Reassuring to hear the metaphorical thud of a dividend hitting the doormat already this year.
The thud in question came from Rolls-Royce, my largest portfolio holding and there is another one due next week from National Grid.
The thud in question came from Rolls-Royce, my largest portfolio holding and there is another one due next week from National Grid.
Seeing that I am starting to view dividends as a very important element of my strategy and they contributed 3.84% last year, I thought that I would try to profile the dividends that I did receive for any pattern or notable points.
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Hmmm, the first noteworthy point is the contribution from (and heavy dependency on) my two largest holdings: Rolls-Royce and National Grid, which has meant January, July, and August are the biggest grossing months.
Totaling 1.92%, the dividend from these 2 holdings made up exactly half of the total 3.84% yield received.
There is no contribution yet from recent addition Vodaphone. The first dividend from which is due to come through in February of this year with the added bonus of a special dividend courtesy of the company's holding in Verizon Wireless.So, despite the variable monthly profile, the healthy start in January and the cumulative profile to Sept (with 80% of dividends received by then) gave my portfolio a good start to the year whilst providing some steady gains throughout.
For me there is a lot to like about dividends as they are an actual cash return for shareholders to manage as they see fit.
Once given, and the share price adjusted, the monies received are no longer subject to the whims of the stock market (or the failings of management), so can't fluctuate based upon emotion and greed.
Added to other dividends an investor has some freedom to choose how to re-invest the proceeds which might be to support a strategy of diversification.
Re-investing means that the portfolio can be grown by actual no of shares and holdings in addition to any capital growth.
Whichever way is chosen, dividends from re-invested dividends from re-invested dividends serves to bring compounding growth to a portfolio which is something I am aiming for.
A little concerned about the disproportionate contribution from Rolls-Royce and National Grid though, which might lead me to increase the size of other holdings (like Vodaphone) to even things out a bit more.
Back to 2012 though, and that metaphorical thud onto the doormat.
It looks like being another good start to the year (with dividends from Rolls-Royce, National Grid, and Vodaphone) and its going to be interesting to compare 2012 with 2011, with the forecast yield likely to increase, and the effect of any portfolio changes along the way.
Morning MA,
ReplyDeleteI decided to go against my strategy of holding onto lloyds shares and wait god knows how long to make some massive profit on them. This was spurned by their chief exec to forgo his bonus to current bad performance and his sick note over early winter. I am also assuming the touted dividend that was due to commence this year to ordinary share holders will not be paid. I'll kick myself if they are paid.
Dumped them to make a 18% profit (I have to reassure my self this was a good move, as you wont get this sort of return on the highstreet, except from the bookies). I then decided to purchase tesco at 312. How is your confidence in Tescos management? following my purchase, I decided to read a few forums. There seems to be a lot of Tesco haters...general consensus of the shares to drop to around 280 because of poor management.
My original thoughts of the business, is that the company has been trading in the same tough market conditions since 2008. More or less same management in place. Hoping this would be a learning curve for their latest Chief exec and get things back on track.
Hi Ritsut,
Deletea bird in the hand as they say...
You know that Lloyds has to come good at some time it is just over what horizon and whether you are able to sleep during the intervening period.
Tesco does look to have dropped the ball somewhat but as you say there is an experienced management team in place and it is one that has implemented the current strategy and should have the competence to refine/reverse/redirect it. It could be argued that they are waging a war on too many fronts and each new front carries a disproportionate start up cost(used cars, gold, banking etc). Breaking even or stopping loss making/low margin ventures can only help improve cashflow.
I think you are right to focus on the management capability rather than the "haters" who will continue to be outnumbered by the shoppers who trust the brand and still see value in the shopping experience (£1 in £7 is a Tesco pound).
I have always said that I would be happy for them to maintain their share of a market that will grow in better times but that share has slipped a little over the last 3 quarters. Additional profit growth can then come from abroad.
The clubcard remains their biggest weapon in the UK and in many ways can be likened to Google Ads with its targeted offers to individuals (I find if you view a retail page then targeted ads follow you around the web e.g Dell, Talkmobile etc).
Opening up the double points scheme again could also be a quick fix but it is an interesting point you make re. the tough climate when you consider how much of Tesco's portfolio is now non-grocery. That being the case then they remain well placed once the feelings of austerity dissipate. As investors we just need to wait it out.
The next quarters trading figures will be interesting though and might, hopefully, provide a floor in the short term(if one is needed).
The key question for you is your expectations for the share price (quick bounce, long term recovery, dividend growth etc) and the likely horizons that this could come over.
But a big thing for new investors to get their head around is giving yourself some choice over timing to underline your certainty.
EG. if ALL your savings are invested, but you suddenly need the money and can't control the timing then you might need to sell at a loss whereas if you don't need to sell and are convinced that an investment will come good then you are giving yourself some choice to hold and wait.
Best regards
MA