Compass Lifts Dividend By 10%

Published in Company Comment on 21 November 2012

Compass (LSE: CPG) has tripled its payout during the last ten years.

The shares of Compass (LSE: CPG) slipped 9p to 700p in early trade this morning as investors appeared indifferent to the group's 10% dividend lift.

The FTSE 100 (UKX) member, which supplies a variety of catering services to businesses and schools, said today that its annual payout had been raised from 19.3p to 21.3p per share.

The dividend news was accompanied by twelve-month results that showed sales up 8% to almost £17bn and profits up 7% to £1.1bn. Compass said its North American operations had fared particularly well, with sales and profits up around 10%.

Sir Roy Gardner, the chairman of Compass, said:

"The Group has had another strong year with good levels of revenue and profit growth. The strength of our cash flow has also enabled us to invest in the business to drive organic growth, as well as make infill acquisitions and reward shareholders. Looking forward, Compass is well placed to exploit the significant growth opportunities that we see in many of our markets."

Sir Roy added that the group's future prospects had prompted the launch of a £400m share-buyback programme during 2013. A £500m buyback should be completed by the end of this year.

Although the market appeared not to welcome today's dividend lift from Compass, long-time shareholders of the group will be more appreciative. Indeed, they have witnessed their dividends triple in value during the last ten years -- equivalent to an annual compound growth rate of almost 12%.

In addition, canny investors could have snapped up these shares for as little as 175p during 2005. Even after today's price slip, a four-fold return within seven years remains a very handsome investment.

If you are keen to earn such superb returns from shares, this free Motley Fool report explains how buying into reliable-but-dull companies such as Compass is a vital step on the path to the enormous investment success. You never know, maybe one day your wealth could be transformed by a four-fold gain from a company such as Compass.

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> Maynard does not own any share mentioned in this article.

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jackdaww 22 Nov 2012 , 9:00am

i sold at about 550 thinking them over valued .

big mistake !!

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