Isaac's Thread - High Yielding Shares & other stuff

Utilities low risk? Really? With government controlled pricing etc who would bet against another windfall/profiteering tax or a harsh pricing formula or two (all very politically favourable). Then there's Nat Grid with its tens of Billions of debt for investment and its habit of raiding the market for new cash. How secure the div?

Safest of all would be SSE imo as its just been incredibly well managed over the years. Utilities? You can keep them.

Not your normal utility but International Power (IPR) has been a good steady growth stock over the years and, with GDF having taken a stake, it's opportunities are likely to increase.

Interesting to read your comments on Prudhoe Isaac. Came to similar conclusions myself and decided to hold off for the time being.

Markets looking very sickly this morning. Running a tad late, so was shocked to see SOCO down 10%!

MAN Results were an Interesting read, as was the Cantos Interview....I plan to hold for a while yet,. I don't understand why the market has rated it so poorly, but it suits me just fine - I can wait for the mood to get better& even add to my posiition especially if they pay a 9-10% dividend.

I have to admit for me it is very tempting to make very LONG term Investments in the likes of Barc, LLOY and RBS.

When anyone looks at the cold blooded numbers these banks look very cheap.

Sentiment is on it's arse and is unlikely to improve soon - which is exactly the time to be buying these stocks.

These things go in cycles and one day in the future the banks will again be profitable and will make ALOT of money again.

Infact I really can envisage that we all look back at the current environment and wonder why we were'nt buying shedloads.

There are clearly uncertainties, but does anyone really believe RBS/LLOY/BARC is likely to go bust at this stage of the credit crunch? I just think if they were to go bust it probably would have happened by now.

I just can't see why the businesses won't be around in 5-10 years time. I think if one does invest here they have to take ateast a 5 year view and with buy backs and dividends I think there could be extraordinary returns to be made over a LONG period of holding.

Infact If I could realise some of my Soco Investment I could see some of my money going into the banks. I mean RBS is trading at a p/b of 0.18, BARC at p/b of 0.35 & LLOY at a p/b of 0.43 - Very Cheap.

Fortune favours the brave - And I like Risk.

Investment is a long term game and looking for very long term Investments, the banking sector would definetly be on my radar.

Hmmmm, but weren't you completely negative on markets only a couple of weeks ago? (Then again, my memory isn't what it used to be).

Anyway, you can realise some of your soco investment any time you want. Click the mouse and you're done.

I know you'll say you want the "full" takeover price but that's the market and that's opportunity cost.

Ask yourself, "do I think the banks will provide a better and lower risk return over xxxx years". Simple as that. If you think they will, click away.

I suspect that this is the core of your Soco frustrations. You want Ed and Roger to sell up/divest SV at precisely the right time to benefit you. It aint going to happen or else by pure freakish luck. You also feel frustrated because other stocks you've liked have done better.

This is the "problem" we've all faced over the relatively recent history. All I can say is "suck it up. That's the game."

Erm I wouldn't be exchanging Soco for RBS or Lloyds personally ,,,,maybe HSBC/Standard Chartered at a real push...

In reply to Fangorn, post #300

Fangorn

I don't plan to. What I said was :

Infact If I could realise some of my Soco Investment I could see some of my money going into the banks

I.e. If Soco sold up I would put some of my funds into the banks so it won't be a case of swapping Soco for a bank.

Although the banks are cheap what I can't quantify is when they will be more reasonably valued, but I suspect when that is obvious the price will be a lot higher. It would be easier to take a stake in the near future if they paid a dividend as then waiting won't be such an issue.

In reply to Fangorn, post #300

Erm I wouldn't be exchanging Soco for RBS or Lloyds personally

I own a few Lloyds, bought at just over 50p on the pullback from the highs earlier this year. The CEO's illness seems a significant blow, as Lloyds continues to be in need of culture change and clarity of purpose for the different brands. Although I regard the recent Euro-inspired falls as largely unjustified in the case of Lloyds (I bought in part because it has negligible exposure to the Eurozone risks by comparison with the others), I don't think I'm going to be rushing to add at present - even though it may well work out fine...and even though I've been thinking about adding at recent levels.

RBS is a slightly different case, because they seem to be coming out of the woods and sharpening their brand strategy and market prescence (reviving the NatWest brand?). However, they are still more exposed than I would like to further global macro issues - more shrinking to be done first?

