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ADrunkenMarcus' 'Dividend Growth Portfolio'.

A helpful place to also put any annual reports etc, of your own portfolios
ADrunkenMarcus
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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#345524

Postby ADrunkenMarcus » October 6th, 2020, 8:34 am

Good news (potentially) on the dividend front from Victrex.

It looks like my only cancelled dividends this year will be from Standard Chartered and Renishaw.


Dividends
The capital requirements for our UK debottlenecking and China manufacturing subsidiary, as well as our usual ongoing maintenance capital expenditure, are likely to be in excess of £50m in FY 2021. These requirements will be covered by our cash generation and, in the light of a healthy net cash position, the Board expects to reinstate a dividend for FY 2020.


Best wishes

Mark

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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#345526

Postby Dod101 » October 6th, 2020, 8:43 am

ADrunkenMarcus wrote:Good news (potentially) on the dividend front from Victrex.

It looks like my only cancelled dividends this year will be from Standard Chartered and Renishaw.


Dividends
The capital requirements for our UK debottlenecking and China manufacturing subsidiary, as well as our usual ongoing maintenance capital expenditure, are likely to be in excess of £50m in FY 2021. These requirements will be covered by our cash generation and, in the light of a healthy net cash position, the Board expects to reinstate a dividend for FY 2020.


Best wishes

Mark


What on earth does debottlenecking mean?

Dod

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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#345534

Postby monabri » October 6th, 2020, 9:17 am

Dod101 wrote:
ADrunkenMarcus wrote:Good news (potentially) on the dividend front from Victrex.

It looks like my only cancelled dividends this year will be from Standard Chartered and Renishaw.


Dividends
The capital requirements for our UK debottlenecking and China manufacturing subsidiary, as well as our usual ongoing maintenance capital expenditure, are likely to be in excess of £50m in FY 2021. These requirements will be covered by our cash generation and, in the light of a healthy net cash position, the Board expects to reinstate a dividend for FY 2020.


Best wishes

Mark


What on earth does debottlenecking mean?

Dod


viewtopic.php?p=308065#p308065

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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#345539

Postby Dod101 » October 6th, 2020, 9:32 am

monabri wrote:
Dod101 wrote:
ADrunkenMarcus wrote:Good news (potentially) on the dividend front from Victrex.

It looks like my only cancelled dividends this year will be from Standard Chartered and Renishaw.



Best wishes

Mark


What on earth does debottlenecking mean?

Dod


viewtopic.php?p=308065#p308065


Thank you. Not really much wiser and it is not important to me.

Dod

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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#345597

Postby monabri » October 6th, 2020, 11:37 am

Not to be confused with another form of " debottlenecking " (sabrage)!

https://youtu.be/cupnnTpHOGA

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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#357897

Postby ADrunkenMarcus » November 18th, 2020, 7:40 pm

Diploma's full year results confirmed they'll pay a 30p dividend in late January 2021. This final dividend represents the entire year's dividend for 2020 and reflects a 3.4 percent increase on the 29p paid in 2019 - above inflation, even if it is the slowest rate of dividend growth since 2009.

This has been a longstanding holding for me and a pleasing one, showing a total return (simply adding up the dividends per share and the capital gain per share) of over 450 percent since November 2012.

I was interested in their comments about the Windy City Wire acquisition and forecasts for turnover, earnings, dividends and cashflows are being nudged upwards. The balance sheet is strong and the dividend is forecast to reach 39p a share by 2023 on the basis of annual dividend increases returning to the high single and low double digits we've seen over recent years. Leaving aside future projections/guesses, it has a 2.7 percent free cash flow yield as of today and a resilient record.

Victrex's results are due in December 2020 and we'll see whether it pays a dividend for this year. I'm guessing it'll pay a final, perhaps as Diploma did to account for the entire year. Other than that, as I indicated before, my only 'cutters' look to be Standard Chartered and Renishaw, which both eliminated their dividends entirely. My dividend stream has held up pretty well.

Best wishes

Mark.

