"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."
There are certainly many fearful people out there when it comes to income generating stock & shares in property companies and this this may well represent a great buying opportunity. I think so and my portfolio reflects this.
Time for something completely different, just in case you thought all i invest in is property stocks & shares. Another sector that is very unloved at the moment is the media sector and particularly the newspaper industry. In many ways, its not surprising. With the internet fast being the medium of choice for many people to get their information and news and advertisers and readers migrating away from newspaper at an uncomfortable rate. Many investors perceive the newspapers industry as a sunset business. Well it is...............& it isn't.
Newspapers have realised that their days are numbered if they dont embrace technology and the internet. The result is that many have developed very strong websites and other related products that trade off the back of their traditional paper copy. One interesting high yielding income generating stock that appears to be doing very well at employing this strategy is Sport Media Group.
Most investors will not recognise this company but when i tell you that it owns the Daily & Sunday Sport you might be a little wiser. The company has been transformed over the last few months by acquiring Sport Newspapers Ltd on the 5th September. Prior to this the company was called Interative World Plc and was purely focused on digital content for the internet and mobile channels. It was effectively the digital arm of the Sport Newspaper with almost 50% of its' shares being owned by David Sullivan who was also owner of Sport Newspapers Ltd.
The deal enables the enlarged company - Sport Media Group - to exploit the growing relationship between print and digital media.
Andrew Fickling, managing director of both the Daily and Sunday Sport, said a strengthened relationship with Interactive was a "natural choice", enabling the group to grow in the online and mobile content markets and "greatly improve" its offering to readers.
Sport Newspapers was set up in 1986 by Sullivan and David and Ralph Gold, owners of the high street sex shop chain Ann Summers, who both hold 25 per cent stakes in the company.
Its titles have suffered from falling circulation over the last few years, which the firm believes comes from a lack of solid editorial. Its titles currently represent around 1.6 per cent of the "red top" tabloid market.
Sport Newspapers reported pre-tax profits of £2.8m for the nine months to May 31 on turnover of £19.6m. Interactive World posted pre-tax profits of £4.3m in the year to 31 July, 2006. It has 11 staff.
INCOME MONKEY VERDICT
The less than 'traditional' nature of this company has put many investors off. Consequently, the shares are trading at a year low of 63.5p valuing the business at less than £25 million although it is expected to turnover almost £43 million next year and generate over £12 million in profit. This put the shares on a projected P/E of 7.6 with earning per share of over 8p. This makes the continuation of the 7p dividend entirely possible putting the shares on a forward looking yield of over 11%. Income Monkey is particularly heartened by the statement of the Chairmam Simon-Hume Kendall published on the 6th of November in which he stated:
"The dividend reflects the strong cash generative nature of the Company and, given the low working capital needs of the business, the Board intends to maintain a progressive policy."
I'm just hoping with all those double Ds knocking about that they are symbolic of a future double digit dividend!
THE INCOME MONKEY WOULD LIKE TO EXPRESS ITS THANKS TO INTERACTIVE INVESTOR WHOS INFORMATION HAS BEING VITAL IN PUTTING TOGETHER THIS BLOG. I WOULD ALSO POINT OUT THAT THE INCOME MONKEY HAS NO ASSOCIATION WITH THIS WEBSITE.
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