- all the FTSE100 incumbents
- plus the Dividend Champions (25+ years of unbroken increasing dividends)
- and Contenders (10-24 years of continual dividend growth) from DividendChampionsUK
Here's the 3 companies which as of - 21st Feb 2018 - meet all 5 of my criteria.
At this stage it seems the norm to include a disclaimer that if you hadn't noticed yourself I am not a professional and this is not advice you should follow.
Share price £1.68
In the Media sector it's a publisher of "works of originality and excellence" apparently, basically a book publisher famously of Harry Potter it seems. It looks like they are attempting to find growth in the academic publishing arena.
The smallest market cap (£127million) of the 3 contenders that I'm reviewing.
The smallest yield of the three @ 4.2% but the longest unbroken period of increasing dividend payments (18 years). The div cover (2) and payout ratio (59) give no reason on there own to doubt this continues.
It does have the lowest (0.12) earnings per share (EPS) and the highest (14.56) price to earnings (PE ratio)
The dividend has increased by an average of 6.25% per annum over 10 years and 5.2% over the previous 5.
At the current share price I would need to buy 24 shares at a cost of £40.03 to purchase 1 new share each year with the current dividend.
Share price £6.42
An investment trust aimed at "investing in the UKs largest companies". Obviously in the Investment Trust sector. The largest market cap (£1.3bn) of the three today and the only member of the FTSE, its in the FTSE250 the other two are in neither.
4.4% yield is in the middle of the three, has the highest div cover (3) and the lowest payout ratio (50).
13 years of non broken increased dividend payments. The average div annual increase of 10 years is 2.98% and over 5 years is 3.18.
To purchase 1 new share with the annual dividend I'd need to own 23 shares at a cost of £147.37.
Share price £8.24
The final contender for my first dividend stock review is Paypoint (PAY). Their main business a "payments platform spanning digital, voice, cards and cash" as well as ATM machines. They are in the Support Sector.
Market cap of £558million.
The highest yield of the three by some distance (6.2%). The div cover is 1.5, the minimum for my screen v1, but they have increased dividends for the last 13 years, have the lowest P/E ratio (9.42) and a payout ratio of 59.
Over the last 10 years they have increased dividends by on average 11.88%. Significantly higher than the previous two companies I have reviewed. Over 5 years this drops to 9.52% but still much higher.
To purchase 1 new share with the annual dividend I'd need to own 16 shares at a cost of £133.13.
Conclusion
Well that was fun. I loved diving in an learning about these random companies that I would never had come across at all normally. Being so new to this world I find it amazing how much data and information is publicly and freely available on all of these business.
So where am I going to put my money?
Part of me thinks this should be straight forward. I have a stock screen, that throws up companies that currently match all 5 of my criteria then I should just pick the highest yield. Which in this case is PAY and also has the highest average annual dividend % growth over both 5 and 10 years and is also the best value judging by the PE ratio.
What has put a spanner in the works is that I actually hadn't realised that PAY, and also BMY, are not actually in the FTSE350. My assumption was that I would be investing in large cap global enterprises predominantly on the FTSE100.
I'm also slightly perturbed that my screen returned so few companies. It's good to focus on quality but I'm going to need to widen the net slightly I believe.
So, next step is to create v2 of my stock screen and re-evaluate.
I'm also slightly perturbed that my screen returned so few companies. It's good to focus on quality but I'm going to need to widen the net slightly I believe.
So, next step is to create v2 of my stock screen and re-evaluate.
Hi Brian
ReplyDeleteNot that it means anything but I hold both EDIN and BMY, the latter I've held for about 3 years now and am happy to continue holding. I think I had in my mind that I was only going to invest in the FTSE100 at first but in the end, I didn't want to restrict myself. Still, it's good to stick to some criteria when you're starting out as you can always change your strategy at a later date if you wish.
Hi Weenie, yeah I've seen now that you hold both! interesting. I guess I just had this preconception of what a HYP portfolio would look like for me and I was slightly surprised by the results and so have tuned the screen to adapt to my expectations. Perhaps in the future when I'm looking to diversify I'll come across BMY again.
DeleteOut of interest, I'm not yet sure what the reasons are for splitting out Investment Trusts from general shares... ie in your holding you've got two distinct lits. Why do you do this? Aren't they all just companies in specific fields...
Hi Brian
DeleteThey're not split for any particular reason really, only that the general shares are a lot more volatile (and risky) so I thought I'd list them separately, so it's easier to keep an eye on them that way. I did have them in a big list previously but just prefer them split like this.