The week gets off to a flying start with a flurry of share purchases

A busy morning, with 13 share purchases so far.

Investors Chronicle magazine publishes a list of shares going ex-dividend in the “Week Ahead” section each Friday.

In order to further my quest to receive income of one form or another on every business day of the year, I like to scan down the list to see if there are any dividends I would like to be eligible for by buying in before the ex-dividend date (which is usually the Wednesday after the magazine comes out).

Now a professional investor would probably tell this Amateur Investor that it’s not a good idea to buy shares just before their ex-dividend date as the amount of the dividend payment is priced into the share price already.

This may be true, and I have certainly seen the price of a particular share drop by the amount of the dividend on the ex-dividend date, which means your capital is worth less by the amount of the dividend.

What I’m trying to say can be illustrated by this very crude example.

Share A might be 100p and the declared dividend is 1.75p – You have 1000 of these shares so your holding in Share A is worth £1000
On the ex-dividend date the share price of Share A might drop 1.75p (the amount of the dividend) to 98.25p so your holding is now worth £982.50 – A loss of £17.50

On the dividend payment date you received a dividend of £17.50

So your shares are now worth £982.50 and you’ve received a dividend of £17.50

£982.50 + £17.50 = £1000

So on the face of it you’re no better off, even though you’d received a dividend.

As I said, this is a simplistic example. Sometimes the share price won’t drop by the amount of the dividend, sometimes it’ll drop by less. And sometimes it could drop by more should there be a general market sell off at the same time.

Anyway, back to the plot.

I purchased 9 shares today which are going ex-dividend on Wednesday 12th October:

  • Animalcare (ANCR) – 3p dividend payable 7 November 2011
  • Close Brothers (CBR) – 26.5p dividend payable 22 November 2011
  • Balfour Beatty (BBY) – 5.3p dividend payable 9 December 2011
  • Invesco Leveraged High Yield Fd (ILH) – 1.25p dividend payable 28 October 2011
  • Travis Perkins (TPK) – 6.5p dividend payable 14 November 2011
  • Murray International Trust (MYI) – 8p dividend payable 15 November 2011
  • Jupiter Primadona Growth Trust (JPG) – 22.75p dividend payable 11 November 2011
  • Yule Catto & Co (ULC) – 1.2p dividend payable 10 November 2011
  • Old Mutual (OML) – 1.5p dividend payable 30 November 2011
The remaining four purchases this morning were:

Yell Group

This is a weird one to be investing in as I haven’t used a Yellow Pages directory for as long as I can remember. But Yell Group isn’t just about their printed directory any more.

Yes, the printed directory of businesses and services is probably still very important to them (I know a client of mine was quoted over £500 for a smallish advert in just one area directory recently. And the client in question will be going for two are directories to cover two English counties, so that’s over £1000), but there emphasis is moving towards Yell.com and this looks as though it will be lucrative for them.

I attended a meeting between the aforementioned client and a Yell salesperson last week (the client wanted me there to mop up the technical aspects of the conversation so that I could explain to him after the salesperson had left!). Their sponsored entry on yell.com was going to cost them in excess of £1600!

Back in 2010 Yell shares peaked at almost 60p, dropping to around 15p by January 2011 and under 4p today.

My average buying price stands at 5.375p

HSBC

A small purchase of HSBC shares reduced my average buying price from 577.86p to 539.8p

Admiral

I tucked some Admiral shares away in the Amateur Investor High Yield Portfolio back in August at an average buying price of 1,434.76p for a forecast 2012 dividend yield of 6.21%

The shares have been on the slide ever since, but I’m still confident they are a good investment and the drop in share price means a potential rise in yield of course. So this morning I bought in again, this time at an average buying price of 1,255.33p (which should yield 7.1% based on the forecast 2012 dividend of 89.19p

My average buying price now stands at 1,407.85p, a forecast yield for 2012 of 6.34%

Pendragon

Purely a speculative holding this one.

I’ve made various purchases of Pendragon in recent weeks. After my initial purchase at 10.3p in August, I have added to the holding 7 times as the share price has dropped. Before this morning my average purchase price had dropped to 9.2234p.

With a bit of spare cash left in my trading account I bought in again, this time at 8.45p to reduce the overall average purchase price to 9.143p

Author: Amateur Investor

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

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