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DividendMax Ultra Safe Portfolio 2012

The final result for the full year is now in. The results for the second half of the year are in the Q3 & Q4 commentary

The companies in this portfolio must:

  1. Be in the process of a share buyback
  2. Be expected to increase the dividend in the next two years

Price Earnings (P/E) data as at time of publication

Weighting as at time of publication

Dividend Cover as at time of publication

Q1 Commentary.               The new Q2 portfolio can be found at the bottom of the page.


1) The FTSE 100 increased by 1.2% in the first quarter. The Ultra Safe portfolio increased by 3.85%, outperforming the FTSE by 2.65%

2) The Ultra Safe portfolio did the following. No trading is undertaken. Dividends are not taken into account.

3) The portfolio performed extremely well with some notable exceptions.  The portfolio was adversely affected by the poor mining and pharmaceutical sector performances.

Company

Entry Price

End-Q1 Price

Performance

Weighting (£1000 = 1%)

Gain / Loss

BAE

313

300

-4.20%

4

-£166.00

Chemring

448

407

-9.10%

5

-£457.00

Diageo

1387

1502

8.29%

3

£248.00

ICAP

335

393

17.30%

8

£1,385.00

William Hill

225

261

16.00%

4

£640.00

Man Group

119

135

13.40%

4

£538.00

Reckitt Benckiser

3359

3531

5.10%

4

£205.00

BskyB

669

676

1.00%

5

£52.00

WPP

742

854

15.00%

5

£755.00

Kazakhmys

1121

908

-19.00%

4

-£760.00

Rio Tinto

3675

3446

-6.30%

4

-£249.00

Glaxo Smithkline

1435

1406

-2.10%

5

-£101.00

AstraZeneca

3034

2779

-9.40%

4

-£336.00

WH Smith

534.5

545

1.90%

3

£59.00

Next

2614

2983

14.10%

3

£423.00

Sage

305

299

-2.00%

6

-£118.00

Compass

613

655

6.80%

6

£411.00

Vodafone

177

172

-2.80%

10

-£282.00

Inmarsat

404

460

13.80%

7

£970.00

British American Tobacco

2921

3150

7.80%

3

£235.00

Imperial Tobacco

2238

2535

13.20%

3

£398.00

 

Total Cash

FTSE 100

Portfolio Performance

£100,000.00

£101,200.00

£103,850.00

 

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 is up tp 6% from 4%

Chemring weighting is down to 3% from 5%

ICAP weighting is down from 8% to 5%

WPP weighting is down to 3% from 5%

Kazakhmys weighting is up to 7% from 4%

Rio Tinto weighting is up to 5% from 4%

AstraZeneca weighting is up from 4% to 5%

Sage weighting is up to 7% from 6%

Compass weighting is down from 6% to 5%

Inmarsat weighting is down from 7% to 5%

 

Q2 Commentary.               The new Q3 portfolio can be found at the bottom of the page.


1) The FTSE 100 decreased by 3.4% in the first quarter. The Ultra Safe portfolio decreased by 4.7%, underperforming the FTSE by 1.3%

2) The Ultra Safe portfolio did the following. No trading is undertaken. Dividends are not taken into account.

3) The portfolio performed badly with some serious underperformers including MAN Group (-43.7%) and Chemring (-32.6%). Also performing badly was Kazakhmys, Rio Tinto and ICAP.

 

Company

Entry Price

End-Q2 Price

Performance

Weighting (£1000 = 1%)

