pace, as we transition to growth,” a spokesperson for the London-based firm said in a statement. The cuts will help Schroders, which managed £774 billion ($947 billion) of assets as of June 30, “improve delivery and ensure we are well-placed to meet our 2025 objectives, which are centered on reinforcing our active investment proposition,” the spokesperson added. The roughly 220-year-old firm’s share price has plummeted by about 50% since its 2021 peak. It has faced criticism for its relatively high cost base and slower organic growth amid wider woes facing traditional active fund managers as investors flock to lower-cost passive funds. Other firms in the industry have trimmed their workforces in recent months, including Wellington Management and Manulife Financial Corp. Earlier this month, BlackRock Inc. told employees it’s cutting about 1% of its 20,000 employees. Most Read from Bloomberg Businessweek Walgreens Replaced Fridge Doors With Smart Screens. It’s Now a $200 Million Fiasco The Swiss Sneaker Brand Outrunning Nike and Adidas How Long Can Toyota Put Off Figuring Out EVs? At Charles Schwab, a Fresh Start After a Close Call Young Americans Are Drinking Less—But Can It Last? ©2025 Bloomberg L.P. View Comments |
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| 29.12.24 10:14:07 | Is Schroders plc (SDR.L) Among the U.K. Dividend Aristocrats for 2024? | |
| We recently compiled a list of the U.K. Dividend Aristocrats List: 2024 Rankings by Yield.In this article, we are going to take a look at where Schroders plc (LON:SDR.L) stands against the other U.K. dividend aristocrats. In recent years, investors have turned away from UK equities, opting instead for global stocks, particularly high-growth options like US technology companies. The UK stock market is contracting at its fastest rate in over a decade, driven by takeovers of London-listed companies. According to Bloomberg data, approximately 45 companies have been delisted from the London market this year due to mergers and acquisitions, representing a 10% increase compared to the total for last year. This marks the highest number of delistings since 2010. Meanwhile, the value of deals targeting UK companies has surged by 81% this year, exceeding $160 billion. Earlier this year, UK equities seemed to be experiencing a shift in sentiment among both large institutions and smaller investors. The British stock market continues to attract bargain hunters, as UK equities are now trading at a record discount of over 40% compared to global counterparts, based on Bloomberg data. Many of the takeover targets have been mid-cap companies listed on London’s AIM market, which typically feature low trading volumes and limited analyst attention. That said, in November, investors returned to UK equity funds after three and a half years of consistent monthly withdrawals and a significant sell-off ahead of the Budget. Data from Calastone shows that retail investors directed a net £317 million into funds focused on UK stocks during the month. This inflow marks a notable shift, ending 41 consecutive months of net outflows, during which over £25 billion was withdrawn since May 2021. Also read: 10 Undervalued Dividend Aristocrats To Buy According to Hedge Funds The change in investor sentiment follows a challenging October for equity funds, which experienced record outflows as UK investors withdrew their money due to fears that the chancellor would raise capital gains tax (CGT). At the end of October, during the Budget announcement, Chancellor Rachel Reeves confirmed an immediate CGT increase. The lower rate rose from 10% to 18%, while the higher rate climbed from 20% to 24%. Analysts suggest the UK stock market could be nearing a recovery, but the timing and pace of this turnaround remain uncertain. This is where dividend stocks play a key role. Prioritizing stocks with rising dividends can offer stability and consistency through different market cycles. In addition, they provide an opportunity for long-term growth, compounding returns over time until share prices rebound. The UK market offers one of the highest dividend yields among major markets. The FTSE 100 boasts a yield of 3.68%, while the FTSE 250, representing medium-sized UK companies, offers slightly lower yields but still provides attractive income opportunities. This allows investors to focus on higher-growth areas, such as smaller companies, while benefiting from increasing dividends. According to a report by BlackRock, currently, UK market dividends are growing at a rate of 2-3%, roughly in line with long-term inflation. Stocks with growing dividends typically have reliable cash flows, enabling them to increase payouts over time. Story Continues Janus Henderson's 2023 annual dividend report confirmed the rise in dividend growth, noting that the UK distributed approximately $86 billion in dividends in 2023, a notable increase from the $63.1 billion paid out in 2020. Given this, we will take a look at some of the best FTSE dividend stocks according to yield. Our Methodology: For this list, we scanned over 40 holdings of the UK Dividend Aristocrats ETF, which tracks the performance of the highest-yielding UK companies with at least 7 consecutive years of dividend growth. From this list, we chose 10 stocks with the highest dividend yields as of December 28 and arranged them in order from lowest to highest yield. We also measured hedge fund sentiment around each stock according to Insider Monkey’s database of 900 as of Q3 2024. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here). A senior executive at Sprott Asset Management USA Inc. contemplating market changes and his future investments. Schroders plc (LON:SDR.L) Dividend Yield as of December 28: 6.86% Schroders plc (LON:SDR.L) is a London-based multinational asset management company. It offers a wide range of investment solutions to its consumers. The stock has underperformed this year, as challenges in the broader active fund management sector weighed it down. In addition, the growing popularity of index funds continues to put pressure on active managers like Schroders, creating uncertainty for 2025. Given this trend and the stock's poor performance during a global bull market, analysts are doubtful about its ability to recover next year. In the past 12 months, the stock has declined by over 28%. Despite these ongoing challenges, Schroders plc (LON:SDR.L) reported solid first-half earnings. The company's assets under management reached a record high of £773.7 billion. Wealth Management continued to perform strongly, achieving 7% growth in advised assets. In Schroders Capital, positive net new business was recorded across all four private market sectors. Moreover, mutual fund net new business saw an increase in the first half, with particularly strong momentum in fixed income. There was also notable asset growth in some of the company's joint ventures, especially in China. On the cost side, operating expenses were reduced by 1% year-on-year, reflecting the company's continued focus on cost discipline. Schroders plc (LON:SDR.L) continued to deliver strong performance for its clients in the long term. Over the past year, 69% of its assets have outperformed their respective benchmarks, compared to 56% at the end of the previous year. Over a three-year period, 62% of its funds have outperformed their benchmarks. In the first half of the year, Schroders plc (LON:SDR.L) returned £101 million to shareholders through dividends, which makes it one of the best FTSE dividend stocks on our list. Currently, the company offers an interim dividend of £0.065 per share and has a dividend yield of 6.86%, as of December 28. Overall SDR.L ranks 1st on our list of the U.K. dividend aristocrats. While we acknowledge the potential of SDR.L as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SDR.L but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT:8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. This article is originally published at Insider Monkey. View Comments |
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