The Lemon Fool

I am just looking over KCOM (its not I currently do not hold). Over the last month or so its dropped quite a bit and I was wondering if this represented a buying opportunity.

The yield is very healthy (6.7%) and they have a strong track record. However last year the profits dipped quite a bit - they say this is all due to fibre roll out and rebranding (which I am willing to accept). They have committed to a 6p dividend for this year and next year.

Has anyone done any in depth work on this one? before I start a decent dig into the plans and finances

Thanks

i bought these about 2 years ago at 92p.

the numbers and record looked good and yielding 6% for me .

however there were changes recently , which i dont understand , and the CFO left in june .

the dividend is possibly not covered now .

also no director buying .

i'm holding on for now.

ps. kcom is not a typical pick for this board which i think looks for bigger market cap.

Perhaps another aspect to consider:- from http://investing.thisismoney.co.uk/fundamentals/KCOM

"The KCOM Group has been designated as having Significant Market Power (SMP) for the provision of certain electronic communications services within the 'Hull area"

Hull is the UK city of culture 2017 - hopefully this will generate more business in the area for which KCOM can benefit?

I guess you've seen this - but just in case (it was a MF article from May 16)

http://www.fool.co.uk/investing/2016/05 ... days-news/

minerjoe wrote:The yield is very healthy (6.7%) and they have a strong track record.

I bought back in 2013, partly because of the commitment to 10% annual dividend increases. When that commitment expired, I reconsidered and sold earlier this year. Putting the money into the (then) higher yielding Galliford Try.

KCOM worked for me, as a temporary home for the proceeds of the Vodafone/Verizon deaI, but I think your 'strong track record' is open to vigorous dispute.

It may pan out for you, and I wish you luck - 6.7% has to be tempting - even if future rises are marginal.

KCOM has been good for me. I bought initially at 60p and made subsequent purchases at 100p, 92p and 103p. So it's only the recent dip that's taken me into red territory on half of it, and the dividends have been piling up in the meantime. Over the period I've heard more downbeat commentary than upbeat but they usually manage to beat the estimates - I suspect they're just not exciting enough for most pundits who can't seem to get their heads round a business with a solid core but more limited expansion potential.

That said, TMF recently dropped them from their recommendations and advise selling, while the drop was partly caused by Barclays downgrading them. How much credence should we give their opinions is down to each individual.

Personally I'll continue to hold quite happily. Would I buy more at the moment? Would depend on how I was feeling at the time - I suspect I wouldn't raise my levels without a bit more information, but if I was expanding my entire portfolio then I might expand my KCOM holding to match.

cheers
Spiderbill