Two of the star performers from the recent company reporting season M2 Group Ltd (ASX: MTU) and Premier Investments Limited (ASX: PMV) have been sold off heavily today after trading without the rights to their final dividends.
M2 Group
The junior telco has dropped 38 cents or 4.9% to $7.37 in morning trade as the loss of rights to a 14.5 cent dividend payout has sent the share price tumbling. Junior telco stocks like M2 and iiNet Limited (ASX: IIN) are prized by investors for their generous yields and the market's rating of them is especially sensitive to their ability to meets expectations for growing payouts. So far both M2 and iiNet have impressed on the dividend growth front, but disappointing on the dividend front in the future is likely to be regarded by investors as a quasi-sacrilegious act by to be avoided at all costs.
Investors are also likely taking some profits out of holdings in M2 Group after the share price saw a strong run after reporting its results on August 25. The company now plans to deliver on its attempts to develop itself as an integrated internet, telecommunication, and energy retailer to individuals and businesses alike.
Management has forecast net profit growth of 15%-20% this financial year and with a strong team and track record of success further price weakness looks a buying opportunity.
Premier Investments
The retailer behind the Smiggles, Just Jeans, Portmans and Peter Alexander brands is also down 54 cents or 5.4% to $9.46 this morning after trading without the rights to its 20 cents final dividend payout.
Premier also impressed the market with its full-year results recently and the group may also be seeing some profit taking after a strong recent run. The retailer also has two growth brands in Smiggles and Peter Alexander and remains one of the better options in the retail sector.
Solomon Lew operated Premier has also recently increased an already substantial stake in kitchen appliance maker Breville Group Ltd (ASX: BRG), another retailer which looks a buying opportunity trading under $7 today.
