I’ve had my eye on Next PLC for a long time and now, thanks to some recent and dramatic share price declines, the shares may at last be as attractive as the underlying company.
Continue reading “Next PLC: Share price declines make this retail stock very interesting”FTSE 250 Valuation and forecast
My latest FTSE 250 valuation and forecast could be a bit of a damp squib because neither the valuation nor the forecast capital gains are particularly exciting (how’s that for an enticing opening paragraph?).
As usual, I’m going to use Robert Shiller’s cyclically adjusted PE ratio (CAPE) as the valuation tool of choice, because it’s both easy to calculate and has a proven track record as a forecasting tool.
If you’re not familiar with it, CAPE is just the ratio between today’s price and the inflation-adjusted ten-year earnings average. It’s like the standard PE ratio, but better.
Continue reading “FTSE 250 Valuation and forecast”BAE Systems’ dividend yield is good, but growth is weak
BAE Systems is one of the bluest blue chip stocks you could imagine: It’s big, it’s defensive and it has a dividend yield of more than 4%. It sounds like the perfect choice for a high-yield portfolio.
Continue reading “BAE Systems’ dividend yield is good, but growth is weak”Model Portfolio update: 2016 Q1
The dividend-focused model portfolio which I have been running since March 2011 has beaten the market over its first five years, producing double the market’s growth rate with less risk and a higher yield.
In some ways, I’m amazed that the portfolio has even reached its fifth birthday. It certainly hasn’t been easy, having left my career in software to focus full-time on developing a defensive value investing strategy, publishing a monthly investment newsletter and even writing my first book.
But that critical five-year period is in the bag and the results so far are encouraging.
Continue reading “Model Portfolio update: 2016 Q1”Rolls-Royce shares are down by 50% but I’m still not buying
Shares in Rolls-Royce have become one of the most high-profile underperformers of recent years. However, despite the share price now sitting some 50% below its all-time high I’m still not tempted to buy.
There are two main reasons:
- The company has a pension scheme which I think is dangerously large
- The share price just isn’t low enough
If those two issues were somehow fixed I would be more than happy to invest because, by most other measures, Rolls-Royce appears to be a solid (but not infallible) company.
Continue reading “Rolls-Royce shares are down by 50% but I’m still not buying”S&P 500 valuation and forecast: Still expensive despite a flat 2015
The S&P 500 has had a much stronger post-financial crisis bull market than the FTSE 100. However, as a consequence, the US large-cap index is now much more expensive than its UK counterpart.
Continue reading “S&P 500 valuation and forecast: Still expensive despite a flat 2015”Why BP’s dividend remains highly uncertain
The oil price collapse which began in 2014 has not exactly been good news for BP’s share price. More importantly, cheap oil has also seriously undermined BP’s dividend.
For now, the company has maintained the dividend, but how long can that last in the face of dwindling revenues, profits and cash flows?
Continue reading “Why BP’s dividend remains highly uncertain”Why Unilever’s shares could disappoint investors
Unilever is one of the most popular companies among dividend-focused investors. As one of the world’s largest consumer goods companies, it makes a huge range of well-known products, from Dove soap to Magnum ice cream and Comfort fabric softener.
Over many decades the company has grown its dividend above the rate of inflation, which is precisely why it is so popular with investors.
But despite Unilever’s impressive track record, I think the odds are that its shares will not perform as well in the future as they have in the past.
In the rest of this post, I’ll explain why.
Continue reading “Why Unilever’s shares could disappoint investors”Selling Hill & Smith Holdings plc for an 83% return in less than 3 years
Hill & Smith Holdings is a highly successful small-cap company which I added to the UKVI model portfolio back in 2013.
It was a relatively easy investment in the end and the results were more than satisfactory.
Continue reading “Selling Hill & Smith Holdings plc for an 83% return in less than 3 years”Does this FTSE 100 bear market have teeth?
So far the recent FTSE 100 bear market has been more of a teddy bear than a grizzly. To some extent, that’s because the dividend has held the index up, but what would happen if that dividend started to fall away?
Continue reading “Does this FTSE 100 bear market have teeth?”Is GlaxoSmithKline’s 6% dividend sustainable?
