British Gas owner Centrica is on the rise after analysts suggested it could return up to £1.2bn to shareholders.
The company raised its stake in the Statfjord field in the north sea earlier in the week, but UBS said further such deals were unlikely to fit its acquisition criteria. Analyst Stephen Hunt said:
Even though Centrica's preferred strategy remains vertical integration, if the company doesn't find sufficient investment opportunities, then it could redistribute cash.
We believe that the payment of a special dividend of up to 23.5p a share (8% yield, totalling £1.2bn) is possible in 2012, although Centrica would likely target a lower payout in order to leave headroom for further acquisitions. Strong cashflows mean such a payment could also be repeated in future years.
Hunt repeated his buy recommendation and 330p price target, helping push the shares 4.1p higher to 299.7p.
