Fellow Income Monkey's that have been following the prospects of Mapeley are probably already aware of the fact that the recent talk over talks came to an end with the announcement on Friday morning. Unsurprisingly the market reacted by marking down the stock heavily from its closing price of £15.57 to £13.21.
Credit crunch
Both the Times and the FT reports that the collapse of the talks were down to the fact that Fortress Investment Group the majority shareholder with over 50% of the share capital were thwarted in their attempt by the conditions in the American money markets.
My reaction
Relief! The biggest risk to me as an income investor was that Mapeley was taken out cheaply as a result of an opportunist bid only successful because of the poor sentiment toward property companies. My reaction was to immediately go back into the market a buy shares. I had taken advantage of the bid to book some short term profits and unwind a significant CFD position. This enabled me to go back in and crank up my holding at a lower average price.
Focus on income generating fundamentals
The latest preliminary results for the year to the end of 2007 showed income investors just what they wanted to see. All the metrics relating to income were up:
Dividends up 11.9% to 188 pence per share (2006: 168 pence
- FFO up 23.4% to £56.4 million (2006: £45.7 million)
- EBITDA up 23.4% to £115.4 million (2006: £93.5 million)
- Revenue up 8.4% to £417.4 million (2006: £385.0 million)
This all means that dividends which were up 11.9% from 188 pence per share (2006: 168 pence). At the current share price this dividend equates to just over 14%.
The most important metric out of these figures is the FFO. This effectively measure the free cashflow and therefore the amount a company can pay in dividends. Mapeley figures show that FFO is up to £56.4 million or 192p a share. This enabled them to pay the 188p dividend out of existing income making the whole process very sustainable.
Paradoxically one of the reasons that the City has been marking down Mapeley is because its investment portfolio is heavily office and regionally based. These provincial properties are perceived rightly to be more of a risk of value reductions. However, as the Times commented that Mapeley is protected from a potential slump in demand for commercial property by the fact that a majority of their tenants are in the public sector (over 60% is let to the public sector tenants). These are just the low risk tenants who going into a economic slump are the ones you need because they are less likely to miss rents or be unable to pay.
Income Monkey Recommendation
I still think that Mapeley has a bright future. The big risk on the horizon is that Fortress are just stalling their time in making the bid in the hope that the market still responds to lack of confidence the share price by launching a secret bid at the right time. For more views and discussion about Mapeley go here
Saturday, 29 March 2008
Wednesday, 19 March 2008
Crazy Crazy Market!
If you said to me a couple of months ago that I would be able to get a 10% yield on solvent, asset backed businesses with growing incomes then i would said you were crazy. We live in extraordinary times.
The credit crunch as well as sucking confidence from the market has also robbed it of any sense.
There is no doubt that the rapid removal of credit from the international financial markets will effect companies prospects but a melt down? Fear and uncertainty has taken hold and investors have run for the door. These are times when income investors can pick up a steal which they can hold for a lifetime and will reward investors handsomely. Here is just a small selection of some great high yielding shares to buy & why.
DAWNAY DAY TREVERIA (DTR)
I've been busily filling my boots with this stock for sometime. For Income Monkeys looking at avoiding the down turn in the UK commercial property market. They should consider Dawnay Day Treveria. This company is focused on investing in income generating German retail property. Launched in December 2005 the company has now completed its objective of having a portfolio of euro 2.3 billion. The company's share price has been hit by the down turn in sentiment towards property assets.
The dividend for 07/08 is projected to be 5.05 cents rising to 7 cents in 08/09equating to a projected 11% yield on its current share price of 64 cents. These levels of dividend are easily affordable from its rent roll of 59,319,000 euros for the 6 months ended 30 June 07. After expenses and interest net revenue should be approximately 42 million euros for the year before tax. This is enough free cash to pay up to a 6.6 cent annual dividend. The company's share price is easily covered by its' net assets. It had a NAV of 116c back in June which means the property income stock is now trading at over a 30% discount to its current share price. Too high for a company investing in a property market that has not seen the excessive over valuations experienced in the UK and therefore it is on a much firmer footing. With a growing revenue stream leading to a potential rising dividend, this looks like a great income generating stock to hold.
Price 64 cents Projected yield 11%
MAPELEY (MAY)- success!
Well we don't like to boast but we did tell you so. Mapeley a share that this blog has mentioned continuously has plumbed the depths over the last few months but has recently rebounded as a result of a potential bid which saw its price soar. Mapeley's latest results just vindicate what we have being saying all along. Mapeley is a thoroughbred cash machine throwing off income and dividend payments.
