DividendMax Model Portfolio 2012
This is the dividendMax model portfolio. It has now been updated for the second half of the year. The model portfolio outperformed the market in both Q1 and Q2. In the second half of the year, we outperformed the market dramatically.
Price Earnings (P/E) data as at time of publication. The P/E is forward looking one year.
Weighting as at time of publication
Dividend Cover as at time of publication
Q1 Commentary
1) The FTSE 100 increased by 1.2% in the first quarter. The Model portfolio increased by 6.45%, outperforming the FTSE by 5.25%
2) The Model portfolio did the following. No trading is undertaken. Dividends are not taken into account.
3) The portfolio performed extremely well with some notable exceptions. By far the worst performer was Antofagasta who disappointed the market with a much lower special dividend than in recent years. There were also a number of other constituents that fell around 6%.
Company |
Entry Price |
End-Q1 Price |
Performance |
Weighting (£1000 = 1%) |
Gain / Loss |
BAE |
313 |
300 |
-4.20% |
5 |
-£207.00 |
Close Brothers |
662 |
784 |
18.20% |
5 |
£921.00 |
Britvic |
339 |
384 |
13.20% |
4 |
£531.00 |
Balfour Beatty |
286 |
286 |
0.00% |
5 |
0 |
3i |
186 |
214 |
15.00% |
8 |
£1,204.00 |
Sainsbury |
290 |
311 |
7.20% |
5 |
£362.00 |
Hargreaves Lansdown |
444 |
484 |
9.00% |
5 |
£450.00 |
Reckitt Benckiser |
3359 |
3531 |
5.10% |
3 |
£154.00 |
Antofagasta |
1340 |
1142 |
-14.80% |
5 |
-£738.00 |
Amlin |
351 |
329 |
-6.30% |
3 |
-£188.00 |
Royal Dutch |
2325 |
2183 |
-6.10% |
3 |
-£183.00 |
Amec |
990 |
1110 |
12.00% |
4 |
£484.00 |
Glaxo |
1435 |
1406 |
-2.00% |
6 |
-£121.00 |
HomeRetail |
100 |
112 |
12.00% |
4 |
£480.00 |
Logica |
79.5 |
98.5 |
24.00% |
3 |
£717.00 |
Hays |
72 |
85 |
18.00% |
3 |
£542.00 |
ARM |
575 |
604 |
5.00% |
6 |
£303.00 |
Talk Talk |
124 |
138 |
11.30% |
6 |
£677.00 |
Ladbrokes |
140 |
162 |
15.70% |
4 |
£628.00 |
Aviva |
350 |
328.5 |
-6.20% |
7 |
-£430.00 |
ITV |
75.1 |
88 |
17.00% |
5 |
£859.00 |
Total Cash Allocated 1% weight = £1000 |
FTSE 100 |
Portfolio Performance |
£100,000.00 |
£101,200.00 |
£106,445.00 |
Here are a list of the changes following the Q1 performance. The portfolio remains the same, but the weightings have been changed to reflect the Q1 performance.
BAE Systems weighting up from 5% to 7%
Close Brothers weighting down from 5% to 3%
Britvic weighting down from 4% to 3%
3i Group weighting down from 8% to 4%
Sainsbury weighting up from 5% to 6%
Hargreaves Lansdown weighting down from 5% to 4%
Antofagasta weighting up from 5% to 9%
Amlin weighting up from 3% to 4%
Royal Dutch Shell weighting up from 4% to 7%
Amec weighting down from 4% to 3%
Glaxo weighting up from 6% to 8%
Home retail weighting down from 4 to 3%
ARM weighting down from 6 to 4%
Ladbrokes from 3 to 4%
Logica weighting down from 4 to 3%
Hays weighting down from 5% to 3%
Aviva weighting up from 7% to 8%
ITV weighting down from 5% to 3%
Q2 Commentary
1) The FTSE 100 fell by 3.4% in the second quarter. The Model portfolio decreased by 2.20%, outperforming the FTSE by 1.2%
2) The Model portfolio did the following. No trading is undertaken. Dividends are not taken into account.
