It’s only been a couple of weeks since we last looked at the “Aim Sustainable Dividends” virtual portfolio but much has happened recently.
The two main events have been the sustained rise of Plus500 Ltd (LON:PLUS) on absolutely zero news flow and the move into profit of Miton Group PLC (LON:MGR) on the back of some stake-building by Artemis Investment Management, which now owns 11.6% of the company.
READ Dividend payers on Aim: not as rare as you might think
Somero Enterprises Inc (LON:SOM), the concrete levelling technology company, returned to the portfolio two weeks ago but has sat there like a desk ornament, doing nothing while Strix Group PLC (LON:KETL), which also joined the portfolio two weeks ago, has been steaming ahead.
We’ve got another new addition to the portfolio this month but if we ignore that for the time being I am pleased to report the portfolio rose 3.5% over the last two weeks – and that’s with about 40% of its portfolio being in cash – compared to a 1.8% rise on the FTSE 100.
So, pats on the back all round, as we move into the 13th month of this experiment designed to show that London’s junior market does have some solid dividend-paying stocks.
Incidentally, you can read the parameters we use in the stock screen in the two articles linked to below.
READ Taking AIM at sustainable dividends
The Property Franchise Group appears on the radar after hiking divi
Results from the Property Franchise Group PLC (LON:TPFG), which last year spurned a merger approach from Belvoir Lettings, received an ambivalent reaction from the market but the numbers were good enough to make it pop up on our stock filter.
Adjusted underlying earnings (Ebitda) rose 14% to £4.4mln in 2017 from £3.9mln in 2016 on the back of a 23% increase in group revenue to £10.2mln.
Earnings per share (EPS) rose 9% to 14.2p whole the full-year dividend jumped 15% to 7.5p.
Despite the dividend rising faster than the EPS, brokers are forecasting that this year’s dividend will be covered 1.6 times by earnings, which is good enough for us – the cut-off point is 1.25 times.
Free cash flow last year was enough to cover the dividend payment more than twice over, which is comforting, and net debt of £2.5mln compared favourably to annual Ebitda of £4.4mln.
"Our financial position is robust with a strong balance sheet, a relatively low level of gearing and high levels of cash generation. This together with our franchise model, weighting towards lettings and multifaceted growth strategy leaves the group well-positioned to withstand developments within the industry and to capitalise on opportunities that arise," said Ian Wilson, the chief executive officer of the group.
About the only thing about the numbers that does not look good is a frightening bid-offer spread of 132p-139p; with that spread, straight away we are looking at needing more than a 5% gain just to break even.
On the other hand, the portfolio is built on the basis that most constituents will be held for the long term so, mindful that the portfolio has more than four thousand virtual pounds sitting there doing nothing, the stock gets to join the club.
Property Franchise Group: 710 shares bought at 139p each, plus £15 assumed dealing costs = £1,002.
So, before the smugness gets unbearable, let us have a look at the scores on the doors.
Company
Number of shares
Total cost
Average price per share
Current bid price
Current value
Profit/loss (£)
Profit/loss (%)
Brooks Macdonald
48
£1,003
2090.25p
2,090.25p
£888
-£115
-11%
James Halstead
195
£998
511.69p
390p
£760
-£237
-24%
Miton Group
2,240
£1,000
44.67p
49p
£1,098
£97
9.7%
Plus500
102
£998
978.21p
1,397p
£1,425
£427
43%
Property Franchise Group
710
£1,002
141.11p
132p
£937
-£65
-6.5%
Somero Enterprises
243
£999
411.17p
390p
£948
-£51
-5.2%
Strix Group
745
£998
134.01p
139p
£1,035
£37
-1.8%
- Cash: £3,308
- Market value of current holdings: £7,071
- Market value (including cash): £10,378
- Unrealised profit on current positions: -£72
- Dividends received: £70
- Profit/loss from closed positions: £237
- Total realised profit/loss + dividends: £307
Outperforming the FTSE
Since its inception on March 30, the portfolio has risen 3.1% (or 3% excluding dividends), despite a fair chunk of the funds being in cash, whereas over the same period the FTSE 100 has risen just 0.3%. On the other hand, for much of the period the portfolio has been trailing the index and its recent upsurge has been largely due to a turnaround situation for just one stock: Plus500.
As ever, the approach is to keep calm and carry on … for the long-term.