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Aim sustainable divis portfolio off to solid start

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Recruitment software firm Dillistone has been "let go" from the portfolio

Back in the days when we thought the current parliament would serve a full term, I set up an “Aim sustainable dividends” virtual portfolio and it has been doing rather well.

It was created seven weeks ago and I said I’d review it every month, but, rather like Theresa May's promise not to cut & run, that pledge has bitten the dust.

The stock screen I used to generate constituents of the portfolio is, in all probability, not going to generate very many changes on a monthly basis, which means a monthly column would merely be me wittering on about how each share had moved and making a stab at why it had done so..

Thinking about it, revisiting it every six months (giving a chance for a new set of results to come out) is probably more realistic, but we’ll suck it and see.

In the meantime, if you were waiting for the “monthly” update, here it is.

Before reading the update, however, you might want to refresh your memory of the thinking behind the portfolio construction.

READ Dividend payers on Aim: not as rare as you might think

READ Taking Aim at sustainable dividends

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For those of you who can’t be bothered to read the second of the above articles, here is a list of the stocks we ended up putting into the “Aim sustainable dividends” portfolio:

We started with a virtual £10,000 and invested £1,000 in each of the above and, unlike most virtual portfolio features you see in the media, we are factoring in share trading charges (£15 a charge) and bid/offer spreads.

Bearing that in mind, I am happy to report that since 30 March, the portfolio’s value has grown to £10,122. OK, £6,000 of that is cash, but the £4,000 we invested has risen to £4,112, which is an increase of 2.8%.

Over the same period, the FTSE All-Share has eased from 4,011 to 4,098, so the portfolio has outperformed the market, but the FTSE AIM All Share has risen from 927 to 977 over the same period, which is an increase of 5.4%, so let’s not celebrate too wildly.

We’ve received £27.84 in dividends from Somero, which pushes the value of the portfolio up to £10,138.

Come 6 June, the portfolio is set to get £7.31 in dividends from James Halstead (it all adds up!).

All of the stocks are above the price at which we bought them but Dillistone has not risen enough to cover dealing costs and the bid/offer spread, but even so it is only showing a nominal £3.80 loss.

As it happens, Dillistone, which released results a month ago, has fallen foul of one of our filters: its average capital expenditure over a five year period has risen to more than 30% of its operating cash flow, to 39.2%.

Dillistone's free cash flow as a ratio of dividend payments is still above 1.0 and the forecast dividend cover is healthy at 1.6, but the increased capital expenditure possibly means the dividend will not be going up as fast as we hoped, so the stock has been ejected from the portfolio.

Taking into account the dealing costs, the loss on Dillistone was £18, which is less than a round of drinks these days.

No new stocks have made it into the portfolio, which leaves it as an exclusive club that seems to be performing well.

Here is the current state of play on the portfolio.

Company

No. of shares

Total cost

Average price paid

Current bid price

Current value

Profit/ loss £

Profit/ loss %

James Halstead

195

£998

511.69p

538p

£1,049

+£51

+5.1%

Somero Enterprises

313

£1,001

319.79p

323p

£1,011

+£10

+1.0%

Zytronic

229

£1,000

436.55p

460p

£1,053

£54

+5.4%

 

  • Cash: £7,010 (including £28 of dividends)
  • Total value of original £10k portfolio: £10,124
  • Profit/loss on closed trades: -£19
  • Unrealised profit on current holdings: +£115
  • Total profit/loss: +£124

 

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