Brokers are divided on the implications of the dividend increase announced by Suncorp Group in its latest financial update

Brokers are divided on the implications of the dividend increase announced by Suncorp Group in its latest financial update. The insurer has announced a final dividend of 30c a share plus a further special dividend of 20c. Credit Suisse has been the most dramatic, downgrading SUN to Underperform from Neutral with a target price of $12.20 (current price $12.73). Although the dividend exceeded the broker's expectations, it sees little potential remaining for further special dividends. Similarly, Citi has downgraded the stock to Neutral from Buy with the target price unchanged at $13.75 after lowering earnings expectations by 11% for FY13, 4% for FY14 and 1% for FY15. Goldman Sachs, however, maintains a Buy recommendation on the stock, noting that the impact on future years will depend on the company's capital surplus at the end of the financial year.


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