Rolls Royce increases dividends

This morning, Rolls Royce announced a dividend increase of 6.7% and reported an underlying rise in profits of 4% to £465m in the six month period up to end of June 2010 whilst group revenue in the six months to 30 June 2010 rose to £5,421m from £5,142m against last year.  Graham Spooner, investment adviser at The Share Centre explains what this means for investors.

"Despite recording a loss due to one off costs and write-downs Rolls Royce reported a 4% rise in underlying profits to £465 million for the six months to 30 June.  These are solid figures and are viewed as better than expected, with a 2% increase in the share price immediately after the results announcement.

"It is important to note that despite the economic climate Rolls Royce said it had secured orders worth £5.9 billion in the first half, increasing its order book to a £58.4 billion. A further £1.1 billion of orders were received at the Farnborough air show earlier this month.

"There has been significant growth in the Middle East and Asian markets and we expect that trend to continue for Rolls Royce.

"In conclusion these are an encouraging set of results and we recommend holding the stock.  It remains our sector pick based on its wide geographic spread and strong after-sales contracts.