There are some amazingly high dividend yields on offer these days, most notably from some of the largest blue-chip shares in the market.
The question, as always, is whether or not those massive yields are sustainable.
Take GlaxoSmithKline as an example.
Continue reading “Is GlaxoSmithKline’s 6% dividend sustainable?”The takeover of Amlin PLC produces a 25% annualised return from this investment
When I added Amlin PLC to the UKVI model portfolio three years ago it was a classic case of buying a good company at an attractive price because it was facing some short-term problems.
Three years later and the investment has produced a very nice return of 25% annualised, largely thanks to the fact that Amlin has recently been taken over.
Continue reading “The takeover of Amlin PLC produces a 25% annualised return from this investment”Go-Ahead Group PLC’s debt and pension liabilities could be a problem
Go-Ahead Group is one of the UK’s leading public transport companies, operating buses and trains across most of the country, although primarily in London and the South East.
In this post, I’ll look at Go-Ahead‘s financial track record and balance sheet, and outline why I wouldn’t invest in the company, even if the price was significantly lower than it is today.
Continue reading “Go-Ahead Group PLC’s debt and pension liabilities could be a problem”Are stock market analysts pointless?
In this post, Robert Davies, manager of the UK Smart Dividend UK Fund, discusses the utility (or lack thereof) of professional stock market analysts.
Continue reading “Are stock market analysts pointless?”Some lessons from my first 20 years as an investor (Part 2)
Last week I covered two of the biggest investment lessons I’ve learned in the past 20 years:
- Begin slowly and carefully and
- Exceptional results are more likely the result of luck than skill
I also mentioned how I’d sold everything at the bottom of the bear market in 2003 and, with hindsight, I think that blunder deserves to be highlighted with a lesson of its own.
Continue reading “Some lessons from my first 20 years as an investor (Part 2)”PZ Cussons PLC: Why I would be happy to invest at the right price
PZ Cussons is a favourite among defensive and income-focused investors and for good reason. It has, for example, raised its dividend for 42 consecutive years, which puts it firmly into “dividend aristocrat” territory.
The company has achieved this primarily by selling small-ticket repeat purchase items with strong brands and market-leading positions, such as soap (Imperial Leather), olive oil (Minerva) and washing-up liquid (Morning Fresh).
These high-margin and frequently purchased items give the company a steady and defensive cash income. At the same time, its exposure to emerging markets and willingness to make carefully chosen bolt-on acquisitions have allowed it to grow faster than most other companies.
Continue reading “PZ Cussons PLC: Why I would be happy to invest at the right price”Some lessons from my first 20 years as an investor (Part 1)
I would like to say that the last 20 years have flown by, but they haven’t. I started investing in 1995 and to be honest that feels like several lifetimes ago.
Over the years I have made a huge number of investment mistakes and as a result, I have learned many important lessons. Of course, I would prefer to have avoided these mistakes and simply learned the lessons by reading about the mistakes of others.
And so, in the spirit of “passing it forwards”, here are some of the most important lessons I have learned during those first 20 years.
A word of warning though: These are my lessons and they relate to my personal quirks and preferences, but I suspect that they will be at least partially relevant to you too.
Continue reading “Some lessons from my first 20 years as an investor (Part 1)”My FTSE 250 forecast for 2016
This FTSE 250 forecast will be based on the same approach as the FTSE 100 forecast I published in December. In other words, it will be based on numbers and historic averages rather than gazing into an invisible crystal ball.
Continue reading “My FTSE 250 forecast for 2016”The UKVI defensive value portfolio returned 14.3% in 2015
With 2015 almost in the bag, this is a good time to sit back and review your investment performance for the year.
For me there are a few things I’m most interested in checking: 1) Total returns, 2) dividend yield and 3) what I learned this year that may help improve my approach and returns in the future.
But first, a little background info.
Continue reading “The UKVI defensive value portfolio returned 14.3% in 2015”My FTSE 100 Forecast for 2016
In the past, I have generally stayed away from making stock market forecasts over a one-year period because, for the most part, they are little more than guesses.
However, this year I’m going to throw my hat into the forecasting ring in the hope that somebody, somewhere, will find it useful.
Continue reading “My FTSE 100 Forecast for 2016”