Gain / Loss

BAE

300

288.5

-3.8%

6

-£230.00

Chemring

407

274

-32.6%

3

-£980.00

Diageo

1502

1638

9%

3

£271.00

ICAP

393

337.5

-14.1%

5

-£706.00

William Hill

261

282.5

8.2%

4

£329.00

Man Group

135

76

-43.7%

4

-£1748.00

Reckitt Benckiser

3531

3368

-4.6%

4

-£184.00

BskyB

676

697

3.1%

5

£155.00

WPP

854

772

-9.6%

5

-£480.00

Kazakhmys

908

722

-20.5%

7

-£1433.00

Rio Tinto

3446

3027

-12.1%

5

-£607.00

Glaxo Smithkline

1406

1448

2.9%

5

£149.00

AstraZeneca

2779

2845

2.4%

5

£118.00

WH Smith

545

548

0%

3

£16.00

Next

2983

3203

7.4%

3

£221.00

Sage

299

278

-7%

7

-£491.00

Compass

655

668

2%

5

£99.00

Vodafone

172

179

4%

10

£407.00

Inmarsat

460

491

6.7%

5

£337.00

British American Tobacco

3150

3247

3%

3

£92.00

Imperial Tobacco

2535

2460

-2.9%

3

-£88.00

 

Total Cash

FTSE 100

Portfolio Performance

£100,000.00

£96,600

£95,247

 

Here are a list of the changes following the Q2 performance. The portfolio remains the same, but the weightings have been changed to reflect the Q2 performance.

Chemring from 3 to 8%

Diageo from 3 to 1%

ICAP from 5 to 6%

William Hill from 4 to 3%

Man Group from 4 to 8%

WPP from 5 to 6%

Kazakhmys from 7 to 8%

Rio Tinto from 5 to 8%

Glaxo from 5 to 4%

Astra Zeneca from 5 to 4%

Next from 3 to 1%

Compass from 5 to 3%

Vodafone from 10 to 7%

Inmarsat from 5 to 3%

BAT from 3 to 1%

Imperial Tobacco from 3 to 4%

 

The Q3 -Q4 result is below

We saw a positive result of £5225 for the second half of the year, which was a little disappointing as Chemring and Vodafone proved to be real drags on performance and both had a high weighting, albeit, we reduced the Vodafone weighting at the end of the second quarter. During this time the FTSE 100 rose by 5.8% which would equate to £5800 meaning that the ultra safe portfolio underperformed the market by a small amount. With dividends of course we would have outperformed.

 

Company

Q3 Entry Price

Year end Price

Performance

Weighting (£1000 = 1%)

Gain / Loss

BAE

288.5

337

16.80%

6

£1,008.00

Chemring

274

230

-16.00%

8

-£1,284.00

Diageo

1638

1784

8.90%

1

£146.00

ICAP

337.5

306

-9.30%

6

-£560.00

William Hill

282.5

347

22.80%

3

£685.00

Man Group

76

83

9.20%

8

£737.00

Reckitt Benckiser

3368

3872

14.96%

4

£598.00

BskyB

697

767

10.00%

5

£500.00

WPP

772

889

15.10%

6

£906.00

Kazakhmys

722

777

7.60%

8

£608.00

Rio Tinto

3027

3505

15.79%

8

£1,263.00

Glaxo Smithkline

1448

1332

-8.00%

4

-£320.00

AstraZeneca

2845

2903

2.00%

4

£80.00

WH Smith

548

668

21.89%

3

£657.00

Next

3203

3704

15.64%

1

£156.00

Sage

278

294

5.70%

7

£399.00

Compass

668

725

8.50%

3

£255.00

Vodafone

179

154

-13.90%

7

£977.00

Inmarsat

491

582

18.50%

3

£555.00

British American Tobacco

3247

3113

-4.10%

1

-£41.00

Imperial Tobacco

2460

2370

-3.60%

4

-£146.00

 

