Carillion continues to win work in a rocky environment. At the start of the month Carillion were selected as the preferred bidder for a £335million private partnership project with the Royal Hospital public private partnership project. See news here.
They have also won a £400 million deal in the first phase development of the Battersea Power Station development also.
Carillion is trading at close to 4 year lows at a price of around 252p per share and although they are ex dividend they currently have a yield of around 6.5% with what I view to be a strong dividend policy going forward. I currently hold and have that view for the long term.
Friday, 24 May 2013
Wednesday, 22 May 2013
Better value is a better yield
When looking at investing in a share with a strong dividend policy and hefty dividend growth it is glaringly obvious that the cheaper you get the share for the better the yield will be. The dividend will obviously be the dividend but the yield will be better.
Some advisors suggest drip feeding cash on a monthly basis to avoid swings in the share price and give more of an average. This is obviously far less risky but can be far less fruitful. I am more keen to wait until there is a retrace in the share price and, so long as this isn't due to severe bad news or a reduction in the dividend, take a position that I'm happy with. This way I can take advantage of better yields.
This can be liable to downsides. In recent years I've watched a number of shares waiting for said retrace only to watch the share price fly, Interserve and Cineworld are two examples. That said its always better to miss a winning opportunity then to suffer a loss. Or at least that's what I keep telling myself.
Some advisors suggest drip feeding cash on a monthly basis to avoid swings in the share price and give more of an average. This is obviously far less risky but can be far less fruitful. I am more keen to wait until there is a retrace in the share price and, so long as this isn't due to severe bad news or a reduction in the dividend, take a position that I'm happy with. This way I can take advantage of better yields.
This can be liable to downsides. In recent years I've watched a number of shares waiting for said retrace only to watch the share price fly, Interserve and Cineworld are two examples. That said its always better to miss a winning opportunity then to suffer a loss. Or at least that's what I keep telling myself.
Tuesday, 21 May 2013
African Barrick Gold (ABG) slides away
I'm holding this sliding stock currently. African Barrick Gold unfortunately don't benefit from cheap mining costs and as such are now looking at mothballing (albeit temporarily) mines due to the current slump in gold prices. The final dividend is due this week which amounts to 12.3 cents per share, at these rates though (as always) my dividend will be reinvested (I'll get a hat full of shares at these prices). I do feel though that African Barrick Gold will be left floundering until the price of gold picks up. If this doesn't happen within a reasonable length of time however then this will suffer and the final results will be poor. This will no doubt affect the share price and inevitably the dividend policy will change and the dividend will be slashed.
I'll continue to hold as I feel this could come back to a reasonable level, a bid could change everything in the blink of an eye.
I'll continue to hold as I feel this could come back to a reasonable level, a bid could change everything in the blink of an eye.
Vodafone's final results unveil their medium term dividend policy
So Vodafone’s
final results were out this morning and contrary to what I believed they have
again increased their dividend. They did see overall revenue down by 4.2% which
just highlights the difficulties they are experiencing in finding growth in
their markets.
They have
announced though that they are to give a final dividend of 6.92 pence per share
making a full year dividend of 10.19 pence which is up 7.0% on the year, very
healthy. This underpins their dividend policy to date.
Going
forward however things are expected to soften, Vodafone’s dividend has
increased by 22% in the last three years. The board has announced though that
at the current levels they will focus on maintaining the dividend at current
levels. This is not a dividend policy a dividend growth investor wants to read.
Maintaining the dividend at these levels indefinitely is a shame and is a bit
of a deterrent from my point of view.
No mention
of a sale of Verizon either which may disappoint Vodafone investors as they were
hoping for a possible windfall from that sale. Vodafone will receive a dividend
of £2.1 billion from Verizon however, this will be held in the business and won’t
be distributed.
Following
the news of the dividend policy I will remain on the sidelines.
Monday, 20 May 2013
Vodafone releases its results tomorrow
I posted recently about Vodafone and the possibility their dividend could take a hit. Well tomorrow is the day the results are released and their dividend policy will be revealed. They have increased their dividend for the last 6 years but rumour has it that they are about to have a change in dividend policy.
First Group results are a dividend disaster
First Group released its preliminary results this morning and they were pretty abysmal with a reduction in pretax profits of 87%.
