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ziknik

Beaten down dividend paying shares that could be good for the long term

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Utilities always seem to be relatively highly indebted. I guess those debts should remain serviceable, but only for as long as people need water, gas, electricity, sewage etc. ;) . I like both National Grid and United Utilities.

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Did you know…. water companies have a 25 year rolling contract with the government. There are profit limits set within the contract. The profit limits were intended to stop abuses of a monopoly position. These limits also guarantee minimum/fixed profits to certain areas of the business. These profits are ring-fenced and cannot be eaten up by other losses.

 

If a water company went bust today, the government would be forced to step in and provide all the minimum/fixed profits for at least 25 years. So effectively, the bust company will be propped up by the government AND continue to generate profits for the shareholders. The company cannot be nationalised without 25 years notice

 

Even in an complete breakdown scenario; the shareholders can legally claim 25 years of profits once the order is restored (providing order is restored and we honour the old laws)

 

I bet electricity and gas have a similar deal

 

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Does anyone know of a website where I can get US shares priced in GBP (charts)? I’ve been downloading data from Yahoo and using excel to calculate prices

 

I’ve been watching Exxon for ages and we’re getting pretty near the lows.

 

10 October 2008: £33.20

06 March 2009: £43.71

09 July 2009: £38.65

 

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I have BP and Exxon Mobil on my watchlist.

 

I prefer Exxon. They’ve got over $10bn sat on their balance sheet.

 

I’m looking for oil to drop to at least $60 this summer so hopefully I will get a good bite at Exxon. I need Sterling to stay strong.

 

 

GBP has scuppered my master plan yet again :angry:

 

Exxon now costs £40.09 despite being down in USD price today

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According to the site below, Xstrata now has a yield of 15.93. I think this is questionable although Digital Look gives a forward yield of 17%.

 

http://www.topyields.nl/Top_dividend_yield...ted_Kingdom.php

Xstrata had a rights issue, the last div was prior to that.

They have been one of my all time best trades over the last four or five months :-)

 

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Investors relying on an income from their equity investments have yet to receive any good news this year, in spite of recent rises in the stock markets.

 

Dividend payouts are still being slashed as companies continue to conserve cash in the face of ongoing uncertainty about the economy.

 

Fewer companies than ever before increased their dividends in the second quarter of this year, according to Standard & Poor's. Just 233 companies out of 7,000 increased their dividends between April and June - nearly half the number that raised their dividends in the same period a year ago.

 

"It's not a good time for dividend investors," says Howard Silverblatt, senior index analyst at Standard & Poor's. "The current trend to conserve cash and cut dividends has become defensive, with even relatively healthy companies choosing to reduce payouts."

 

This lack of dividends - particularly in the financial sector - has been problematic for fund managers investing for income.

 

"A lot of income managers have had to cut their costs as people have been forced to reduce distributions," says Julian Chillingworth, chief investment officer at Rathbones.

 

However, managers say it is still possible to unearth companies that are paying decent dividends.

 

Such stocks are nearly all in the defensive sectors - companies that tend to be less exposed to business cycles as they produce essential goods, such as utilities, telecoms and pharmaceuticals.

 

Defensive stocks were sold off earlier this year as the markets began to rise but this could be good news for investors willing to buy them for their yield.

 

Neil Woodford, the UK's best-known equity income fund manager, thinks cyclical stocks are overvalued after the stock market rally this year. He is looking to defensives with strong business models for income, such as Tesco (LSE: TSCO.L - news) . Woodford is more bearish than most fund managers and does not believe there will be a V-shaped recovery. So he thinks defensives, such as AstraZeneca (LSE: AZN.L - news) and GlaxoSmithKline (LSE: GSK.L - news) , the pharmaceutical groups, are about to see a rise in their share prices.

 

http://uk.biz.yahoo.com/10072009/399/manag...cks-income.html

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I've got Severn Trent

 

http://uk.reuters.com/article/idUKLNE56G00...lBrandChannel=0

Water firms could see dividend pressure

 

LONDON (Reuters) - Water companies could see dividend pressure next week if the sector's regulator permits them to make returns which do not match their capital expenditure plans.