3) The portfolio performed well by outperfoming the index once again, but lets face it, there were too many poor performers and we were effectively saved by Talk Talk. This was such a volatile quarter with wild swings in the market. We had 4 constituents losing more than 10% and Home Retail, which unexpectedly completely cut it's dividend in the quarter falling by an alarming 24%.
Company |
Entry Price |
End-Q2 Price |
Performance |
Weighting (£1000 = 1%) |
Gain / Loss |
BAE |
300 |
289 |
-3.6% |
7 |
-£256.00 |
Close Brothers |
784 |
746 |
-4.8% |
3 |
-£145.00 |
Britvic |
384 |
330 |
-14% |
3 |
-£421.00 |
Balfour Beatty |
286 |
298 |
4.2% |
5 |
£210 |
3i |
214 |
198 |
-7.5% |
4 |
-£299.00 |
Sainsbury |
311 |
302 |
-2.9% |
6 |
-£173.00 |
Hargreaves Lansdown |
484 |
528 |
9.10% |
4 |
£363.00 |
Reckitt Benckiser |
3531 |
3367 |
-4.6% |
3 |
-£139.00 |
Antofagasta |
1142 |
1090 |
-4.50% |
9 |
-£409.00 |
Amlin |
329 |
354 |
7.6% |
4 |
£304 |
Royal Dutch |
2183 |
2149 |
-1.5% |
7 |
-£109.00 |
Amec |
1110 |
1001 |
-9.8% |
3 |
-£294.00 |
Glaxo |
1406 |
1448 |
3.00% |
8 |
£239.00 |
HomeRetail |
112 |
84.5 |
-24.5% |
3 |
-£736.00 |
Logica |
98.5 |
106 |
7.6% |
3 |
£228.00 |
Hays |
85 |
74 |
-12.9% |
3 |
-£388.00 |
ARM |
604 |
505 |
-16.3% |
4 |
-£655.00 |
Talk Talk |
138 |
192 |
39.1% |
6 |
£2348.00 |
Ladbrokes |
162 |
157 |
-3% |
4 |
-£123.00 |
Aviva |
328.5 |
272 |
-17.1% |
8 |
-£1375.00 |
ITV |
88 |
77 |
-12.5% |
3 |
-£375.00 |
Total Cash Allocated 1% weight = £1000 |
FTSE 100 |
Portfolio Performance |
£100,000.00 |
£96,600 |
£97,795 |
Weighting Changes at the end of Q2
BAE Systems from 7 to 8%
Britvic from 3 to 4%
Balfour Beatty from 5 to 3%
Hargreaves Lansdown from 4 to 3%
Amlin from 4 to 3%
Royal Dutch Shell from 7 to 6%
Glaxo Smithkline from 8 to 6%
Logica from 3 to 0% (Reflecting the takeover)
ARM Holdings from 4 to 10%
Talk Talk from 6 to 4%
Aviva from 8 to 10%
ITV from 3 to 5%
The second half performance was simply astonishing for a portfolio of this size reflecting some brave decisions in the face of the very tough second quarter. We increased our weighting in key stocks with the star performer being ARM, with big performances from Aviva, ITV and Antofagasta. The model portfolio increased by £21,260.30 compared to the FTSE which returned £5897
The second half performance is reflected in the table below:
Company |
Entry Price |
End-Q4 Price |
Performance |
Weighting (£1000 = 1%) |
Gain / Loss |
BAE |
289 |
337 |
16.60% |
8 |
£1,328.72 |
Close Brothers |
746 |
863 |
15.68% |
3 |
£470.00 |
Britvic |
330 |
406 |
23.03% |
4 |
£921.21 |
Balfour Beatty |
298 |
273 |
-8.30% |
3 |
-£251.67 |
3i |
198 |
217 |
9.59% |
4 |
£383.83 |
Sainsbury |
302 |
345 |
14.24% |
6 |
£854.30 |
Hargreaves Lansdown |
528 |
681 |
28.97% |
3 |
£869.32 |
Reckitt Benckiser |
3367 |
3879 |
15.21% |
3 |
£456.19 |
Antofagast |
1090 |
1324 |
21.47% |
9 |
£1,932.11 |
Amlin |