When you look at the dividend history for First Group it can be seen that they have furnished investors with dividend increases every year for the last six years. This shows the positive dividend policy they've had over the last six years.
However with ballooning debt not only have they cut the dividend but they have cancelled it. I posted recently about the danger of a company reducing the dividend. Well this is the worst case scenario for a dividend investor. I did have shares in First Group up until fairly recently but due to the increasing debt and the insecurity of the profit I suspected that the dividend wasn't safe and sold my position at a loss. Looks like I made the right call, thankfully. First Group are still showing a reasonable dividend cover, this just goes to show though how quickly things can deteriorate.
First Group have announced also this morning that they are to dilute the shares with a rights issue. So whilst they have had a great dividend policy reflected by their dividend history it has all come to a shuddering halt. An example that it's important to keep monitoring the situation with holdings.
When you look at the dividend history for First Group it can be seen that they have furnished investors with dividend increases every year for the last six years. This shows the positive dividend policy they've had over the last six years.
However with ballooning debt not only have they cut the dividend but they have cancelled it. I posted recently about the danger of a company reducing the dividend. Well this is the worst case scenario for a dividend investor. I did have shares in First Group up until fairly recently but due to the increasing debt and the insecurity of the profit I suspected that the dividend wasn't safe and sold my position at a loss. Looks like I made the right call, thankfully. First Group are still showing a reasonable dividend cover, this just goes to show though how quickly things can deteriorate.
First Group have announced also this morning that they are to dilute the shares with a rights issue. So whilst they have had a great dividend policy reflected by their dividend history it has all come to a shuddering halt. An example that it's important to keep monitoring the situation with holdings.
Carillion and Morrisons went ex dividend
Carillion and Morrisons both went ex dividend on Wednesday.
Whilst you expect the share price to fall by the amount of the dividend, Carillion's share price has fallen way further than that. It is now offering a yield of around 6.8% with a current dividend cover of more than 2. As I already have a fair exposure I won't be buying any more but I think at these levels it's cheap and should only go in one direction. That said, as we've seen nothing is certain and it could fall further.
Whilst you expect the share price to fall by the amount of the dividend, Carillion's share price has fallen way further than that. It is now offering a yield of around 6.8% with a current dividend cover of more than 2. As I already have a fair exposure I won't be buying any more but I think at these levels it's cheap and should only go in one direction. That said, as we've seen nothing is certain and it could fall further.
Wednesday, 15 May 2013
Melrose directors show faith
Melrose directors have put their money where there mouths recently, which is great for confidence. Miles Templeman bought 60,000 shares last week to a total value of £152,400. More notable however is James Miller who bought 365,000 shares at the end of March with a total value of close to £1,000,000. This trade certainly instills confidence in the shareholders if they're taking positions to that extent. Comforting to say the least.
It's not what it seems at Melrose - no, it's much better!
I bought into Melrose in mid November (at a price of 206p per share) following a tumble in the share price on the release of their interim management statement. I didn't actually think that the statement was that bad and it appeared that the market had over reacted as it has a tendency to.
I'd already done the research into Melrose and they appeared to have a great dividend history, increasing dividends year on year demonstrating that they have a great dividend policy. To the naked eye though this isn't how it appears. Up until this year Melrose have shown dividend growth year on year and the dividend policy has been rock solid. This year however there has been a reduction in the dividend.
This is down to a rights issue whereby more shares were issued. The actual dividend was the same as people received more shares during the rights issue just that the dividend was reduced per share.
So without the adjustment for the rights issue the dividend history and dividend growth would appear as below;
Dividend Dividend Growth
2006 6
2007 6.75 12.50%
2008 7 3.70%
2009 7.7 10.00%
2010 11 42.86%
2011 13 18.18%
2012 7.6 -41.54%
This throws out a 6 year average dividend growth of 7.62% which in itself is pretty good but a reduction of 41.54% in the last year would be sufficient to stop any dividend growth investor dead in his tracks.
If you take a look at the rights issue adjusted dividend history however it shows a different story.