 

Every five years the water regulator OFWAT rules on how much money the companies can make, and on July 23 it will issue its draft opinion for the period 2010 to 2015.

He said that Pennon (PNN.L), which owns South West Water, was well placed because it also had its Viridor waste business to draw from.

Analysts at Merrill Lynch agree that United Utilities is at the greatest risk from the price review

They see Northumbrian Water (NWG.L) as having the lowest risk because the business plan is uncontentious and focussed on the company's customers.

 

Mark Freshney at Credit Suisse said he saw Severn Trent (SVT.L) being at the highest risk because of the cost of its debt and the level of its dividend.

 

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Does anyone know of a website where I can get US shares priced in GBP (charts)? I’ve been downloading data from Yahoo and using excel to calculate prices

 

I’ve been watching Exxon for ages and we’re getting pretty near the lows.

 

10 October 2008: £33.20

06 March 2009: £43.71

09 July 2009: £38.65

 

I've discovered Stockcharts can price US shares in GBP

 

http://stockcharts.com/h-sc/ui?s=XOM:$...id=p21361634238

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Did you know…. water companies have a 25 year rolling contract with the government. There are profit limits set within the contract. The profit limits were intended to stop abuses of a monopoly position. These limits also guarantee minimum/fixed profits to certain areas of the business. These profits are ring-fenced and cannot be eaten up by other losses.

 

If a water company went bust today, the government would be forced to step in and provide all the minimum/fixed profits for at least 25 years. So effectively, the bust company will be propped up by the government AND continue to generate profits for the shareholders. The company cannot be nationalised without 25 years notice

 

Even in an complete breakdown scenario; the shareholders can legally claim 25 years of profits once the order is restored (providing order is restored and we honour the old laws)

 

I bet electricity and gas have a similar deal

 

Very interesting! I certainly did not know that! Do you have any links providing more information on this?

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Here's an interesting choice: FTSE250 member "De La Rue". Forecast yield of 5.2% and very modest debt - looks excellent to me. I suspect they're about to have a bumper few years of business, too. They are an international money fiat-currency printer - the biggest in the world. ;)

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Very interesting! I certainly did not know that! Do you have any links providing more information on this?

My apologies. It is 10 years notice (the initial 25 years has expired)

 

from the UU Licence:

 

CONDITION O: CIRCUMSTANCES IN WHICH A REPLACEMENT APPOINTMENT MAY BE MADE

1 Requirement to give at least 10 years' notice, expiring not

earlier than 25 years after the transfer date, to terminate either

Appointment

 

The link I have posted in #82 says. (The actual clauses will also be in the Licence)

"Every five years the water regulator OFWAT rules on how much money the companies can make, and on July 23 it will issue its draft opinion for the period 2010 to 2015."

 

All the Licences are public documents and can be downloaded here http://www.ofwat.gov.uk/industrystructure/licences/

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Here's an interesting choice: FTSE250 member "De La Rue". Forecast yield of 5.2% and very modest debt - looks excellent to me. I suspect they're about to have a bumper few years of business, too. They are an international money fiat-currency printer - the biggest in the world. ;)

 

Another neglected thread.

 

http://www.greenenergyinvestors.com/index.php?showtopic=6702

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My SVT shares got hammered today after OFWAT proposed to slash water bill for the first time in years.

 

I hope the shares stay down because my dividends are coming next week :)

 

http://news.bbc.co.uk/1/hi/business/8164243.stm

 

 

GSK is performing well on the back of Swine Flue, but not well enough to suggest investor confidence. The Telegraph has an AVOID recommendation on GSK (I’m not selling)

 

http://www.telegraph.co.uk/finance/markets...to-swallow.html

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My SVT shares got hammered today after OFWAT proposed to slash water bill for the first time in years.