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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#364237

Postby ADrunkenMarcus » December 8th, 2020, 9:29 pm

Good news from MasterCard with another double digit dividend increase.

PURCHASE, N.Y.--(BUSINESS WIRE)-- Mastercard Incorporated (NYSE: MA) today announced that its Board of Directors has declared a quarterly cash dividend of 44 cents per share, a 10 percent increase over the previous dividend of 40 cents per share. The cash dividend will be paid on February 9, 2021 to holders of record of its Class A common stock and Class B common stock as of January 8, 2021.

The Board of Directors also approved a new share repurchase program, authorizing the company to repurchase up to $6 billion of its Class A common stock.

The new share repurchase program will become effective at the completion of the company’s previously announced $8 billion program. The company has approximately $3.8 billion remaining under the current program authorization.


Best wishes


Mark.

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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#383545

Postby ADrunkenMarcus » February 4th, 2021, 8:53 am

Pleasing news this morning with Unilever increasing the fourth quarter dividend for 2020, meaning a very slight rise for the year as opposed to a freeze. Renishaw has also reinstated its dividend in full, after paying no dividend for 2020, so it has very much staged a V-shaped recovery. They also report plenty of net cash on the balance sheet.

And I note Victrex reinstated its final dividend for 2020 in full, although they did not pay an interim so there's a cut in the ordinary dividend per share of 23 percent for the year.

I expect Standard Chartered to reinstate a very modest dividend shortly, within the regulatory constraints it is under.

Positive news has also come from Diageo, increasing its ordinary dividend slightly, and Kone which has increased its ordinary dividend by 2.9 percent and decided to pay a special dividend on top. Cash continues to pile up on Kone's balance sheet. Looking at Diageo or Kone's dividend record alone, you would not know we had had any sort of economic disruption in the past year!

Best wishes

Mark.

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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#391628

Postby monabri » March 2nd, 2021, 7:26 pm

I wonder who will be eyeing up RSW?

ADrunkenMarcus
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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#391645

Postby ADrunkenMarcus » March 2nd, 2021, 8:18 pm

monabri wrote:I wonder who will be eyeing up RSW?


Yes indeed.

The share price hit 6988.5p at one point today, representing a 704 percent gain on my purchase in October 2011. Adding dividends takes the total return to c. 750 percent. Quite a phenomenal increase when the shares were already highly rated.

I am rather torn as I would hate to see it sold off to a foreign bidder - we need long term investment in the UK. Their concern to find a purchaser who would respect the company's approach and long-term mindset might be hard to meet.

In other news today, Rotork confirmed it would pay its dividend for the full year 2020 in May 2021, consisting of what would normally be an interim and a final. The dividend per share is up 1.6 percent. :)

Best wishes

Mark.

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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#414021

Postby ADrunkenMarcus » May 21st, 2021, 9:39 pm

My review for 2020-21 (1 May 2020 to 30 April 2021).

TRADES

As I said last year, the number of income units increased 10.7 per cent between early March and late April 2020. I took advantage of market weakness to add new capital. None has been added since.

However, there have been some trades.

Early in June 2020, I sold Marlborough Multi Cap Income (a unit trust) which was going to pay a much reduced dividend. Due to its open ended structure it had no reserves. The proceeds went into Murray International and Acorn Income Fund (both investment trusts), as well as a new position in BlackRock Smaller Companies investment trust which was then yielding 2.3 per cent and had a very strong dividend growth record. (It then raised its annual dividend 2.5 per cent despite COVID-19.)

CURRENT HOLDINGS (% OF PORTFOLIO)



TOTAL RETURN - INDEX



Absolute performance was strong. The accumulation unit price rose 26.8 per cent year on year, beating the FTSE All Share (25.9 per cent) and FTSE 100 (22.2 per cent) but lagging the FTSE 250 (39.4 per cent) and FTSE All World ($) (46.8 per cent – very strong indeed!). The portfolio had always been ahead of the FTSE indexes and close to, or ahead of, the All World, but it ends its five years behind the All World quite significantly as a result of this year.