Dividend Dividend Growth
2006 3.4
2007 3.8 11.76%
2008 4 5.26%
2009 4.4 10.00%
2010 6.3 43.18%
2011 7.4 17.46%
2012 7.6 2.70%
Here the 6 year average dividend growth rises to 15.06% when you amend the dividends for the rights issue. Melrose also sporadically issue a return of capital to shareholders following the sale of companies, which took place in 2007 and 2011. These are a massive bonus but as these are incidental I've not included them in the dividend growth calculations above.
As such it can be seen that the dividend policy at Melrose is superb and they have a strong ethos of dividend growth. When I took a position the yield was around 4% however following the increase in price the yield has reduced to around 3%. Not a great yield for a dividend share so at these prices I probably wouldn't take a position but I currently have the view of holding for the long term.
Actual and adjusted dividend history can be seen here.
I'd already done the research into Melrose and they appeared to have a great dividend history, increasing dividends year on year demonstrating that they have a great dividend policy. To the naked eye though this isn't how it appears. Up until this year Melrose have shown dividend growth year on year and the dividend policy has been rock solid. This year however there has been a reduction in the dividend.
This is down to a rights issue whereby more shares were issued. The actual dividend was the same as people received more shares during the rights issue just that the dividend was reduced per share.
So without the adjustment for the rights issue the dividend history and dividend growth would appear as below;
Dividend Dividend Growth
2006 6
2007 6.75 12.50%
2008 7 3.70%
2009 7.7 10.00%
2010 11 42.86%
2011 13 18.18%
2012 7.6 -41.54%
This throws out a 6 year average dividend growth of 7.62% which in itself is pretty good but a reduction of 41.54% in the last year would be sufficient to stop any dividend growth investor dead in his tracks.
If you take a look at the rights issue adjusted dividend history however it shows a different story.
Dividend Dividend Growth
2006 3.4
2007 3.8 11.76%
2008 4 5.26%
2009 4.4 10.00%
2010 6.3 43.18%
2011 7.4 17.46%
2012 7.6 2.70%
Here the 6 year average dividend growth rises to 15.06% when you amend the dividends for the rights issue. Melrose also sporadically issue a return of capital to shareholders following the sale of companies, which took place in 2007 and 2011. These are a massive bonus but as these are incidental I've not included them in the dividend growth calculations above.
As such it can be seen that the dividend policy at Melrose is superb and they have a strong ethos of dividend growth. When I took a position the yield was around 4% however following the increase in price the yield has reduced to around 3%. Not a great yield for a dividend share so at these prices I probably wouldn't take a position but I currently have the view of holding for the long term.
Actual and adjusted dividend history can be seen here.
Tuesday, 14 May 2013
The shrinking average of Tesco dividend growth
Tesco company dividend policy has been a bit pasty in recent years just 2 years ago their dividend history shows that they have benefited from a 6 year average dividend growth of 11.4%. Having seen dividend growth of only 2.1% last year and a dividend policy to freeze the dividend this year due to profits being hit as a result of the ailing Fresh and Easy in the U.S.A. the average dividend growth has shrunk to 7.5%.
Whilst it is a shame to see any reduction in the average dividend, the dividend policy hasn't swung far enough for us to see a reduction in the dividend and I'm hoping now that the Fresh and Easy debacle has been put to bed we will again see the profits and dividend growth of a couple of years ago.
Whilst it is a shame to see any reduction in the average dividend, the dividend policy hasn't swung far enough for us to see a reduction in the dividend and I'm hoping now that the Fresh and Easy debacle has been put to bed we will again see the profits and dividend growth of a couple of years ago.
The year Tesco dividend policy waivers
This year Tesco has announced a freeze in its dividend. The below is the 7 year dividend history and the 6 year average dividend growth.
Dividend Dividend Growth
2007 9.64
2008 10.90 13.07%
2009 11.96 9.72%
2010 13.05 9.11%
2011 14.46 10.80%
2012 14.76 2.07%
2013 14.76 0.00%
Tesco have a solid 6 year average dividend growth of 9.42% which makes it pretty attractive. Up until this year Tesco have had a strong dividend policy and from the dividend history it can be seen that year on year Tesco have offered substantial dividend growth. This year however with one thing and another, primarily the failure that was Fresh and Easy and the downturn in the economy, Tesco has been forced to freeze the dividend. So they've not reduced the dividend to ensure that investors don't see their dividend policy falter too much. Hopefully this year there'll be further increases. I took a position following poor results in January 2012 at a price of £3.27, I'll continue to hold.
