Category: Editor’s Blog

Can Unilever be trusted to deliver a growing dividend?

Unilever has been through something of a PR disaster in recent weeks.

In January, Terry Smith questioned why Unilever felt that Hellmann’s mayonnaise needed to have a social purpose beyond tasting great. Shortly after that, Smith wrote a somewhat scathing post mortem of Unilever’s recent attempt to buy GSK Consumer Healthcare, calling it a “near-death” experience.

So are the wheels falling off the Unilever wagon, or is this all just a storm in a teacup?

You can continue reading this blog post on my new website, UKDividendStocks.com:

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Selling Domino’s Pizza Group after its share price and debts increased

Domino’s Pizza Group is one of the UK’s highest quality dividend growth stocks and I have been a fan for many years and a shareholder for almost five years.

But increasing debts, an increasing share price and the rise of dark kitchens have left me wondering whether Domino’s is still a good investment.

You can continue reading this article on my new website, UKDividendStocks.com:

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Is the UK’s housing bubble about to burst?

UK house prices have been in a bubble for almost 20 years, which makes it one of the longest-running bubbles in history.

This is very interesting because bubbles almost never last this long. They usually only last a few years, and every bubble in history has ended when the temporary factors that inflated it came to an end.

So will the UK house price bubble be the first in history to last forever, or will it end just as all other bubbles have ended?

Read the full article over on my new website, UKDividendStocks.com:

Will the UK’s housing bubble ever end?

Is now a good time to invest in the FTSE 100?

The FTSE 100 has become unloved and unwanted by an increasing number of investors.

I guess you can’t really blame them. After all, the FTSE 100 has grown from 6,900 in 1999 to 7,500 today, which is less than a 10% capital gain over 22 years.

By any reasonable stretch of the imagination, that’s a terrible return for an investment as volatile as the stock market.

To rub salt into this particular wound, US stocks have gained more than 200% over those same 22 years, as has the UK housing market.

And as you might expect, most investors today are keen to put more money into US stocks and UK property, precisely because they’ve performed so well over the last decade or two.

But are they right to do so, or should investors instead be shovelling at least some of their money into the relatively unloved UK stock market?

Click the button below to read the full article on my new website, UKDividendStocks.com:

Should you invest in the FTSE 100?

2021 Year-end portfolio review

Another year has whizzed by and so, inevitably, it’s time for investors up and down the land to review their portfolio’s performance over the last 12 months and beyond.

In my case, I’m going to review the UK Dividend Stocks Model Portfolio, which I set up in 2011.

It’s a virtual portfolio that I manage using ShareScope’s portfolio tool and it holds exactly the same stocks as my real-world portfolio, with approximately the same position sizes.

This is, somewhat obviously, a dividend-focused portfolio, so it invests in a diverse basket of 20-30 quality UK dividend stocks that I think are trading at a material discount to fair value.

The portfolio reinvests all dividends and is benchmarked against the Vanguard All-Share Unit Trust (accumulation), which tracks the FTSE All-Share. Both portfolios were launched with 50,000 virtual pounds in March 2011.

You can read the full review on my new website:

UK Dividend Stocks Portfolio: 2021 Full Year Review…

SThree: A world leader in STEM recruitment and a quality dividend stock

SThree is the world’s number one recruitment firm focused solely on science, technology, engineering and maths-related roles (typically abbreviated to STEM).

I think it’s a high-quality dividend growth stock and I added it to the UK Dividend Stocks Portfolio and my personal portfolio back in April 2020.

You can read the full review of SThree on my new website over at UKDividendStocks.com.

SThree: A world leader in STEM recruitment

Why I own shares in Next

Next is a popular UK clothing and homeware retailer and it’s popular with dividend growth investors too.

It recently announced relatively positive half-year results, so I thought this would be a good time to review the company’s current situation, its underlying qualities and why Next is a holding in both my personal portfolio and the UK Dividend Stocks model portfolio.

You can see the full review on my new website, UKDividendStocks.com:

ukdividendstocks.com/blog/next-quality-dividend-stock-2021-10

A 5-step approach to investing in dividend stocks

You don’t have to be a rocket scientist to invest in dividend stocks, but if you want to do more than just buying stocks because they have a high yield, then there is quite a lot you’ll need to know.

