Market Report: More Than good news on dividend for RSA shareholders?

Barclays’ scribblers have predicted RSA would once again become a favourite of dividend-seekers, suggesting investors will start raking in special handouts from 2018.

The FTSE 100 group, whose takeover by Swiss insurance firm Zurich fell through last year, has been steadily recovering after last year’s disaster.

The shares are up 10% this year and improved another 14.5p or 3% today to 473.6p as Barclays lifted its rating from equal weight to overweight and predicted the More Than insurer would start dishing out more cash to shareholders within the next couple of years.

The stock fell out of favour with fund managers in 2013 after an accounting black hole forced it into a rights issue and a dividend cut.

Analyst Alan Devlin said: “RSA was at one time a favourite of income funds, and we see no reason why it can’t reclaim this crown in the future.

“In the short term, restructuring costs and pension contributions… will restrain dividends, but we expect special dividends to start by 2018.” Devlin reckons the yield could rise as high as 8.1% by 2019, putting it among the best-paying shares in the blue-chip index.

On the wider market, the FTSE 100 slipped 43.73 points to 6198.16 as investors mulled over weak UK manufacturing data.

Russ Mould at stockbroker AJ Bell said: “The first reading below 50 from the UK’s manufacturing sentiment survey since May 2013 raises fresh concerns over Britain’s economic growth prospects but also those of the world, as this weak number follows equally disappointing readings from China and America.”

It meant the usual suspects were at the bottom of the blue-chip table. Miners Anglo American, down 62.6p or 8% to 700.8p, and Glencore, off 7.95p at 154.95p, are both heavily reliant on a healthy global economy.

Merlin Entertainments dropped 2.2p to 429.3p after another incident at Alton Towers over the weekend following last year’s Smiler rollercoaster disaster. Riders on the Air Galactica were left suspended in mid-air for half an hour after it ground to a halt at the top of a loop.