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Some more reliable dividend payers on AIM to consider as Plus500 moves on

The transfer of Plus500 from AIM to the main market has forced Stockpot's AIM Sustainable Dividends portfolio to bank handsome profits; will three newcomers be able to emulate Plus500's meteoric rise?

Pound coins on pound notes
It's one out and three in

One of the most successful constituents of the “AIM sustainable dividends portfolio” has, rather selfishly I thought, moved on to the main market.

Plus500 Ltd (LON:PLUS) moved to the main market on June 26 so I supposed I am obliged to remove it from the portfolio, banking a £764 (77%) profit over an eight month holding period in the process.

Aside from no longer being an AIM stock, the certificates for deposit trading platform operator continues to meet all the criteria for inclusion in the portfolio and I was half-tempted to keep it in on the grounds it had started its life on AIM but a 77% profit is not to be sniffed at.

The sale gave the virtual portfolio a very healthy cash balance of just over £5,000, which is just as well as we have three new stocks that look like they should join the gang.

Looking to clean up with Johnson Service Group plc

Johnson (LON:JSG) is perhaps best remembered as the operator of a chain of dry-cleaning shops but if memory serves me correctly it made the wise decision to wash it hands of that business and focus on work-wear rental and laundry services.

in the first half of the current decade, turnover growth was hard to come by while as recently as 2012 it made a loss but the last couple of years have seen the top line and the bottom line start to head north at pace.

The stock is forecast to yield 2.2% in the current financial year with forecast dividend cover of 3.0, which is well above our hurdle rate, as is the free cash flow (FCF) dividend cover of 6.0.

A week ago it raised trading expectations for the current financial year, albeit only a tad, and with eight successive years of dividend growth to its name, it saunters into the “AIM sustainable dividends portfolio”.

Bought 740 shares at 133.6p a share at a cost of £1,004 (including £15 assumed dealing costs).

Chairman of Sanderson Group PLC chose a bad time to reduce his stake

Software and information technology services provider Sanderson (LON:SND) is another company that has been exceeding expectations; results for the six months to the end of March were a bit ahead of budget.

The forecast dividend yield is 2.9% and the forecast earnings cover is 2.2 (FCF cover is better still, at 2.5) and, like Johnson, it has eight years of dividend growth to its name.

The debtors-to-turnover ratio – a measure of how quickly (or slowly) the company gets paid – is on the high side at 23.8% but just about within the 25% limit we have set on the stock filter, so into the portfolio it goes, despite a 3% bid-offer spread.

The company’s shtick is developing bespoke software solutions for multi-channel retail, manufacturing, wholesale distribution and logistics businesses that will maximise the return on investment.

Shortly after I updated the portfolio to include Sanderson in the portfolio, the executive chairman, Christopher Winn, sold shares equivalent to 6.2% of the company at a placing price of 90p, knocking the shares for six.

It’s not great a good sign for the company, although Winn retains a 13.3% stake in Sanderson; I quite like software companies as they seem to attract takeover approaches and the reduction in Winn’s stake might make the company more susceptible to an approach.

Bought 965 shares at 102p each at a cost of £999.

System1 Group PLC slow to react to customers’ slashed budgets

System1 (LON:SYS1), formerly known as BrainJuicer, provides online market research services. In its results statement covering the year to the end of March it admitted that the financial performance had been disappointing as it was slow to pick-up on budgetary constraints among its targeted customer base.

On the plus side, it said its strong cash position enabled it to maintain the final dividend at 6.4p, leaving the full-year pay-out unchanged at 7.5p (the company paid a special divi of 26.1p in August of last year).

On that basis, the share joins the portfolio despite a painfully wide bid/offer spread of 270p-280p.

This is one to keep an eye on, just in case it fails to pull out of its tailspin.

Bought 352 at 280p each at a cost of £1,001

 

Those purchases reduce the cash pile to just over £2,000, which means the ‘AIM sustainable dividends’ virtual portfolio is close to being fully-invested for the first time since it was set up March 2017.

The unfortunate timing of the Sanderson purchase has put a bit of a dent in an otherwise excellent performance but in investing, you have to take your lumps and bruises.

Here’s the current state of play.

Ticker

Company

Shares owned

Cost of shares

Cost per share

Current bid price

Current value

Change

% change

BRK

Brooks

48

£1,003

2,090.25p

1,900p

£912

-£91

-9.1%

JHD

James Halstead

195

£998

511.69p

394p

£768

-£230

-23%

JSG

Johnson Service Group

740

£1,004

135.63p

130p

£962

-£42

-4.2%

KETL

Strix Group

745

£998

134.01p

166.2p

£1,238

£240

24%

MGR

Miton Group

2,240

£1,001

44.67p

69p

£1,546

£545

54%

SND

Sanderson Group

965

£999

103.55p

94p

£907

-£92

-9.2%

SOM

Somero Enterprises

243

£999

411.17p

390p

£948

-£51

-5.2%

SYS1

System1 Group

352

£1,001

284.26p

270p

£950

-£50

-5.0%

TPFG

Property Franchise

710

£1,002

141.11p

140p

£994

-£8

-0.8%


 

  • Cash: £2,119
  • Value of portfolio (including cash): £11,344
  • Starting value of portfolio (March 2017): £10,000


 

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