Shares in travel group National Express (NEX) might have stuttered in the past few months, but a change to its dividend policy may drive renewed investor interest. Two German rail contract wins have given management the earnings visibility to confirm a proposal to start including rail profits in their calculation of dividend cover. That explains the 10 per cent dividend uplift at the half-year mark.
Adjusted profits rose by 30 per cent to £66.7m, while the company expects to reach its £100m free-cash-flow target for the full year, adding to the £370m generated in the past two years. Fuelling this was an improvement in its bus franchise in the West Midlands, a jump in coach users partly driven by Glastonbury festival-goers, and a 10 per cent revenue increase in rail. In the UK, the group has been shortlisted to bid for control of the East Anglia franchise from October 2016. It will be up against existing franchisee Abellio Greater Anglia and First East Anglia.