Over five years, the portfolio has compounded at 11.6 per cent compared to 14.7 per cent for the All World, but beating the FTSE All Share’s 7 per cent, FTSE 250’s 8.8 per cent and FTSE 100’s 6.3 per cent. Although its constituents have a strong international focus, the holdings are still UK-heavy in terms of their listings.

The portfolio was hurt quite significantly by the strengthening of sterling, which impacted my directly held international holdings as well as the sterling returns of international earners such as Unilever. This probably shows the folly of thinking you can beat the indexes! And I was happy when sterling weakness helped me…

TOTAL RETURN – INDIVIDUAL HOLDINGS

Virtually all holdings had a positive year, excepting AstraZeneca and Reckitt. (As TJH has noted elsewhere, often it seems one year’s best performer is the next year’s worst and this is true: AstraZeneca was my best performer the year before, returning almost 50 per cent.) In aggregate, the new capital which went into MasterCard and PayPal outperformed the overall portfolio return (itself, boosted by their performance) which is pleasing.



CURRENT HOLDINGS FROM PURCHASE TO DATE (30 APRIL 2021):

PayPal has shown a good return for little over one year. It has basically doubled yet the strengthening Dollar reduced the return significantly, as it did for MasterCard. One of my frustrations is that the very strong performance from Spirax Sarco Engineering, Diploma and Renishaw has not had a greater impact on the overall portfolio, because Diploma and Renishaw in particular started out as much smaller holdings. They have grown as a proportion of the portfolio due to their ongoing growth.



How do current holdings look on a historical basis? It seems worth exploring because the portfolio now has five years of unit history:


* Data is only available for the Dollar return on the share price. PayPal pays no dividends so the capital gain is the same as the total return.
** Data is only available for the Dollar return on the share price. MasterCard pays a small current dividend yield which is growing rapidly, however it is unlikely to increase its return above Diploma in second place.

It would be nice if the top performers of my current holdings repeated their performance over the next five years, particularly since they now account for a larger proportion of the portfolio. However, I suspect it more likely that stronger returns will come from the current laggards!


INCOME:

The ordinary dividend income per unit came to 2.90 pence with a 0.03 pence special dividend from Kone, making a ‘yield on cost’ of 2.9 per cent and a ‘current yield’ of 2.15 per cent. This is the third year out of the first five where I have enjoyed a special dividend from one of my holdings. The two prior occasions were Victrex. (Spirax Sarco has form for specials but that was before the portfolio was unitised.)

There are so many complications this year that it is hard to capture the underlying picture. I am pretty pleased with how the dividend stream held up.

The ordinary dividend per unit fell almost 15 per cent. Looking at the absolute figure, total dividends fell over 9 per cent and this highlights the dilution of the dividend per unit by adding substantial new lower yielding investments. Both figures exaggerate the fall to an extent because some dividends move into next year as a result of timing changes, even though they related to this period. Had they been paid on the normal dates, the decline is closer to 5 per cent.

As noted last year, the significant new capital added to the portfolio in March and April 2020 had a dilutive effect on the dividend per unit because it went into MasterCard and PayPal; together, they contributed virtually no yield (the current yield on this new capital was then 0.0037 per cent): ‘even without COVID I would have expected dividends to be slightly down at best in 2020-21’.

If I was running the portfolio solely to try to maintain or grow the ordinary dividend per unit every year, I could have increased it year-on-year by moving lower yielding investments into higher yielding securities, but my focus is more for longer term dividend growth with lower initial dividend yields hopefully growing faster over time. (In fact, doubling the portfolio’s ordinary dividend yield from 2.15 per cent to 4.3 per cent would still have a lower dividend yield than Murray International.)

Leaving aside Marlborough Multi Cap Income, which was sold during the year, the only other dividend cuts came from:
Renishaw (it abolished the dividend for 2020 and has since resumed at its pre-COVID level);
Victrex (it skipped its interim dividend and then paid only a final, reinstated at its prior level); and
Standard Chartered (it was not able to pay its 2019 dividend in May 2020 or an interim for 2020, ordinarily due October 2020; it has now resumed dividends at a low level).