Total Cash

FTSE 100

Portfolio Performance

£100,000.00

£105,897

£105,571

Company 3 Div Yield P/E Cover FDI Sector Price Weighting
BAE Systems 7.94% 7.8 2.1 5.7% Aerospace & Defence 288.5 6.0%
Chemring Group 4.95% 8.4 4.2 18.6% Aerospace & Defence 274.0 8.0%
Diageo 3.89% 15.7 2.0 6.4% Beverages 1638.0 1.0%
ICAP 8.84% 9.0 2.0 15.3% Financial Services 337.5 6.0%
William Hill 5.94% 9.8 2.5 12.0% Travel & Leisure 282.5 3.0%
Man Group 11.33% 10.4 1.1 -22.7% General Financial 76.0 8.0%
Reckitt Benckiser 5.55% 14.0 1.9 8.7% Household Goods 3368.0 4.0%
Sky 4.8% 13.7 1.9 16.6% Media 697.0 5.0%
WPP 3.42% 11.5 3.0 14.4% Media 772.0 6.0%
Kaz Minerals 2.9% 6.2 9.6 50.3% Mining 722.0 8.0%
Rio Tinto 2.97% 6.9 7.5 11.9% Mining 3027.0 8.0%
GlaxoSmithKline 6.88% 12.7 1.6 6.1% Pharmaceuticals & Biotechnology 1448.0 4.0%
AstraZeneca 9.56% 6.5 2.57 9.5% Pharmaceuticals & Biotechnology 2845.0 4.0%
WH Smith 4.64% 9.0 2.3 9.8% Retailers 548.0 3.0%
Next 4.35% 11.1 2.7 9.6% Retailers 3203.0 1.0%
Sage Group 5.52% 14.5 2.4 9.2% Software & Computer Services 278.0 7.0%
Compass Group 5.45% 14.5 2.0 8.8% Travel & Leisure 668.0 3.0%
Vodafone Group 8.25% 11.2 1.4 18.5% Mobile Telecommunications 179.0 7.0%
Inmarsat 8.99% 7.9 2.0 7.1% Telecomms 491.0 3.0%
British American Tobacco 7.38% 15.1 1.6 19.2% Tobacco 3247.0 1.0%
Imperial Brands 4.18% 11.0 2.1 10.5% Tobacco 2460.0 4.0%

Aerospace & Defence

BAE Systems, Chemring Group

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.

Chemring

Chemring has an amazing recent track record, growing rapidly by acquisition. It has a decent yield, a good forecast dividend growth target and has very high dividend cover. We prefer it the BAE in spite of the lower yield and so give it a slightly higher weighting in the portfolio.

Alternative Energy

No company in this sector meets our criteria

Automobiles & Parts

No company in this sector meets our criteria

Banks

No company in this sector meets our criteria

Beverages

Diageo

Diageo

Diageo is a very defensive stock and is on a premium rating to reflect this. It meets our criteria and so is included in the portfolio with a relatively low weighting of 3%.

Chemicals

No company in this sector meets our criteria

Commercial Transportation

No company in this sector meets our criteria

Construction & Materials

No company in this sector meets our criteria

Consumer Staples

No company in this sector meets our criteria

Electricity

No company in this sector meets our criteria

Electronic & Electrical Equipment

No company in this sector meets our criteria

Engineering

No company in this sector meets our criteria

Equity Investments

No company in this sector meets our criteria

Financial Services

ICAP

ICAP

ICAP really is an excellent company. It is tarnished with the 'financials' brush as investors remember what happened to their bank shares. This is no bank. It is a money making machine and it pays a whopping dividend. Absolutely essential part of the portfolio. We attach a very high weighting of 8%.

Food and Drug Retailers

No company in this sector meets our criteria

William Morrison

The outstanding performer in the sector since the takeover of Safeway. This very well managed company is on the up while Tesco finally seems to have hit the rocks after an incredible run. Excellent yield, good cover and a high forecast dividend increase lead us to give this a strong 7% weighting in the portfolio. This is also a defensive stock, being a food retailer.

Food Producers

No company in this sector meets our criteria

Forestry & Paper

No company in this sector meets our criteria

Gas, Water & Multiutilities

No company in this sector meets our criteria

General Financial

Man Group

Man Group

Although strictly speaking, MAN does not meet our criteria of having to have a forecast dividend increase for the current year, it has maintained it's dividend and changed it's year end. We believe it is worth holding as it has a lot of surplus cash and will benefit hugely from a return to stability in the markets as clients return and the redemptions stop. It's very high yield tempts us into a decent weighting of 4% of the portfolio.

