Justin Cooper, CEO of Shareholder solutions at Capita Asset Services

“Stellar profit growth has rolled out the red carpet for bumper dividend payouts at ITV, and investors are already tuning in to the prospects of increased income. Last quarter ITV provided a big special dividend, returning £179m to shareholders, and it has not rested on its laurels. Hiking first-half dividend payments by 27%, and committing to raise them more than 20% every year is real statement of intent from chief executive Adam Crozier.

“While ITV is a relatively small payer in the grand scheme of UK dividends, the rapid improvement comes in stark contrast to slowing underlying dividend growth across the wider market, which we forecast will cool to 3.5% for 2014. Dividends are the most important component of equity returns over the long term. Crozier’s five-year turnaround plan is starting to turn heads.”

Graham Spooner, investment research analyst at The Share Centre

“ITV provided the market with its half year results this morning, which on the whole were positive. The update showed that profit growth was boosted by its expanding production business alongside the continuing progress of the group’s strategy to grow and strengthen all parts of the company. With the advertising market showing signs of improvement ITV is well placed and the group plan to generate half its revenue from sources other than traditional adverts by 2015.

“The company recommended an interim dividend of 1.4p, up 27% and says it is committed to its full year ordinary dividend growing by at least 20% a year for the next three years, which will please investors. News in early July that Liberty Global had purchased a 6.4% stake gave the share price a boost and offers the potential for future M&A activity. These results demonstrate the business is continuing to move in the right direction and we recommend ITV as a ‘buy’ for investors.”

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:

“As expected, performance has been driven by the football World Cup. The economic recovery is also playing its part, whilst the group’s push to embrace technology has been rewarded by a 20% increase in revenues for its Online, Pay & Interactive business. More broadly, the group’s ambition to acquire content and reduce its reliance on volatile advertising, whilst also becoming more internationally focused, previously took a significant step forward, with it now having become the biggest unscripted independent production company in the US.

On the downside, the group’s and the wider industry’s dependency on major sporting events is again being underlined, whilst any strategy utilising acquisitions is not without risk.

In all, management’s transition programme has come a long way. Revenue growth across all parts of the business has been reported, cost savings continue to be pursued, while investors are now being rewarded via a focus on shareholder returns, with a commitment being made to increase the full year dividend by at least 20% per annum over the next three years. Nonetheless, and despite today’s positive results, the recent sale of a 6.4% share stake to Liberty Global remains at the forefront of investor thoughts, with the potential for M&A activity having recently moved analyst consensus opinion from a firm hold to a buy.”