Shopping for Stocks – the Best Kind of Shopping!
I didn’t really know where to begin this month. There were so many stocks I wanted to buy! This is due to reviewing my most recent watchlist in conjunction with recent downwards price movements. But of course, I couldn’t buy all of them, so I decided to sock away as much money as possible and then I would be able to to add to my position in National Grid, as well as purchase two entirely new stocks.
Beazley
Beazley plc is a holding company engaged in global specialist risk insurance and reinsurance business. Its segment includes life, accident and death, underwrites life, health, personal accident, sports and income protection risks; marine , underwrites a broad spectrum of marine classes including hull, energy, cargo and specie, piracy, aviation, kidnap and ransom and war risks; political risk and contingency, underwrites terrorism, political violence, expropriation and credit risks; property, underwrites commercial, high-value homeowners and construction and engineering property insurance; reinsurance, specializes in writing property catastrophe, property per risk, casualty clash, aggregate excess of loss and pro-rata business, and specialty lines , underwrites professional liability, management liability and environmental liability, including architects and engineers, healthcare, lawyers, technology, media and business services, directors and officers and employment practices risks.
I’m not an enormous fan of insurance companies, but Beazley has been cropping up on my watchlist for a long time, and since I don’t have any insurance stocks after T having gotten rid of his holding in Standard Life, I decided it was time to get a little exposure. As is my usual way – I mostly go for stocks with a dividend cover of 2, a PE of less than 20, and 7 years’ or more of increasing dividends at a minimum of 2% p.a. yield, with a minimum of 2% dividend increase every year. I occasionally break these rules, such as with National Grid (because they’re an entrenched, relatively safe payer), but Beazley easily fulfils my basic screening criteria.
One of the special attractions to Beazley is that they have a very high dividend cover, and have a history of paying out their excess money in the form of special dividends. I do not count special dividends as part of dividend history, but it’s certainly nice to get some bonuses every now and again! The share is going ex-div TOMORROW, so if you want to get in on some special dividend action, you better hurry up and trade!
Interserve
Interserve Plc, based in the United Kingdom, is a support services and construction company. The Company offers advice, design, construction, equipment, facilities management and front-line public services. It operates through the following segments: Support Services, Construction and Equipment Services, and Investments. The Support Services segment provides a range of outsourced services to public and private sector clients both in the United Kingdom and the Middle East. Its Construction segment offers services such as designing, construction and maintenance of buildings and infrastructure, both in the United Kingdom and through Middle East associates. The Equipment Services segment is engaged in the designing, hiring and selling of formwork, falsework and associated access equipment. Its Investments segment offers transaction structuring and the management of the Company’s project finance activities.
There have been quite a few companies from this sector in my watchlist of late, so I am guessing the sector as a whole is experiencing some pressure. I already own Carillion in this sector, and they have been paying me handsomely, but they technically don’t tick all the boxes of my investing criteria, namely that they haven’t been increasing their dividend by 2% or more p.a. As such, they dropped out of my watchlist by a very tiny fraction. I’m still happy with them, so I don’t have any reason to sell, but since they don’t fit my criteria, I thought I’d buy a different company in this sector instead to increase my exposure.
One of the great things about Interserve, is that they also have a good history of dividend cover. Not crazily high like Beazley (running at 4+), but Interserve’s cover has been over 2 for several years. They fit all my criteria easily, and I also suspect they may be the subject of a takeover bid in the near future, so that might boost my returns.
I’m pretty happy with being able to do 3 purchases this month, as sometimes I am scraping to make one – which I always like to do as a minimum. Luckily, I’m also getting a bit of extra money from work for something I assumed I was doing voluntarily, so guess where the money’s going? Yep, hopefully will be able to make some more decent purchases at the end of March. Lastly, I managed to put £100 into my Funding Circle account. I’m a big believer in SMEs, so it’s really important to me that I support these small businesses to grow. Yes, they can be risky, but as I only lend in batches of £20, I am extremely cautious. I am waiting on one remaining bid of £20, the other £80 has already been lent out.
What purchses did YOU make this month? Let me know, leave a comment below.
