Bottom Line: Pressure on dividend as investors hope bad news comes in twos

Elizabeth Fournier
INVESTORS are clearly concerned. Despite reassurances from RSA’s under-pressure management that the Irish investigation will not hit the group’s long term outlook or dividend policy, shareholders scarpered, wiping almost £500m off the insurer’s market cap yesterday.

It’s no wonder they’re worried – the group has already altered its dividend twice this year – cutting both the rate of increase and the actual pay-out – and analysts are already warning that more bad news could be on the way.

Unfortunately for RSA its dividend yield, which came in at six per cent for 2012 – well above the average – is one of the most attractive aspects of its stock.

Uncertainty around its future payouts is unlikely to be cleared for a while, and – on top of profit forecasts being lowered by as much as a quarter for next year – will remain a drag on the share price.

After two profit warnings in less than a week, analysts are already wary that another one could be on the cards before Christmas. Investors will be hoping that this time, bad news doesn’t come in threes.