General Industrials

No company in this sector meets our criteria

Health Care Equipment & Services

No company in this sector meets our criteria

Hedge Funds

No company in this sector meets our criteria

Household Goods

Reckitt Benckiser

Reckitt Benckiser

Another defensive stock with a long track record. A decent yield, cover and FDI lead us to weight it at 4%

Household Goods and Home Construction

No company in this sector meets our criteria

Industrial Engineering

No company in this sector meets our criteria

Industrial Metals

No company in this sector meets our criteria

Industrial Transportation

No company in this sector meets our criteria

Investment Trusts

No company in this sector meets our criteria

Leisure Goods

No company in this sector meets our criteria

Life Insurance

No company in this sector meets our criteria

Media

Sky, WPP

BskyB

Forced into a share buyback to support it's ailing share price in light of the News of the World scandal, BskyB nevertheless is a good investment. There has to be some worry over people cutting their subscriptions in the recession, but the company has shown great resiliance. With decent cover and good forecast dividend growth, we weight it 4%.

WPP

Strong results for the first 3 quarters of the year bode well for the full year outcome. Strong dividend cover and a high expected dividend increase make this advertising giant a 4% weighting in the portfolio.

Mining

Kaz Minerals, Rio Tinto

Kazakhmys

Is a major producer of copper. The company now has net cash on the balance sheet and is using it's strong cash generation to return surplus cash to shareholders in the form of buybacks and increased dividends. With dividend cover over 9, the scoppe for increased dividends over time is huge.

Rio Tinto

This mining giant is buying back it's own shares, enjoys high dividend cover and has considerable scope to increase the dividend through increased profitability and strong cash flows.

We recommend a weighting of 4% each for Rio and Kazakhmys.

Mobile Telecommunications

Vodafone Group

Vodafone


Vodafone is an absolute must for any dividend portfolio for a number of reasons. It's huge cash generative abilities make it essential. Reasons to hold Vodafone include It's high yield of over 8%, it's stated dividend policy of increasing the dividend by at least 7%. There is also the wild card of what it will do with it's Verison dividends, if and when Verison choose to pay them. Last year Vodafone returned them directly to shareholders in the form of an 4p special dividend with the Interim.

 

Nonlife Insurance

No company in this sector meets our criteria

Oil Equipment, Services & Distribution

No company in this sector meets our criteria

Oil & Gas Producers

No company in this sector meets our criteria

Personal Goods

No company in this sector meets our criteria

Pharmaceuticals & Biotechnology

GlaxoSmithKline, AstraZeneca

Glaxo Smithkline

Glaxo is a core holding for any portfolio. It is excellent value and pays a good dividend. The new business strategy promises much for shareholders.

Astra Zeneca

On a very low P/E, the prospects for Astra Zeneca are fully accounted for in the low share price,. It remains a highly cash generative business.

Property

No company in this sector meets our criteria

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

Retailers

WH Smith, Next

WH Smith

WH Smith is another company with an excellent track record and is not expensive.

 

 

Next

Next is good value on a P/E of under 12 and a dividend approaching 5%. Good value for this very well run business.

Software & Computer Services

Sage Group

Sage

With a 5.5% yield and a P/E of just over 14, Sage is very good value in this generally high growth sector.

Support Services

No company in this sector meets our criteria

Technology Hardware & Equipment

No company in this sector meets our criteria

Telecomms

Inmarsat

Inmarsat

Inmarsat is a growth company on a very low rating with excellent prospects, a very high yield and solid dividend cover. It is entering a year of relative consilidation and the dividend is only expected to increase by 7%, but with the share buyback and a 3 dividend optimised yield of almost 9%, it is great value.

 

Tobacco

British American Tobacco, Imperial Brands

British American Tobacco

A high P/E and a high yield and a very good increase in the dividend forecast. Highly defensive.


Imperial Group


A lower P/E than BAT and a lower yield. Highly defensive

Travel & Leisure

William Hill, Compass Group

William Hill

William Hill is a reovery play on a P/E of about 10 with a yield approaching 7%.

 

Compass Group

Not cheap on a PE of over 14x, but the yield is nearing 6% and the company is a play on quality management and a very good track record of growth.