354 |
379 |
7.06% |
3 |
£211.86 |
Royal Dutch |
2149 |
2175 |
1.20% |
6 |
£72.59 |
Amec |
1001 |
1003 |
0.01% |
3 |
£5.99 |
Glaxo |
1448 |
1332 |
-8.00% |
6 |
-£480.66 |
HomeRetail |
84.5 |
126.5 |
49.70% |
3 |
£1,491.12 |
Logica |
106 |
N/A |
0 |
0 |
0 |
Hays |
74 |
82.3 |
11.22% |
3 |
£336.48 |
ARM |
505 |
768 |
52.00% |
10 |
£5,207.92 |
Talk Talk |
192 |
234 |
21.87% |
4 |
£875.00 |
Ladbrokes |
157 |
198 |
26.11% |
4 |
£1,044.58 |
Aviva |
272 |
373 |
37.13% |
10 |
£3,713.23 |
ITV |
77 |
105 |
36.36% |
5 |
£1,818.18 |
Total Cash Allocated 1% weight = £1000 |
FTSE 100 |
Portfolio Performance |
£100,000.00 |
£105,897 |
£121,603 |
Company | 3 Div Yield | P/E | Cover | FDI | Sector | Price | Weighting |
---|---|---|---|---|---|---|---|
BAE Systems plc | 10.0% | 7.4 | 2.1 | 5.7% | Aerospace & Defence | £2.89 | 8.0% |
Close Brothers Group plc | 7.43% | 9.2 | 1.6 | 6.3% | Banks | £7.46 | 3.0% |
Britvic | 5.09% | 9.7 | 2.1 | 3.4% | Beverages | £3.30 | 4.0% |
Balfour Beatty plc | 6.05% | 8.2 | 2.6 | 4.3% | Construction & Materials | £2.98 | 3.0% |
3i Group plc | 5.69% | 0.0 | 2.0 | 125.0% | Financial Services | £1.98 | 4.0% |
Sainsbury (J) plc | 7.51% | 10.7 | 1.8 | 4.6% | Food and Drug Retailers | £3.02 | 6.0% |
Hargreaves Lansdown Plc | 6.23% | 19.3 | 1.2 | 70.4% | General Financial | £5.28 | 3.0% |
Reckitt Benckiser Group Plc | 5.55% | 14.0 | 1.9 | 8.7% | Household Goods | £33.67 | 3.0% |
Antofagasta plc | 1.55% | 16.6 | 2.1 | 40.8% | Mining | £10.90 | 9.0% |
Amlin | 10.52% | 0.0 | 2.0 | 1.7% | Nonlife Insurance | £3.54 | 3.0% |
Shell Plc - Class B Shares | 6.83% | 6.9 | 2.6 | 0.0% | Oil & Gas Producers | £21.49 | 6.0% |
AMEC Foster Wheeler | 4.58% | 14.7 | 2.4 | 29.1% | Oil Equipment, Services & Distribution | £10.01 | 3.0% |
GSK Plc | 6.88% | 12.7 | 1.6 | 6.1% | Pharmaceuticals & Biotechnology | £14.48 | 6.0% |
Home Retail | 11.2% | 9.5 | 1.1 | -34.0% | Retailers | £0.85 | 3.0% |
- deleted share - | 8.08% | 7.6 | 2.7 | 9.5% | £1.06 | 0.0% | |
Hays plc | 9.58% | 13.3 | 1.2 | 0.0% | Support Services | £0.74 | 3.0% |
ARM Holdings | 0.8% | 51.4 | 3.3 | 17.2% | Technology Hardware & Equipment | £5.05 | 10.0% |
Talk Talk Telecom Group Plc | 7.93% | 8.1 | 1.9 | 39.3% | Telecomms | £1.92 | 4.0% |
Ladbrokes Coral | 8.4% | 9.7 | 1.9 | 5.3% | Travel & Leisure | £1.57 | 4.0% |
Aviva Plc | 10.93% | 7.4 | 2.1 | 5.9% | Life Insurance | £2.72 | 10.0% |
ITV | 3.69% | 10.7 | 4.8 | 100.0% | Media | £0.77 | 5.0% |
Aerospace & Defence
BAE Systems plc
Here we choose BAE systems for it's superior yield and share buyback programme. It is currently yielding 8.43% on the 3 dividend optimizer. It has a forward P.E of around 7 and is forecast to increase it's dividend by around 5.5%. It has an excellent track record of increasing it's dividend. We would be underweight in this sector due to U.S. Defence cuts, but would still retain a holding rather than a zero weighting.