 

I hope the shares stay down because my dividends are coming next week :)

 

http://news.bbc.co.uk/1/hi/business/8164243.stm

Why do you want them to stay down? Surely the number of shares you have and the dividend paid for each share stays the same, so the current fall in the price makes no difference?

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Why do you want them to stay down? Surely the number of shares you have and the dividend paid for each share stays the same, so the current fall in the price makes no difference?

 

I'm guessing that ziknik is reinvesting the dividend.. the share price stays low, the more shares they'll get.

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I'm guessing that ziknik is reinvesting the dividend.. the share price stays low, the more shares they'll get.

If the money is to be reinvested to buy more that would explain it and make sense. Could be the best time to do it as well, because the share price will often go down after a dividend to reflect the payment.

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I'm guessing that ziknik is reinvesting the dividend.. the share price stays low, the more shares they'll get.

That’s right. I have my shares on ‘automatic dividend reinvestment’.

 

I have chosen not to pick my own re-investments points as I will be charged a £12(ish) fee for the purchase (no fee on automatic dividend reinvestment). I have a small amount of money on each share I hold so a £12 fee is a huge percentage of the total dividends I am going to receive. In some cases, £12 will be greater than the total dividends I receive.

 

I don’t need the cash in this portfolio at the moment, I’ve got circa 25% in Sterling and I am struggling to find shares/funds to purchase.

 

Welcome to GEI BTW.

 

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Cazenove have given GSK the kiss of death - Down over 14% today.

 

It’s a good job I am in this for the dividends. My GSK position is underwater.

 

http://www.telegraph.co.uk/finance/persona...eral-Trust.html

 

GlaxoSmithKline

 

Buy at £11.60 (this week's price £11.59), advises Cazenove. Recent second quarter results from the pharmaceutical group, which in May received an order for 60m swine flu vaccines from the British Government, materialised at the top end of forecasts, noted the broker.

 

A solid sales performance was enjoyed across all key brands, while cost savings also aided performance, it added. Furthermore, the group continues its push into emerging markets, while discussions with over 50 governments regarding the group's flu treatments remain ongoing.

 

In conclusion, Cazenove believes GSK may have reached a turning point, with investment costs easing and management upgrading earnings guidance.

 

 

 

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Cazenove have given GSK the kiss of death - Down over 14% today.

 

It’s a good job I am in this for the dividends. My GSK position is underwater.

 

http://www.telegraph.co.uk/finance/persona...eral-Trust.html

I think if your strategy, or requirement because it is part of pension planning is more buy and hold, you have to live with this. You just have to hope that the companies you have bought are strong enough to survive for the long term.

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I think if your strategy, or requirement because it is part of pension planning is more buy and hold, you have to live with this. You just have to hope that the companies you have bought are strong enough to survive for the long term.

I’m up over 14% today, there must have been a fault on yesterdays Yahoo data.

 

You are right though - I’m sure I will be picking a number of shares that suffer for many years and some of these will go bust

 

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I’m up over 14% today, there must have been a fault on yesterdays Yahoo data.

 

You are right though - I’m sure I will be picking a number of shares that suffer for many years and some of these will go bust

The funny thing is, I actually prefer to trade the dividend payers because the fact that they pay a decent divi to some degree protects the share price at certain levels. I'm not sure that I will ever buy and hold again. I'm more into buy, hold a while, sell, repeat on the next buy signal.

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I’m up over 14% today, there must have been a fault on yesterdays Yahoo data.

 

You are right though - I’m sure I will be picking a number of shares that suffer for many years and some of these will go bust

I was wondering what you meant by being down 14% on Glaxo in a day, that would probably have made headline news :unsure: .

 

I have been buying some nat grid with money made from xstrata recently. Good yield and fairly solid company. I'll go back into xstrata if they get as low as 600.

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I was wondering what you meant by being down 14% on Glaxo in a day, that would probably have made headline news :unsure: .

 

I have been buying some nat grid with money made from xstrata recently. Good yield and fairly solid company. I'll go back into xstrata if they get as low as 600.

National Grid gets a right up here.

 

http://www.independent.co.uk/news/business...rs-1763383.html

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