Just come across your site. Had a click around and like it a lot! I had a similar trading month as well. In January I topped up my holding in Interserve. In February I opened a new position in National Grid.
I don’t hold Beazley but, unlike you, I am quite heavy on insurance (especially reinsurance). Catlin, Lancashire and–most recently–Amlin. I only added Amlin today but it is chiefly in anticipation of replacing Catlin if the XL Group acquisition goes through.
Interserve is one of my favourite FTSE 250 companies. It’s a great growth and income company with longstanding management and an impressively long history of dividend growth. Excellent.
Here’s to the first of many visits to your site!
Dividend Drive recently posted…February 2015: Dividend Income and Trading Activity (Updated)
Yes, just recently found you on Twitter. Been reading your site too, really like it and hope to keep reading it on a regular basis! Always good to find another UK investor.
Totally agree with you on Interserve. I meant to buy it quite a while ago, but other stocks just kind of pipped it for one reason or another, I think mainly because I was looking to get a few high yielders to start off with, then add in more high growers on top of that high yield foundation. That’s why I bought Carillion first.
Thanks for visiting, hope to see you around!
Same here. Carillion caught my eye first for the high yield. Indeed, todays 1% lift for the Final dividend is welcomed. Quite solid results, considering.
However, I suspect that Interserve will soon match it with the rate of growth it is showing.
Services in general are quite interesting. I have been watching Babcock for some time. Recent price declines make it look very nice indeed. What do you think?
Glad to hear you’ve enjoyed going round my site! I am still slowly but surely building up my content. Got about 50 half-finished articles I have been thinking about for some time waiting to be polished off! They’ll get there eventually!
Dividend Drive recently posted…February 2015: Dividend Income and Trading Activity (Updated)
Hey man, thanks for returning to comment once again. I’m happy with the 1% from Carillion, the yield is already high, and since our inflaiton has shrunk to a puny 0.3%, 1% is satisfactory.
Babcock is a share I’ve seen mentioned around the web, but it never passes the criteria which generate my monthly watchlist. As you say, support services are pretty interesting right now, with many high value companies, some better than others. I think I agree with you 100% on the awesomeness of Interserve, I sometimes only wish I’d started accruing it earlier, but alas. Now I plan to buy on any dips that suit my cost basis. The other companies that passed my criteria are:
Aggreko
Capita
Intertek
Atkins
DCC
Mitie
PayPoint
RPS
So, a large number to choose from over the last month!
Looking forward to more form your site in due course
Cheers
I agree about Carillion. Ahead of inflation is a simple but important target for dividend growth. The dividend is still well covered by earnings as well which is excellent.
I am surprised Babcock has not passed your criteria. It could be due to the fact that the dividend record is wrong on most sites (for example, Stockopedia and FT have it incorrect). They and others suggest that the dividend fell between the 2012/13 and 2013/14 financial years, which is not right (take a look at ).
I have been so impressed by it and happily watched the price slide down to a reasonable value that I opened a position in it today. Will write up my reasoning when I get time!
Yes, Interserve remains very much on my watchlist. I would be surprised if it dips to the levels we were seeing recently (and when I topped up my holding). I found it amazing that it was hovering at such a level for so long.
A really interesting list. Mitie, Aggreko, Capita and Intertek are all piquing my interest at the moment as well. Though the first three have been for some time but I have not quite been moved to act yet!
RPS also interested me some time ago. A strong company with high growth and consistent high dividend growth as well. However, anything with a large oil-related element I am a little reticent about at the moment. Not due to the drop in oil price per se but rather because I am quite “oil heavy” at the moment. I think I will limited my oil exposure to the megacaps as much as possible for now!
Have you looked at Berendsen? May be of interest, if not.
Dividend Drive recently posted…BUY: Amlin–A Fitting Replacement for Catlin?
I’ll look into Babcock. I have heard it spoken of, but perhaps my screener is taking incorrect information. I’ll check it out manually, just to be sure.
Berendsen I’ve also come across on and off, can’t remember why it went back to off, but perhaps the PE was too high or something? I’m doing my March watchlist tonight, so will see which companies make the TV grade!