Dividend Dividend Growth
2007 9.64
2008 10.90 13.07%
2009 11.96 9.72%
2010 13.05 9.11%
2011 14.46 10.80%
2012 14.76 2.07%
2013 14.76 0.00%
Tesco have a solid 6 year average dividend growth of 9.42% which makes it pretty attractive. Up until this year Tesco have had a strong dividend policy and from the dividend history it can be seen that year on year Tesco have offered substantial dividend growth. This year however with one thing and another, primarily the failure that was Fresh and Easy and the downturn in the economy, Tesco has been forced to freeze the dividend. So they've not reduced the dividend to ensure that investors don't see their dividend policy falter too much. Hopefully this year there'll be further increases. I took a position following poor results in January 2012 at a price of £3.27, I'll continue to hold.
Sunday, 12 May 2013
Vodafone's dividend policy could sag
It's rumoured that the top chap at Vodafone is not going to renew his pledge to increase dividend payouts due to uncertainties with the Eurozone. Vodafone have had a great dividend policy and the dividend history shows that Vodafone have rewarded investors with year on year increases in dividend payments since 2000. The results are due out this week. I looked at Vodafone recently specifically due to their meaty dividend and dividend policy but I felt I missed the boat when the price jumped on the back of news about Verizon. I'm staying on the sidelines with interest about where the dividend goes with the results.
Friday, 10 May 2013
Why professionals don't like dividends?
In my investing quest I've done varying amounts of research into different investing criteria. The vast majority of stock brokers and advisers seem to push the next big growth stock. Being a sceptic this is naturally because they want you to experience fluctuations in the market. With fluctuations you trade whether you are in profit or cutting losses. With trading you incur costs - to the brokers benefit, they love you incurring costs, the more trades you make the more profit they make.
With a buy and hold outlook which is the view I take when looking at company dividend policy and dividend growth stocks I incur one trading fee when I buy the stock and a 1% (although different brokers have different fee structures) dividend reinvestment fee. So whilst, for the main part, I don't follow the method the brokers and advisers would prefer, it is a far cheaper investing method when it comes to trading fees and charges. It can't be too far wrong either as Warren Buffet agrees with me, his favourite investing period isn't short term or medium term, it's forever.
With a buy and hold outlook which is the view I take when looking at company dividend policy and dividend growth stocks I incur one trading fee when I buy the stock and a 1% (although different brokers have different fee structures) dividend reinvestment fee. So whilst, for the main part, I don't follow the method the brokers and advisers would prefer, it is a far cheaper investing method when it comes to trading fees and charges. It can't be too far wrong either as Warren Buffet agrees with me, his favourite investing period isn't short term or medium term, it's forever.
Thursday, 9 May 2013
Pan African Resources on the up
There's been a lot of action with Pan African Resources lately which I have held for some time and managed to buy in at at around 6.5p. This was one of my earlier investments when I was chasing the "next ten bagger". I think this was one of only a handful that I've had any success with over the years. It was paying a dividend too until recently but it was suspended in order to acquire Evander, another goldie.
The CEO, Jan Nelson, departed Pan African Resourecs recently under discreet circumstances in that nobody really knew why he left other than for personal reasons. Concerns were that he had been poached however he, up until now, hasn't appeared within another company.
There was also a rights issue to fund the Evander acquisition which you would expect have an impact on the share price, fortunately in this case it didn't. What did have an impact on the share price was the stuffing that gold got when Cyprus announced it was to flog it's gold to pay off it's debt. I think this is a solid play though and generally (this year excepted) has a great dividend policy. I think the future for Pan African Resources is looking good, pending the gold price where we should hopefully see the reinstatement of the dividend.
Following the hit Pan African is seeing a recovery today, currently up 6.25% on constant gold prices.
The CEO, Jan Nelson, departed Pan African Resourecs recently under discreet circumstances in that nobody really knew why he left other than for personal reasons. Concerns were that he had been poached however he, up until now, hasn't appeared within another company.