So in this article, I break down everything I know about dividend investing into five basic steps. These steps form a solid foundation upon which everything else in an investment strategy can be built.

You can read the full article on my new website at UKDividendStocks.com:

Read more about the five steps

Portfolio review: Q3 2021

2021 has been a pretty good year so far for the UK stock market.

The FTSE 100 is up around 10%, the FTSE 250 is up around 18% and my portfolio of dividend stocks has also performed quite well.

To read the full performance review, along with some of the major tweaks I’ve made to the portfolio and my general outlook for the UK stock market, please head on over to my new website at UK Dividend Stocks.

Read the review on UKDividendStocks.com

Why I sold Burberry even though it’s a quality business

There is little doubt that Burberry is a high-quality business.

That’s one of the reasons I added it to my model portfolio and personal portfolio in 2015.

The share price at purchase was £13.70 and at that price, the company seemed to be pretty good value.

Fast forward to today and Burberry is still a quality business but the price, in early August, had reached more than £21.50.

Although Burberry has grown over the last six years, I don’t think it’s grown enough to justify that price increase.

So a couple of weeks ago I sold Burberry, somewhat reluctantly because quality companies are hard to find.

You can read my full and detailed review of Burberry, which includes my target buy price, on my new website, UKDividendStocks.com:

Is Burberry a good dividend growth stock?

The pros and cons of discounted dividend models

Two months ago I wrote a long article about Discounted Dividend Models and how I’ve started to use them to value companies.

I then added a template to my investment spreadsheet so I could quickly build a standardised dividend model for any company which I could then refine and expand upon later.

After that I spent several weeks hammering out one dividend model after another so that I now have reasonably detailed models for all of my portfolio‘s 30 or so holdings.

As I now have a lot more experience of what it takes to build discounted dividend models in the real world, I thought it would be useful to outline some of the major pros and cons I’ve run into while using this approach.

Continue reading “The pros and cons of discounted dividend models”

How to value shares with a Dividend Discount Model

As a value investor, I’ve spent most of the last ten years valuing companies using valuation ratios such as dividend yield and the cyclically adjusted price-to-earnings ratio (CAPE or PE10).

However, I now think such backward-looking ratios are inferior to the more theoretically correct Dividend Discount Model (DDM), which values companies based on an estimate of their future dividends.

So in the rest of this blog post, I’ll explain what the Dividend Discount Model is and how you can use it to guide your buy, sell and position sizing decisions, especially if you’re interested in dividend growth stocks.

Warning: This is a long blog post so you may want to get a cup of tea and a slice of cake before you settle in for a long read. Or, bookmark this page and come back to it when you have a spare moment or three.

Continue reading “How to value shares with a Dividend Discount Model”

How the UK Value Investor portfolio performed in 2020

With 2020 finally over (good riddance) now is the traditional time for an annual performance review, and who am I to argue with tradition?

In this review I will:

  1. measure my portfolio’s short, medium and long-term performance against an appropriate benchmark and 
  2. think about what went right and what went wrong, and how that knowledge can be used to improve future performance
Continue reading “How the UK Value Investor portfolio performed in 2020”

How to build a concentrated portfolio of quality shares

Value Investing portfolio holdings chart
The 34 holdings in this portfolio is probably too many

Over the last ten years or so my investment approach has moved steadily towards higher quality companies, yet hopefully still purchased at attractive valuations.

This takes quite a bit more time because I have to analyse companies in more detail, but for me this is the right decision as I prefer investing in successful businesses which align with my Quality Defensive Value criteria.

However, during the pandemic, I found that researching potential new holdings for the UK Value Investor portfolio, as well as keeping up to date with its existing 34 holdings, was taking more time than I had available.

I didn’t want to shrink the amount of research I was doing per company, so the obvious solution was to reduce the number of holdings. But reduce it to what?

To answer that we’ll need to look at the following points:

Continue reading “How to build a concentrated portfolio of quality shares”