Banks
Close Brothers Group plc
We choose Close Brothers because of their astute handling of the credit crisis. We are tempted to say 'No banks', but we feel that Close will benefit from any increased activity in the sector, whilst being underpinned by a seriously good dividend.
Beverages
Britvic
This was a very close call between Britvic, Greene King and Diageo. In the end, we felt that the pub sector would continue to be under pressure and that Britvic were better value than Diageo.
Construction & Materials
Balfour Beatty plc
Balfour Beatty is having a really good time of it of late, winning contracts regularly and is expected to increase profits dramatically in 2012.
Financial Services
3i Group plc
There is a great deal of choice in this sector, but in the end, we went for 3i because it allows the investor to spread his or her investments across the globe and across sectors. Add to that the massive increase in the dividend promised for this year and 3i looks good value at these levels. At a 37% discount to NAV, the price just looks wrong.
Food and Drug Retailers
Sainsbury (J) plc
It is difficult to choose between the big three, but in spite of it's lower dividend cover, we have just gone with the optimizer. At 7.09, Sainsbury is yielding more than a full percentage point more than rivals Tesco and William Morrison
General Financial
Hargreaves Lansdown Plc
After the success of Hargreaves Lansdown last year, we are going for a recovery play in Man Group.
Household Goods
Reckitt Benckiser Group Plc
It pays to have something from this sector due to the global coverage and exposure to the BRIC economies where Reckitts products are in a growth phase. The P/E says fair value, but the yield is unusually high for this sector. So Reckitt still gets the nod over Unilever.
Life Insurance
Aviva Plc
Take your pick. The sector is crammed with high dividend payer's. We are tempted to select more than one stock from this sector. This year we are choosing RSA above Aviva in a reversal of last years choice.. The sector has been hit hard by the level of natural disasters this year. Agreed, that this is bad in the short term, but insurance companies have a habit of putting up their premiums. Then, next year when things are not so bad, funny how the premiums do not come down.
Media
ITV
ITV remains our choice for this year as we believe the recovery has further to play out.
Mining
Antofagasta plc
Excellent growth being shown and consistently pays high special dividends.
Nonlife Insurance
Amlin
Over 10% on the optimizer and with a solid track record of dividend increases.
Oil Equipment, Services & Distribution
AMEC Foster Wheeler
AMEC has a fantastic track record of increasing dividends
Oil & Gas Producers
Shell Plc - Class B Shares
A higher dividend than BP and no baggage from the deep water horizon spillage
Pharmaceuticals & Biotechnology
GSK Plc
Glaxo is a dividend paying giant with a long time track record of increasing the payout year in, year out and almost always accompanied by share buybacks. With it's new strategy of focussing on growth markets and reducing exposure to the high litigation Pharmaceutical sector, this is a must for any portfolio.
Retailers
Home Retail
With an incredibly high yield of over 12% on the optimizer, this represents a good recovery play. With £200 million in cash and takeover prospects to boot.
Support Services
Hays plc
Hays is a recovery play with a high dividend payout.
Technology Hardware & Equipment
ARM Holdings
ARM is expensive, but it's prospects merit this and it's yield is still more than you can get in the building society.
Telecomms
Talk Talk Telecom Group Plc
Strong dividend increase last year. This stock is just plain undervalued.
Travel & Leisure
Ladbrokes Coral
Recovery play