I wouldn't swap SOCO for either of them on the terms that seem likely to be offered by the market....until there is an external development. I don't think there is a rush just yet - bank reratings look a little way off.

ee

I actually like RBS over LLOY as it is the cheapest on a P/b of 0.18! And a market cap of £13.6bn.

I am not looking at it from an individual bank perspective of which bank holds what amount of exposure to Europe, because if Europe blows up then I expect even those banks with little exposure to be hit perhaps just as bad!

So in effect I am treating it as a ONE bank scenario.

I think the reality is if the banks are going to get through this mess & recover then it probably makes more sense to buy the cheapest of the lot & just hold on as your likely to make the most money in that scenario and if it does'nt work you will probably lose as much. I don't see UK Gov wanting to hold RBS on it's balance sheet so nationalisation just seems out of the question.

I don't think it is impossible to see an RBS go up 3-4 bag over a 10 year period which would put it on a £40-55bn valuation. But what kind of regulation and taxes this industry will face over the next few years is not yet clear. But a 3-4 bag return seems attractive.

In reply to Isaac, post #303

Re price-to-book ratios, I wouldn't rely on them at all. RBS has probably got more conspicuously-rubbish assets on its balance sheet than the others. You'll recall it used to be thought that a PBR of less than one indicated cheapness.......but that was in the days when people believed bank balance sheets!

However, it isn't expensive and I think Hester will eventually sort it out and it will get refloated at c.50-60p at some point (nb - it will need a damned good following wind for any float to get enough private investment in!). A doubling seems a decent buy and hold bet - though the timescale is very uncertain.....and it could get even cheaper first.

In reply to Isaac, post #301

I suspect you'll be waiting a while on the dividend front. As, unfortunately am I, given i hold both!

The sooner they both return to decent profitability the sooner they should resume paying 80% of their profits out in dividends (great way for government to get some much needed cash in!)

In reply to emptyend, post #302

Yes, it was quite a shock Antonio going on medial related leave.

I think the problem with Lloyds, unlike RBS and the latter's exposure to Europe, is that the former is over geared to a economic recovery in the UK. I personally don't see this happening for a while. The HBOS acquisition is going to be one hell of an ask to turn around and this will weigh on Lloyds form many years to come.

A pity as Lloyds used to be a conservative superbly well run bank. I've been a shareholder for many years(as well as a long standing account holder with the bank) and have nibbled several times on the way down..but have not fared well at all. HSBC has been a rock and it is them that I'll continue to invest in - the Eastern promise, the decent dividend, and a strong balance sheet. Admittedly they've been fairly active in the CDS side(presumably punting rather than back to back client trading) but I'm not aware how significant their exposure is in Europe.

RBS do seem to be turning things around but they are indeed still far too big.Share your sentiments here.

I'm more inclined to swap my Soco holdings for a several stakes in some Canadian and Colombian oilies myself. The former paying 6% or so, the latter which DJP has been discussing recently.

F2

Wow! :-)))

Charts

I have no plans to sell my LLPC - I hope to hold these a long time and collect dividends...

From LLOY results today...

Since 31 January 2010, the Group has been prohibited under the terms of an agreement with the European Commission from paying discretionary coupons and dividends on hybrid capital securities issued by the Company and certain of its subsidiaries. This prohibition ends on 31 January 2012. The Group intends to be in a position to recommence payment of coupons and dividends on these hybrid capital securities after this date. Future coupons and dividends on these hybrid capital securities will, however, be paid subject to, and in accordance with, the terms of those securities

Just bought some ADM and AV.

I don't think the ADM statement is that bad, profits to be at lower end of expectations if Q4 does'nt improve. It is still a good quality company to own IMO and I've taken advantage of todays falls to lock in an 8% yield.

"Across 2011 as a whole we are likely to have grown our UK vehicle count by more
than 20%.  Our international insurance business also continues to achieve strong
growth and further improvement in operating results.

"Notwithstanding the continued higher level of large claims in the quarter, I
expect us to once again report record profits for the full year, probably some
10% higher than last year.  I am confident that with Admiral's enlarged customer
base and significant combined ratio advantage we are in a strong position for
sustained long term growth and good news in 2012 and beyond."

