The latest quarterly review of the FTSE 100 has just been published.
The review sees Direct Line Insurance Group (LSE: DLG) and Dixons Carphone (LSE: DC) join the UK’s top index. Barratt Developments (LSE: BDEV) and Rexam (LSE: REX) say goodbye to the blue-chip elite.
The changes will take effect from the start of trading on Monday 22 September.
Direct Line
Insurer Direct Line, for a long time part of Royal Bank of Scotland, was floated as a company in its own right in October 2012 at 175p a share. After a strong rise in the shares to 301p, Direct Line is promoted to the FTSE 100 with a market capitalisation of £4.5bn.
Despite the big share-price rise, Direct Line trades on 13 times current-year forecast earnings, which is below the long-term FTSE 100 average of 14. There’s a prospective dividend yield of 4.4%, too, which easily beats the Footsie’s 3.2%. Furthermore, Direct Line has paid three additional ‘special’ dividends since flotation under the Board’s policy of distributing surplus cash to shareholders.
Dixons Carphone
Following, last month’s merger of Dixons Retail and Carphone Warehouse, the new combined group — Dixons Carphone — enters the FTSE 100 with the shares trading at 364p and a market cap of £4.2bn.
Dixons Carphone is rated on a highish 17 times forecast earnings, with a modest yield of 2%, but analysts are expecting the company to ring up impressive annual earnings growth of about 20% over the next two years, with the dividend rising rapidly, too.
Barratt Developments and Rexam
Making way for Direct Line and Dixons Carphone in the FTSE 100 are housebuilder Barratt and manufacturer of drinks cans Rexam. Barratt and Rexam lose their places not because they’ve disappointed, but simply because Direct Line’s shares have risen so strongly and the enlarged Dixons Carphone has muscled into the index.
In fact, Barratt (trading at 363p) and Rexam (trading at 505p) are on quite attractive forward 12-month earnings ratings (9 and 13, respectively); while both also offer a prospective market-beating yield of about 3.8%.