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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 10.0% 7.4 2.1 5.7% Aerospace & Defence 288.6 8.0%
Close Brothers Group 7.43% 9.2 1.6 6.3% Banks 746.0 3.0%
Britvic 5.09% 9.7 2.1 3.4% Beverages 330.0 4.0%
Balfour Beatty 6.05% 8.2 2.6 4.3% Construction & Materials 298.0 3.0%
3i Group 5.69% 0.0 2.0 125.0% Financial Services 197.5 4.0%
Sainsbury's 7.51% 10.7 1.8 4.6% Food and Drug Retailers 302.0 6.0%
Hargreaves Lansdown 6.23% 19.3 1.2 70.4% General Financial 528.0 3.0%
Reckitt Benckiser 5.55% 14.0 1.9 8.7% Household Goods 3367.0 3.0%
Antofagasta 1.55% 16.6 2.1 40.8% Mining 1090.0 9.0%
Amlin 10.52% 0.0 2.0 1.7% Nonlife Insurance 354.0 3.0%
Royal Dutch Shell 'B' (UK) 6.83% 6.9 2.6 0.0% Oil & Gas Producers 2149.0 6.0%
AMEC Foster Wheeler 4.58% 14.7 2.4 29.1% Oil Equipment, Services & Distribution 1001.0 3.0%
GlaxoSmithKline 6.88% 12.7 1.6 6.1% Pharmaceuticals & Biotechnology 1448.0 6.0%
Home Retail 11.2% 9.5 1.1 -34.0% Retailers 84.5 3.0%
- deleted share - 8.08% 7.6 2.7 9.5%   106.0 0.0%
Hays 9.58% 13.3 1.2 0.0% Support Services 74.0 3.0%
ARM Holdings 0.8% 51.4 3.3 17.2% Technology Hardware & Equipment 505.0 10.0%
TalkTalk Telecomms Group 7.93% 8.1 1.9 39.3% Telecomms 191.5 4.0%
Ladbrokes Coral 8.4% 9.7 1.9 5.3% Travel & Leisure 157.0 4.0%
Aviva 10.93% 7.4 2.1 5.9% Life Insurance 272.0 10.0%
ITV 3.69% 10.7 4.8 100.0% Media 77.0 5.0%

Aerospace & Defence

BAE Systems

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.

Alternative Energy

No company in this sector meets our criteria

Automobiles & Parts

No company in this sector meets our criteria

Banks

Close Brothers Group

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.

Chemicals

No company in this sector meets our criteria

Commercial Transportation

No company in this sector meets our criteria

Construction & Materials

Balfour Beatty

Balfour Beatty is having a really good time of it of late, winning contracts regularly and is expected to increase profits dramatically in 2012.

Consumer Staples

No company in this sector meets our criteria

Electricity

No company in this sector meets our criteria

We see no value in this sector. Price earnings ratios are too high compared to the yields on offer.

Electronic & Electrical Equipment

No company in this sector meets our criteria

Although Halma is a dividend paying giant, we think it is fairly valued.

Engineering

No company in this sector meets our criteria

Equity Investments

No company in this sector meets our criteria

Financial Services

3i Group

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's

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

Food Producers

No company in this sector meets our criteria

We see no value in this sector. Price earnings ratios are too high compared to the yields on offer.

Forestry & Paper

No company in this sector meets our criteria

Gas, Water & Multiutilities

No company in this sector meets our criteria

We see no value in this sector. Price earnings ratios are too high compared to the yields on offer.

General Financial

Hargreaves Lansdown

After the success of Hargreaves Lansdown last year, we are going for a recovery play in Man Group.

General Industrials

No company in this sector meets our criteria

We see no value in this sector. Price earnings ratios are too high compared to the yields on offer.

Health Care Equipment & Services

No company in this sector meets our criteria

We see no value in this sector. Price earnings ratios are too high compared to the yields on offer.

Hedge Funds

No company in this sector meets our criteria

Household Goods

Reckitt Benckiser

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.

Household Goods and Home Construction

No company in this sector meets our criteria

Industrial Engineering

No company in this sector meets our criteria

We see no value in this sector. Price earnings ratios are too high compared to the yields on offer.

Industrial Metals

No company in this sector meets our criteria

Industrial Transportation

No company in this sector meets our criteria

We see no value in this sector. Price earnings ratios are too high compared to the yields on offer.

Investment Trusts

No company in this sector meets our criteria

Leisure Goods

No company in this sector meets our criteria

Life Insurance

Aviva

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

Excellent growth being shown and consistently pays high special dividends.

Mobile Telecommunications

No company in this sector meets our criteria

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

Royal Dutch Shell 'B' (UK)

A higher dividend than BP and no baggage from the deep water horizon spillage

Personal Goods

No company in this sector meets our criteria

We see no value in this sector. Price earnings ratios are too high compared to the yields on offer.

Pharmaceuticals & Biotechnology

GlaxoSmithKline

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.

Property

No company in this sector meets our criteria

We see no value in this sector. Price earnings ratios are too high compared to the yields on offer.

Real Estate

No company in this sector meets our criteria

Real Estate Investment & Services

No company in this sector meets our criteria

Real Estate Investment Trusts

No company in this sector meets our criteria

We see no value in this sector. Price earnings ratios are too high compared to the yields on offer.

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.

Software & Computer Services

No company in this sector meets our criteria

Logica is a recovery play with a low PE ratio and a high dividend.

Support Services

Hays

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

TalkTalk Telecomms Group

Strong dividend increase last year. This stock is just plain undervalued.

Tobacco

No company in this sector meets our criteria

We see no value in this sector. Price earnings ratios are too high compared to the yields on offer.

Travel & Leisure

Ladbrokes Coral

Recovery play