Victrex was somewhat disappointing (it has a history of paying specials!) whereas Renishaw and Standard Chartered could have been predicted more easily. Renishaw slashed its dividend in 2009 and fully restored it in short order.

The actual dividend per share paid was as follows:


The cutters are marked with an asterisk.
Note:
Kone’s total includes a special dividend but the ordinary still rose slightly in reporting currency;
AstraZeneca’s dividend was flat in reporting currency;
Rotork increased its dividend slightly (1.6 per cent) but the altered timing of payments mean the payment crosses over into the next year;
Domino’s Pizza’s timing of dividend payments changed.

It is hard to gauge what ‘the Market’ did to get some sort of benchmark. Anecdotally, we’ve seen fund managers claim the ‘income environment’ is the worst for decades and what struck me as unusual was so many dividends being suspended despite the ex-dividend date passing. Taking the income index figures at 30 April 2021 and working out what the historic dividend might have been based on the published market yield at that date (and comparing to same data from the year previous) suggests that aggregate dividends fell as follows:

FTSE All Share minus 31 per cent;
FTSE 250 minus 35 per cent;
FTSE 100 minus 30 per cent;
FTSE All World minus 9.4 per cent.

Against this, my total dividends fell by less than any of these and the ordinary dividend per unit did worse than only the FTSE All World.

I now have no dividends from unit trusts, so the benefit investment trusts have in keeping reserves should help improve the resilience of my portfolio’s income stream when the next crash comes. (Another contribution to the decreased dividend this year was selling Marlborough Multi Cap Income, even though it hopefully improved long term).

The portfolio has returned 16.33 percent of the initial income unit price in dividends (ordinary and special).

To date, about 67 per cent of returns came from capital appreciation and 33 per cent from dividends. That is quite healthy and returns to the immediate pre-COVID situation.

RUNNING COSTS

The running costs, based on the portfolio’s capital value at the end of the period, were: annual cost (inc dealing) 0.31% and annual cost (ex dealing) 0.21%. Both are down on the year before which is welcome.

As I said last year: ‘What will the next year bring? Who knows.’ It'll be interesting to see what happens to Renishaw.

Best wishes


Mark.

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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#414068

Postby Pendrainllwyn » May 22nd, 2021, 3:40 am

Thanks for sharing Mark. Some quality holdings and I like the portfolio. Having said that I only own Kone and Reckitt (one of these - Reckitt I think - after a previous posting of yours). I have thought about Victrex and BlackRock Smaller Companies many times and both remain on a short watchlist. For some of the other UK names like Astra Zeneca, Diageo, Diploma, Rotork, Spirax-Sarco & Unilever the quality seems to be in the price for me. Renishaw I sold out of for that reason. I am possibly under-estimating the value of these quality companies. Standard Chartered is the odd one out for me; low returns and not a strong franchise in my humble opinion. Anyway, you have done well and I hope it continues.

Pendrainllwyn

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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#414173

Postby ADrunkenMarcus » May 22nd, 2021, 3:39 pm

Thanks Pendrainllwyn,

Pendrainllwyn wrote:I have thought about Victrex and BlackRock Smaller Companies many times and both remain on a short watchlist. For some of the other UK names like Astra Zeneca, Diageo, Diploma, Rotork, Spirax-Sarco & Unilever the quality seems to be in the price for me.


Yes, they are all (excepting Unilever and Astra) more expensive than when I bought them. I touched upon some of this here:
viewtopic.php?f=93&t=25400&hilit=expanding+multip#p343021

On the other hand, quality can shine through. To take Diploma, for example, the dividend for 2021 had been forecast at 34p (up from 30p in 2020 which, itself, was up from 29p in 2019). They announced their interim results and are now expected to do much better this year. The full year dividend is now forecast at 38p, which is close to what previous forecasts were for the 2023 dividend payment; that represents a rise of 27% but, if they are keeping the interim as the same proportion of the annual payment as historically, then the dividend could easy hit 41-42p or a rise of 38%.

