To fit with all the criteria i.e. high dividend, exposure to lots of markets, acceptable to my fiance (although this one only just), I bought into Tesco at 394p per share. Tesco is an absolute staple - one of those shares that fund manages charge you 1.5% per year of your investment to buy into (where's the value add?!). It's the third biggest supermarket in the world after Walmart and Carrefour, it operates in the UK, California, Thailand, Poland, China and plenty of other countries. It was also expected to pay out 3.8% as a dividend when I boughtthe shares. More later on that.
There's nothing like food in bad economic times - as long as there isnt a significant decline in population, you know people are going to want food and the supermarket is the obvious place to go. Working on this logic, I decided to buy into Sainsbury's too at 295p per share. Sainsbury's doesn't operate outside the UK, so in some ways it failed the diversification criteria. However, it was very acceptable to the fiance because it has a reputation for good business practice (compared to the other supermarkets, at least!), and the dividend yield is expected to be 4.8% - and as I know, diversification is very important (and how glad was I of that mantra come Tesco's January performance!)
Sticking to the so called "defensive" stocks, the next place to go was a company actually producing everyday goods that people had to buy. I went with Unilever, the producer of food, drink, cleaning and "personal care" goods. Its a old company that strikes me as being fairly smooth sailing, if such a thing exists. It owns 52% of a company called Hindustan Unilever which sells the same kind of thing as Unilever to the Indian subcontinent. Tick on the diversification box, and tick with the fiance (great Corporate Social Responsibility i'm led to believe). 2134p a share gives an anticipated dividend of about 3.8%.
The next purchase was Vodafone. This company is so underrated it is unbelievable - it's absolutely massive (the world's largest when measured by revenue), but it's treated like just another mobile phone company. At 174p per share, it should provide a dividend yield of about 3.5% - and given that people keep wanting to talk to each other, I cannot really see how this can change much. But then that's my opinion. The fiance was happy with them too, because she hasnt heard anything too negative in the news (neither have I for that matter).
So food, food, gold, phones - where next? Well, walking round Lancaster around Christmas gave me the answer. I consider Lancaster a fairly stereotypical town, so when you see a lot of people in a stereotypical town wanting to do something, in a low competition environment, it's probably a good sign. Pies. That's right, pies - or in fact Greggs Plc, to be specific. Lancaster has three of them in the pedestrian area, all with big queues, and no really serious chain-like competition. And believe it or not, it is a dividend darling with 26 years of rising dividends. So that may change, but its a good indicator. And the dividend yield at the 507p I bought the shares for is 3.3% - another good one, and no complaints from the fiance (can you believe that Greggs have 1200 shops!?!)
So more food. Quite a lot of food there, so perhaps time for something different? Well, I read about the insurance company Aviva and how it was trading at a discount of around 30% to the assets it held. For those that don't know about insurance companies, the way they work is very simple - you pay them a premium, they invest it in shares, bonds, and other investments, and then try and profit before you take your cash out again in the form of claims. So, if Aviva is trading at a 30% discount to assets, it means you can get a load of shares for a discount of 30%. Obviously this is only useful if you believe that the discount will reduce in the future - which you do if you believe in market efficiency - so there's a lot of growth there. Although, remember, I should be investing for dividends and diversification. Well, at the 311p I bought the shares the dividend was about 9% - that's massive I know, and reflects the fears around the exposure that Aviva has to Europe which is paddling up the metaphorical creek at the moment as fast as its politicians can get upstream. However, Aviva operates in 28 countries of which 6 are in Europe. So it might own a lot of European shares, but I am sure the company knows that and is doing something sensible about it before it all goes Pete Tong. On the basis of all this evidence, the fiance was fairly satisfied.
My most recent share purchase? Well, a certain company announced some terrible earnings in the last few days - and that fitted nicely with my contrarianism. Are you seriously telling me you think that Tesco is suddenly worth 18% less because it didnt sell as much stuff as it thought it would over Christmas? Let me put that in context - you are telling me Tesco is suddenly worth £5.5 BILLION less because it didnt sell as much stuff as it expected in one of its 13 countries? Ok, the UK represents 51% of its stores, but it's hardly going out of business. "Oh, but they made the announcement to prepare you for a reduction in the dividend". They'll have to have really screwed up if they are going to reduce the dividend by 20% and set it back to 2008. Maybe they have, but i don't doubt it'll come bouncing back.
Long post this once, but now everything's up to speed. And how does everyone feel about Carnival, the world's biggest cruise ship company? It sinks £95 million worth of boat and suddenly is worth $3 billion less. They must have had all the company's money on the boat, in non-waterproof boxes. It's the world's largest cruise ship operator, for goodness sakes - their balance sheet (what the company nominally owns) shows $37 billion in assets, and the market only values the company at half that now. I might pile in - need to speak to the fiance first.
Signing off......
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