The Amateur Investor made another addition to the High Yield Portfolio today. After yesterday’s addition of Admiral I decided to go defensive again.
With Autumn and Winter just around the corner, before we know it we’ll be putting the central heating back on again so I decided to look for a company that would benefit from a harsh winter like the last two winters we have experienced.
I plumped for Centrica (CNA) who’s yield based on year ending December 2010 is 4.3% with forecast yields of 5.2% and 5.6% for years ending December 2011 and December 2012 respectively.
A couple of weeks ago The Scotsman said
“Centrica’s shares may not be the most exciting but, offering a yield of around 4.5 per cent and on a conservative price earnings ratio of nine, they look an attractive commitment to the oil and gas sector.”
So this morning I tucked away a few Centrica shares at 306p per share (including Stamp Duty).
The shares go ex-dividend on 28th September and an interim dividend of 4.29p is due to be paid on 16th November. At 306p a share this interim dividend represents a return of 1.40%.
Total dividend payments for 2010 were 14.3p which is a return of 4.67% based on my buying price today.
Forecast dividend for 2012 is 16.45p, or 5.38% based on my 306p entry price.
High Yield Portfolio Update
Yesterday’s purchase of Admiral at 1,434.75p is looking premature. Today’s newspaper share tips sees both The Telegraph and The Independent taking an “avoid” stance on the shares, which ended today’s trading session down a further 5.5% at 1,279p.
As I stated in yesterday’s post, I might look at buying further Admiral shares if they drop to the 1,200p level.
Yes, the car insurance business is competitive, but I read today that Admiral insures 1 in 10 cars in the UK, despite the efforts of the meerkats and the singing opera star!