The point here is not inaccurate forecasts. Rather, it turns out Diploma wasn't rated as highly as it seemed, because earnings and dividends surprised on the upside. If it pays either 38-42p as a dividend rather than 34p then the true dividend yield is between 11.8-23.5% higher than it appeared.

Pendrainllwyn wrote:I am possibly under-estimating the value of these quality companies.


For me, Spirax Sarco (for example) is quite extraordinary. To look at the dividend history (and even the share price sometimes), you would never know that recessions were taking place as the payments were always paid at the time expected and they rose like clockwork. It delivered a strong increase this year.

Kone, too, raised its ordinary dividend above inflation and paid a special on top. I think both rate a premium (if not as much as today's).

Pendrainllwyn wrote:Standard Chartered is the odd one out for me; low returns and not a strong franchise in my humble opinion.


You're right on that. It turned a stellar performance from 1998 to 2012. Since then, not so much - to say the least! I have been considering getting rid of it. It does have an attractive profile in the growing parts of the world but it does not follow that it will be a winner.

Best wishes


Mark

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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#414517

Postby Wasron » May 24th, 2021, 9:25 am

ADM,

It’s always interesting to read your updates.

They’re a different path taken, an alternative to a HYP.

I’m slowly edging away from HYP but have thus far stopped short of direct holdings in shares listed elsewhere.

I’ve liked the idea of Kone, PayPal and MasterCard along the way, but when I wanted to buy Coca Cola I settled for the London listing.

Keep doing what you’re doing anyway, it seems to work.

Wasron

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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#416046

Postby ADrunkenMarcus » May 29th, 2021, 12:09 pm

Thanks Wasron.

There's an interesting chart called 'Capital and Income Growth' at the top of page 7 of Blackrock Smaller Companies' annual report. This trust doesn't actually target dividend income, but it has delivered it:

https://www.blackrock.com/uk/individual ... report.pdf

It compares BRSC's dividend with the 'UK income sector median' since 2007. The chart demonstrates how BRSC's dividend exceeded the median in 2019 and is now well above it in 2021 as BRSC's dividend continued to grow throughout the crisis and the medium also plunged in 2020-21. The total return performance is far better too as capital growth followed a dividend compounding at 12% p.a. since 2003. This is a great example of how a lower dividend growing at a higher rate can deliver a superior absolute income stream and dividend yield on cost over time.

I guess my portfolio is somewhere between that and HYP. The initial dividend yield was just over 3% for the first year it was unitised so a far bit higher than the 1.5%+ you might get from something like BRSC. The dividend per unit this year, in nominal terms, should be back to what it was for the first year but that would represent a current dividend yield of maybe 2.2-2.3%. What I have been consistently doing is sacrificing current dividend income for the potential of future higher dividend growth down the line. It will take quite a while to show up and the dividend growth per unit would have been far higher had the initial yield been lower.

My experience so far is that buying higher dividend yielders is not a successful longer term approach. For example, MYI has delivered a high and rising income stream but with poor capital growth. I bought in 2012 and it is now yielding 5.4% on book cost as the dividend has compounded under 4%. DPLM, by contrast, was bought the same year as MYI but the initial lower dividend has compounded just under 10% and so the yield on cost is higher at 6.4%. It's also paid 40% of the book cost in dividends compared to 47% or so for MYI, so the difference there is not huge; moreover, DPLM's total return is closing on 550% whereas MYI is on 67% today. MYI provides a good current dividend income core but I am going to be adding more lower yielders with faster growth in future.

I should possibly just keep buying BRSC! :lol:

Best wishes


Mark.

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Re: ADrunkenMarcus' 'Dividend Growth Portfolio'.

#416280

Postby Wasron » May 30th, 2021, 8:43 pm

ADrunkenMarcus wrote: I should possibly just keep buying BRSC!


I think that will be my approach, although for me it’s been Henderson Smaller Companies, alongside Scottish Mortgage.

Individual stock picking of smaller companies is definitely beyond my skills.

Regards.


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