Group highlights

  * Group turnover* increased by 30% to £582m (Q3 2010: £446 million)
  * Group vehicle count increased 27% to 3.3 million (Q3 2010: 2.6 million)
  * International car insurance turnover up 45% to £27.0 million (Q3 2010: £18.6
    million)
  * International car insurance vehicle count up 53% to 267,000 (Q3
    2010: 175,000)
  * Annualised UK vehicle count growth rate of just over 13%
  * Modest UK premium rate increases achieved
  * UK ancillary contribution per vehicle in line with H1 2011
  * Combined ratio remains significantly lower than the market
  * Financial position remains strong
* Turnover is defined as total premiums written (including co-insurers' share)
and Other Revenue


Outlook

Our claims experience in Q3, if replicated in Q4, would lead to a small
improvement at the end of the year in the aggregate projected ultimate loss
ratios for the back years (2000-2009).  However, consistent with the trend
reported in H1 2011, the frequency and expected cost of new large personal
injury claims has remained above historical levels of experience.  This leads us
currently to expect some adverse development at the full year on the projected
ultimate loss ratios for 2010 and 2011 which would affect both overall reserve
movements and recognised profit commission.
If there is no reversal in Q4 of this higher than normal level of large claims,
we anticipate that full year pre-tax profits will be towards the lower end of
the range of analysts' estimates, or some 10% ahead of 2010, with no further
reserve releases in the second half.

http://www.investegate.co.uk/Article.aspx?id=20111109070000H1948

Maynard Paton also highlighted ADM a week ago, at 30% cheaper it must be a better bet :-)

This could be today's no-brainer

So what might Neil Woodford and Warren Buffett buy now? Here's one no-brainer idea for them, and of course for you as well: Admiral (LSE: ADM).

As you may already know, Neil Woodford likes shares with high, rising and reliable dividends. Warren Buffett meanwhile likes shares with tip-top management and strong competitive positions. Buffett also likes insurance companies, which is lucky for him as Admiral is one of the country's largest motor insurers.

Anyway, here are ten facts about Admiral you might want to consider while everyone else panics about Greece:

1. It has grown from nothing to become a £3 billion FTSE 100 share in 20 years;

2. It floated during 2004 at 275p and the price reached £17 earlier this year;

3. It has expanded rapidly, despite the recession and Greece. Between 2006 and 2010, profits and the dividend jumped more than 80%.

4. It continues to grow, with first-half profits this year up 27%;

5. It has consistently reported underwriting profits, unlike most of its rivals;

6. It hasn't needed to retain capital to grow, and therefore regularly distributes about 90% of its earnings as ordinary and special dividends;

7. It offers a trailing total dividend of 74.6p per share and 6.7% yield at £11;

8. It has a forecast P/E of 13 for 2011 and 11 for 2012;

9. It is run by founder management that has an enormous £540m riding on the share price, and;

10. It has seen its share price fall since the summer on fears of rising costs, and Greece.

http://www.fool.co.uk/news/investing/2011/11/02/a-no-brainer-stock-for-this-euro-mess-market.aspx?source=isesitlnk0000001&mrr=0.17

I've also bought back an old favourite which I last sold at £4.49 in March this year, Aviva.....I think it is worth locking in the 8%+ yield again.

I will use my dividends and income to further top up on these and buy other stocks as the opportunity arrives.

Now is the time to be drip feeding money into the markets IMO especially dividend paying stocks where you get paid to wait. 

ADM has managed to grow it's Revenues and Customers every single year since 1993 - that is an awesome stat :http://www.admiralgroup.co.uk/about/financial_growth.php

What sort of European sovereign debt exposure for AV and ADM ? ;)

Minimal for AV apparently, although on the downside alot of its general insurance business originates from Europe so possible downturns there. But sovereign debt exposure is pretty small from what I've read.

Minimal for ADM as well....although I expect both to continue having loads of volatility based on what happens in Europe.

I am comfortable picking up stock though in the current environment, the numbers look good. If I included numbers + emotion I too probably would'nt want to buy,

I think it is just a case of waiting on both taking nice dividends with the expectation that the price can go anywhere in the short term.

Well the CEO's wife of ADM today bought £8.74m worth of shares!!

That is probably the single biggest share purchase I've seen from a director/director's spouse etc

Diane Briere de l'Isle, the wife of Admiral Group Chief Executive Officer, Henry
Engelhardt, has today bought 1,000,000 Admiral Group plc shares at an average
price of  GBP8.74.

Henry Engelhardt and Family holdings now total 39,313,565 ordinary shares in
Admiral Group.



http://www.advfn.com/p.php?pid=nmona&article=49874432

The CEO now has £343m worth of shares in the company.....