There was also a rights issue to fund the Evander acquisition which you would expect have an impact on the share price, fortunately in this case it didn't. What did have an impact on the share price was the stuffing that gold got when Cyprus announced it was to flog it's gold to pay off it's debt. I think this is a solid play though and generally (this year excepted) has a great dividend policy. I think the future for Pan African Resources is looking good, pending the gold price where we should hopefully see the reinstatement of the dividend.
Following the hit Pan African is seeing a recovery today, currently up 6.25% on constant gold prices.
Wednesday, 8 May 2013
Director offloads shares at British American Tobacco
John Daly, the COO of British American Tobacco sold around a third of his shares
this week. The first quarter has been hit by overseas sales due to exchange rate
movements.
Does he feel that there is a headwind for British American Tobacco or does he need to free up some cash for personal reasons? A lot is often read into directors share sales however it could be for anything in my view and whilst past history is no guarantee for the future, I feel British American Tobacco's dividend policy is solid in recent years so I am staying put.
Does he feel that there is a headwind for British American Tobacco or does he need to free up some cash for personal reasons? A lot is often read into directors share sales however it could be for anything in my view and whilst past history is no guarantee for the future, I feel British American Tobacco's dividend policy is solid in recent years so I am staying put.
Tuesday, 7 May 2013
Sainsbury's take on Tesco Finance?
Sainsbury's results are out tomorrow and it is expected that they are to announce their intentions to buy out their partner in the Sainsbury Bank venture, Lloyds, who currently own 50% of the outfit.
Tesco did the very same thing when they bought the other 50% of Tesco Finance from Royal Bank of Scotland 5 years ago.
Sainsbury's made £25m pretax profit from their share of the banking arm last year so could have an interesting future. An increase in pretax profit of around 5% is expected to be announced tomorrow which will hopefully lead to an increase in the dividend. Sainsbury's have a strong dividend policy and have seen dividend growth every year for the last 6 years.
I currently don't hold Sainsbury's but this may well change shortly pending the results.
Imperial Tobacco is the dividend of the week
According to Dividend Investor, Imperial Tobacco is the dividend of the week.
They have reiterated the solid interim dividend increase of around 11%, going ex dividend on the 17th July. They also suggested Sainsbury's and SSE as contenders for the dividend of the week, I'll look into these and their respective dividend policy shortly. Nice to read though so soon after taking a position.
They have reiterated the solid interim dividend increase of around 11%, going ex dividend on the 17th July. They also suggested Sainsbury's and SSE as contenders for the dividend of the week, I'll look into these and their respective dividend policy shortly. Nice to read though so soon after taking a position.
Sunday, 5 May 2013
African Barrick Gold - a dividend paying gold stock?
Concisely, yes African Barrick Gold is a dividend paying gold stock. But is it one worth investing in?
This kind of stock doesn't normally suit my requirements, normally I invest in large caps with a strong dividend policy and positive dividend growth but it caught my eye a while ago when I was looking for exposure into gold. Gold stocks themselves have greater leverage to the price of gold compared with gold itself. When the price of gold goes up, hopefully the price of gold stocks goes up by more but, as has been seen when the price of gold pulls back, gold equities have the potential to collapse.
I dipped into African Barrick Gold a while ago on a dip in price and managed to make 40%. The price again retraced and I took another position. The price continued to slide.
Part of this was due to the deal with the Chinese Government falling through alongside the issues in Cyprus which caused gold to take a pounding when they announced that they were to sell part of their gold reserves. African Barrick Gold were also having problems with extraction and were failing to achieve targets. They also have a high cost of extraction compared to their peers which means any reductionism the price of gold hurts their margin.
They are currently (well on last years dividend) paying a dividend of 16.2 cents per share which equates to around 10.5p per share. On today's price that gives a hefty yield of around 7%. Their dividend policy to date (they have only existed for 3 years) is reasonable and we've seen no reduction yet however their dividend cover is now less than 1 (their dividend is greater than their earnings). This is never good and creates all kinds of uncertainty for the future.
So whilst this pays an attractive dividend currently nothing is certain with the future and I think this will get slashed unless there is a big turnaround with the price of gold, the output volume and their production costs. As a growth stock at these levels it might be worth a punt for those with an appetite for risk but as a dividend stock it's to avoid (I continue to hold), I just don't feel the dividend policy will held be if the share price and other factors don't see a serious turn around.
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