High Yield Portfolio – Update

I’ve been looking around for a another potential member of the Amateur Investor High Yield Portfolio family. The portfolio currently has 16 holdings, including the likes of Vodafone, Royal Dutch Shell, GSK, Centrica, RSA Insurance and Astrazeneca but to me, diversification feels the right thing to do.

So this lunchtime I made my decision…

And the new member of the HYP is (drumroll) Amlin (AML). I purchased the shares at 313.125p (including Stamp Duty). The actual buying price was 311.56p, the rest being the stamp duty.

At the time of the purchase the quoted bid/offer price was 309.4p/309.7p, so the purchase was made above what I was originally quoted as the offer price. I tried and rejected the purchase a few times to see if I could pick the shares up cheaper, but the offer price didn’t budge.

Amlin have been on my watchlist for a while, and their name keeps cropping up in the press and shares magazines. In fact, they are tipped as a buy in today’s Shares magazine (see the Share Tips website for today’s Shares magazine share tips).

Amlin is an insurance underwriter at Lloyds which was formed in 1998 from the merger of Angerstein Underwriting Trust and the Murray Lawrence group. According to my Share Centre account It is “a recognised specialist in areas such as aviation, direct marine, property, casualty and commercial motor insurance”.

My cost per share of 313.125p the interim dividend represents a return of 2.3%
Forecast total dividends for 2012 and 2013 are 23.33p and 25.12p, yields of 7.8% and 8.5% respectively according to my Share Centre research. Tasty.

As an aside, I I’m not sure how Share Centre calculate the forecast yield. Is it based on a certain share price rather than the live share price? Given my buying price of 313.125p then a 2012 dividend of 23.33p would represent a yield of 7.45%, not 7.8% as displayed in the Share Centre company overview for Amlin.

The next ex-dividend date is 7th September 2011, so today’s purchase means I’ll be entitled to receive the interim dividend of 7.2p per share when it is paid on 6th October.

This latest purchase makes the HYP a bit top heavy with insurance companies, with all the high yielding insurance sector shares around at the moment is the Amateur Investor heading for a fall??

Author: Amateur Investor

An Amateur Investor seeking to make their cash work hard, so they don't have to!

Leave a Reply

Your email address will not be published. Required fields are marked *