Cheers
Berendsen fell off my watchlist for some time as well. It’s P/E is certainly not bargain bucket but it does not seem too expensive either. Yield if pretty good with a solid cover as well.
Very much back on my watchlist again!
Dividend Drive recently posted…BUY: Babcock International–High Growth Engineering Support for My Portfolio
I try to look at companies with a PE of <20, so perhaps that’s why? Yield is not enough. I’m cheap – I want a bargain!
According to my calculations, it is about a P/E of 18 at the moment with predicted P/E’s of about 17 and 16 for this year and next.
Yield is about 2.6%. It is predicted to grow to 2.85% and 3.05% for this year and next. They have a history of 10% dividend growth. Rather similar to Dignity, actually. Very consistent growth!
Dividend Drive recently posted…How does your Broker’s Foreign Exchange Charge affect your Yield?
that sounds right up my alley!
I know exactly what you mean! I am just waiting for a possible dip before I finally dive in I think. Though that may be a mistake!
Dividend Drive recently posted…How does your Broker’s Foreign Exchange Charge affect your Yield?
Always difficult to time the markets though isn’t it? The only kind of timing I do sometimes is to watch the ex-div dates then buy afterwards in the almost inevitable dip in prices…
Yes, timing is nigh on impossible. I have done your trick of post ex-div a couple of times. Most notably with SSE!
Exercising a bit of patience often pays off though. AstraZeneca, for example, seems on a delicate rerating at the moment. Starting to head back into what I consider pretty good value territory now! Definitely a long-term prospects investment that one, though! Not the best figures in the short term!
Dividend Drive recently posted…How does your Broker’s Foreign Exchange Charge affect your Yield?
I have some positive knowledge on AZN, because they’re sponsoring something to do with my work – I basically agree with you – definitely a very long-term buy
Yes, I am just really waiting either for the price to be right or for some more solid positive earnings progress to be made. All the rights things are starting to happen though!
Dividend Drive recently posted…BUY: Hansteen Holdings–Made of the REIT stuff?
do it!
I am mightily tempted. Really want to wait until the forward P/E floats down to closer to 15 and the yield floats up a little to about 4.5%. With no earnings or dividend growth predicted for this year or next, I’d like to lock in a slightly plumper yield and earnings margin of safety.
That being said, their jump today shows that I may be waiting a long time. Clearly people are very much behind AZN at the moment!
Dividend Drive recently posted…BUY: Hansteen Holdings–Made of the REIT stuff?
yeah I think we’ve temporarily missed the boat on this one. If we see any price slumps, it could be a great moment in grab some
Yes. However, as growth is not anticipated for a while I suspect the share price will remain under pressure for some time. Hopefully that will throw us an opportunity or two.
Fingers crossed!
Dividend Drive recently posted…BUY: Hansteen Holdings–Made of the REIT stuff?
it could well do!
Have you ever just bought index stocks? Or do you ave an exit strategy for this stock?
A S&P ETF will be almost like an IRA purchase. It grows tax free (unless you sell) except for the dividends. No capital gains, no commissions. No worry’s about companies, or sectors, that go out of favor.
No Nonsense Landlord recently posted…Filling Rental Vacancies – How to get a tenant in the Winter
I do have index trackers in my pension and I have just one in my NISA (British tax free account). I don’t have an exit strategy as I prefer to buy and hold forever, but if the fundamentals of the companies were to change significantly, then I’d consider selling them. I might also consider selling on account of the price getting crazily high, which would affect the fundamentals anyway.
Someone’s been quite busy lately with all these stock purchases. Good for you for adding more capital in your investment portfolio.
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Thanks Tawcan, by the way I lived the baby’s feet photo
Funnily enough, I was going to go for National Grid but for reasons unknown, I went for Centrica instead (I’d put in a regular investment buy order a few weeks back) – just as well only a small investment but as with my Tesco shares, I have hope that long-term they’ll do ok.
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Shame about the centrica dividend cut, but probably still worthwhile investing in these sorts of companies… Unless we get a labour government in may
Looks like you’ve been quite busy this month. 3 buys, that’s a lot!
i know. Just coincidence really… hoping to do 2+ next month too,
nice to see you Henry