This is good. Getting shot of personal care would leave Rexam's plastics operation with the more resilient healthcare products business. Combined with the strong beverages arm, the company will be better positioned to deliver value to shareholders. And talking of value for shareholders, if Rexam does end up selling personal care, investors could be in line for "a major cash return", according to Bank of America Merrill Lynch. This is because the company is doing well with its debt target, and could afford to give shareholders a boost, which would come on top of the already very tasty 4.3 per cent dividend yield.

Last of the phew?

Number one tip - Dividends

www.dividendmax.co.uk

http://www.dividendmax.co.uk/sectors/general-industrials/companies/rexam

Bullish lesson from blast furnaces
By Ken Fisher | Wed, 14/12/2011 - 09:30
http://bit.ly/w0EUtc

Investment Column: Rexam strikes the right note with a review of its personal care arm
http://www.independent.co.uk/news/business/sharewatch/investment-column-rexam-strikes-the-right-note-with-a-review-of-its-personal-care-arm-6263980.html

NIKHIL KUMAR FRIDAY 18 NOVEMBER 2011

Our view: Buy

Share price: 332.8p (+7.7p)

Rexam's shares were among the strongest on the FTSE 100 last night. The gains, achieved as the wider market headed south, came after Europe's largest manufacturer of beverage cans said it was trading in line with hopes, with strength in the cans division limiting the hit from weakness in its plastic packaging business.

There was, in other words, nothing eye-catchingly spectacular on the trading front – at least nothing that would explain the sharp jump relative to other blue-chips. To work out why the stock rallied as it did, we think it might be more useful to take note of Rexam's comments on the weaker plastic packaging division.

In particular, the company said it was "exploring all options" for the division's personal care arm, "including divestment". In English, this means the company is trying to get rid of the business, which, as Seymour Pierce points out, makes up around half of the plastic division's sales.

This is good. Getting shot of personal care would leave Rexam's plastics operation with the more resilient healthcare products business. Combined with the strong beverages arm, the company will be better positioned to deliver value to shareholders. And talking of value for shareholders, if Rexam does end up selling personal care, investors could be in line for "a major cash return", according to Bank of America Merrill Lynch. This is because the company is doing well with its debt target, and could afford to give shareholders a boost, which would come on top of the already very tasty 4.3 per cent dividend yield.

Now, before we come to our recommendation, we should admit that we bought in earlier this year, when Rexam was trading north of 370p. Since then, it has fallen back. Given the uncertain economic backdrop, we did think about sitting tight until our investment is back in the black. But the possible disposal changes everything in our view.

Rexam is a good business with a healthy yield and undemanding valuation multiples (which is why it's not a sell). It does, however, have its weaknesses. The fact that it is dealing with them, and the possibility of a further cash boost, makes its well worthwhile in these uncertain times.