Signs of improvement for UK dividends
As the UK starts to emerge from lockdown, pent-up demand from stir-crazy British consumers looks set...
12 June was supposed to mark the start of Euro 2020, with the football tournament being held in 12 different cities in 12 UEFA countries, as a ‘romantic one-off event’ to celebrate the 60th birthday of the European Championship competition.
It would have opened in Rome this Friday and the final would have been played at Wembley. Alas, along came the coronavirus and it has been suspended until next year.
As an avid football fan, I’ve missed the game during lockdown and would have enjoyed the extra summer matches. But, fingers crossed, after 100 days of football-famine, the Premier League is set to resume next Wednesday 17 June, with 92 games left to play.
All matches will be played behind closed doors and some may still be moved to neutral venues, with health and safety measures continually being assessed during ‘Project Restart’. But all things being equal, fans like myself will be able to watch all the games live on TV over the next six weeks.
There are a number of ways investors can tap into the beautiful game
In terms of investing in football clubs, the one fund that has done this consistently, is LF Lindsell Train UK Equity. It currently holds both Manchester Utd and Celtic*. The managers behind the fund like football clubs because fans are so loyal, you get global fan bases and draw big, predictable audiences – which helps monetise advertising. Audiences watching live sports are also very valuable.
Speaking of which, Sky Sports, BT Sport, Amazon Prime and BBC Sport will all be broadcasting the Premier League matches.
Comcast, the majority owner of Sky, is a holding in JPM US Equity Income**. The company has managed to grow its dividend for the last eight consecutive years.
In contrast, BT has become one of the latest UK companies to cut its dividend. The company, a holding in Threadneedle UK Extended Alpha**, has announced that no further dividends will be paid in 2020/21 but that a reduced dividend will recommence in 2021/22. The company will instead spend excess cash on infrastructure projects.
Amazon – which has been a winner in the crisis and is also benefiting from a number of structural growth trends, is the second largest holding in LF Miton US Opportunities fund***.
Kits and boots are another way of investing in football and football boot sponsorship deals have been very lucrative for players. David Beckham sold the ideals of the Adidas Predator Football Boots to my generation; convincing anyone who saw that free-kick against Greece to go out and lace up our Gun-metal silver Predator Manias and practice until we could bend it into the top corner – all for a reported £7m a season!
A top ten holding*** in Legg Mason IF Martin Currie European Unconstrained fund, Adidas will start a new five-year partnership deal with Celtic FC at the start of July, to become its official kit supplier.
Then of course, there is the FIFA game. Made by Electric Arts, a top ten holding in Brown Advisory Global Leaders***, it has kept many a fan and other gamers entertained through lockdown.
And finally, as some very happy Leicester City fans discovered a few seasons ago with odds of 5,000-1, there is always a good bet to be had on the game.
Flutter Entertainment (the company resulting from the merger of Betfair and Paddy Power) is a top ten holding in GAM Star Continental European Equity^, while William Hill is held by GAM UK Equity Income***.
Football is my passion. But thinking about profits as well as wins would ruin my weekends! So instead of investing in the shares, I’ll personally stick to my best investment ever: my Chelsea season ticket!
*Source: FE Analytics, full holdings as at 29 May 2020
**Source: FE Analytics, full holdings as at 30 April 2020
***Source: fund fact sheet, 30 April 2020
^Source: fund fact sheet, 31 May 2020