I have been saving up my dividends from the Share Investor Portfolio over 2010 as I haven't yet found anything I am interested in buying. There is currently close to $16000 to spend and with Fisher & Paykel Healthcare Ltd [FPH.NZX] and Mainfreight Ltd [MFT.NZX] still to announce their 2011 half year results in late November this figure should reach well over 16K .
But what to spend it on or to spend it at all, that is the question.
Most stocks in the portfolio have now retraced back up to market value or past my buy levels but I have a few I am currently looking at to add to.
First on my list is Michael Hill International [MHI.NZX], it has been operating reasonably well as a business over the great recession but its share price has been marking time and hasn't taken off like other shares in my portfolio have.
Closing at 68 cents yesterday, it is trading at levels it was back in 2005 when its profit and growth prospects were much lower. I have a lower end 60c price to add to the current 10000 shares in the portfolio. I am tempted to use the whole dividend pool on this stock alone.
Second in the firing line is Pumpkin Patch Ltd [PPL.NZX] It has had some hiccups due to the expansion of the company in North America and the UK but profit has remained over the last 2 years and its latest result shows an improvement and a promising long term.
Its share price though is trading well below where it was in 2005 and even though its share price has recovered over the last year or so it is now a yield stock at current price levels with a gross dividend of over 7%. It has the added benefit of good growth prospects as the economy recovers. I have a buy level between $1.70 and $1.80.
Third and last from the existing Share Investor Portfolio is Sky City Entertainment Group Ltd. [SKC.NZX] The company has been performing better than it ever has, with record profits and a much better balance sheet due to far lower debt.
While it is off its lows share price wise, it isn't by much and I cant fathom as to why this stock seems to be out of fashion. It is paying a dividend of well over 8% gross on these share price levels so it is a good buy for those sick of meager returns from term deposits.
I am greedy here considering its current share price, I am looking at a buy between $2.70 - $2.80.
My final pick is a stock from outside the Share Investor Portfolio but one I follow closely for a number of reasons. Contact Energy Ltd [CEN.NZX].
CEN is a solid company that does business amongst a handful of electricity companies that operate like monopolies and I love monopolies as investments.
I think it is one of the better long-term buys at current share price levels of around $5.70. A price it was trading at in 2005.
It has the added benefit of a majority owner poised to make a takeover offer at any time.
I am looking at a buy in the $5.50 - $5.60 range.
Conclusion.
I don't have a time horizon for my buys and things could change if the market takes a dive - other stocks might become more attractive than the ones above.
I could in the end just leave the $16000 in the CMA account and wait for further opportunities as the market reacts to the poor global economy latter on down the line.
I think my picks though show how my portfolio will develop as I add stocks through dividends and this has been my intention from its inception in 2002.
*Note all charts are 5 year indicators chosen for uniform comparison.
Michael Hill International @ Share Investor
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Pumpkin Patch @ Share Investor
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Sky City Entertainment Group @ Share Investor
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Contact Energy @ Share Investor
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Follow the Monopoly Board
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c Share Investor 2010
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Hi Darren,
ReplyDeleteSo the Share Investor Portfolio growth is now self funding? You are not investing any new capital of your own, you are relying on dividend interest to realise compound growth?
That is a great position to be in.
As you are also a great fan of Warren.B. are you planning to offer shares in your portfolio when it reaches a suitable size. Similar kind of set up to W.B's Berkshire Hathaway or is this just for your own amusement?
Hey Steady,
ReplyDeletewith $16,000 to $20,000 net per year in dividends, it is a good little earner for me based on an investment of around NZ $280,000.
I have added about an estimated $60,000 over the 2007 - 2009 period because stocks were sufficiently cheap. I have also been grabbing dividends from the portfolio over its 8 years to use in areas other than the portfolio, so I think we are about even on cash in and out.
The portfolio currently has a value of around $320,000.00 and given the right circumstances I hope in 10 - 20 years time it will be worth 10 times that.
I run my portfolio just like a business but who knows if my 14 month old daughter plays her cards right and has the same interest in the stockmarket and investing she might be able to do things with it that I cant even dream about.
She already has $1000 invested in her name.