Friday Email: 10 January 2014
Every Friday morning our lead analyst Mark Riding sends out his weekly run-down and upcoming events in the investor calendar, like this one:
Wishing everybody a prosperous 2014. It has been a lacklustre start to the year and the market is at the moment fairly directionless. There has been no companies reporting so far and when the reporting season gets underway, it will be interesting to see if earnings growth matches up to last years performance on the stock market. Until the earnings season begins, the market could go either way. We have had some pointers. Relentless Next has done well but the food retailers seem to have struggled. We shall see about the rest of UK PLC...
We have yesterday released our 2014 model portfolio which is positioned quite defensively for the first quarter at least until we have a better idea on how things are going to pan out on the earnings front. It can be accessed via the home page. To get to the home page when logged in, click on the DividendMax logo and the past three years of the model portfolio are on the right hand side of the screen.
The price of Imperial Tobacco looks very very attractive at these levels, having fallen well over £1 in the past few days. That is unusual as the stock goes ex-dividend this coming Wednesday for 81.2p per share. That looks very attractive to me and over three dividends they are currently yielding 9.29% and are on top of the Optimizer. Such luxury yields are often reserved for companies that are about to cut/reduce their dividend or at least are at risk of doing so. To see a yield of that magnitude for a stock that we know is going to increase its dividend by 'at least 10%' is quite rare. There have been a few over the past few years since I set up DividendMax. Close Brothers springs to mind and that has since doubled. Others such as Aviva went on to slash their dividend as did Hays and RSA. Admiral are another that has topped the optimizer and has kept increasing its divi, but you sense that Imperial's dividend is the safest of the lot and if 9.29% over the next year or so is good enough, the capital should take care of itself unless the market completely tanks.
It is good to see Easyjet doing so well since we looked at it in early December. It has risen from 1386 on 3rd December to a new high of 1651 last Wednesday; 19% in just over a month. We will be producing plenty of notes like that for members throughout the year. Things are a little quiet right now but as the earnings and dividends start to flow, there will be plenty to go for in the coming 12 months. Here is the note for those who did not get the chance to read it.
The Friday email is delivered to over 20,000 subscriber’s every week, and remains a widely read run-down of recent events and what investors can expect in the week ahead written by our chief analyst Mark Riding.
It’s included as part of the free DividendMax trial.
Read next: 27 December 2013
As we predicted in our last Friday email, there was nothing to stop the Santa rally after the moves by the Federal Reserve and so we have been proved correct...by a mrgin even greater than we were expecting. The market has risen every day sionce then and by fairly substantial amounts. At the moment we can see no end to this as we are not sure where the bad news is coming from right now. We are concerned that the market is getting ahead of itself, but that is fairly normal for markets and the overbought scenario can continue. Over the coming months we will examine earnings expectations across the market and at the moment valuations looked stretched and any earnings disappointments will be treated severely.
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