Mapeley is a classic case of the City not understanding a company. Mapeley is a hybrid which has confused the City. It is partly property investment company but mainly an outsourcing company deriving much of its income from managing other companies property requirements. The result is that it generates much greater levels of income than traditional property investment companies.
The latest results for year ended 31 December 07 show:
dividends up 11.9% to £1.88
FFO up 23.4% to £56.4 million
EBITDA up 23.4% to £115.4 million
On there current share price of just over £15 the yield is a massive 12.5%.
The main downside was the fact that as a result of the fall in commercial property values Net Asset Values were down to £18.62 from £24.23 a year earlier.
This prices at a discount to asset value of 20%. However as Citi property analyst Harry Stokes observes Mapeley should not be valued as an investment company
"We use enterprise value/EBITDA because we consider property outsourcing an earning play, not a property play" he said.
This all means that you have a company with a cast iron and rising income stream, most of its properties are let to government or the Santander Bank (formerly Abbey). The company is paying a whopping and rising dividend and trading at a discount to underlying asset values into the bargain.
The worry is that short term jitters means that the majority shareholder and current take over interest Fortress will get away with underpaying for this great income stock should they decide to press forward with a full bid. Logically this company should be worth £25-30 on its income generating capacity, growth prospects and recession proof business model. However, since when have markets been rational?!
Price £15.07 Projected yield 12.5%
PROSPECT EPICURE J-REIT (PEJR)
PEJR is another example of an unloved stock in an unloved sector. This company originally floated in November 2006 at £1 was a £100 million in has been set up with the purpose of investing in Japanese REITs. This stocks like UK REITs invest in a variety of Japanese real estate and in return for preferential tax treatments are required to pay out most of their incomes to shareholders in the form of dividends.
The Japanese property market has been in a slump since the early 90's and was until the recent 'credit crunch' showing signs of life . The Japanese market like the German property market are amongst the best investment opportunities having missed out on the global boom in values experienced over the last 5 years.
Why invest in PEJR? Well if you believe in value investing and investing for income this stock is a must. The shares are now down from their 52 week high of and trade just of their lows. The most attractive thing about them are the investment fundamentals.
Prospect Asset Management, Inc., the investment adviser to the Company believes that low vacancy rates and limited supply of property,combined with robust demand are pushing rents higher. This provides strong fundamental underpinning for real estate capital values and rental yields. They note that some J-REITs are trading at discounts to stated book value as high as 48.7%, and some have yields of up to 9.9% p.a. The Investment Adviser believes that this discount to stated book value may be expected to narrow due to a shift in the attitude of J-REIT underwriters toward consolidation. PEJR estimates that the Company's current portfolio holdings are trading on a 36.8% discount to their net asset value.
Low interest rates om Japan - BOJ rate at 0.75% is practically zero means that finance costs are very low so this leveraged fund can borrow for very little and then invest in J-REITs yielding in the high single figures. The result is that they can afford to pay high dividends. The O7 dividend should total 6.5p which on its current share price of just over 50p means a whopping dividend of over well over 10%. This added to the fact that the companies ad visors announced earlier this month that they were about to embark on a placing to raise an additional $100m of funds to raise their investment in the sector. Most encouragingly this appears to be prompted by existing institutional investor demand who have expressed a firm commitment to take over $50 million of these new shares themselves. The main risk to investors is the currency risk as funds and income are derived in Yen.
Price 53.75p Projected yield 12%
The credit crunch as well as sucking confidence from the market has also robbed it of any sense.
There is no doubt that the rapid removal of credit from the international financial markets will effect companies prospects but a melt down? Fear and uncertainty has taken hold and investors have run for the door. These are times when income investors can pick up a steal which they can hold for a lifetime and will reward investors handsomely. Here is just a small selection of some great high yielding shares to buy & why.
DAWNAY DAY TREVERIA (DTR)
I've been busily filling my boots with this stock for sometime. For Income Monkeys looking at avoiding the down turn in the UK commercial property market. They should consider Dawnay Day Treveria. This company is focused on investing in income generating German retail property. Launched in December 2005 the company has now completed its objective of having a portfolio of euro 2.3 billion. The company's share price has been hit by the down turn in sentiment towards property assets.
The dividend for 07/08 is projected to be 5.05 cents rising to 7 cents in 08/09equating to a projected 11% yield on its current share price of 64 cents. These levels of dividend are easily affordable from its rent roll of 59,319,000 euros for the 6 months ended 30 June 07. After expenses and interest net revenue should be approximately 42 million euros for the year before tax. This is enough free cash to pay up to a 6.6 cent annual dividend. The company's share price is easily covered by its' net assets. It had a NAV of 116c back in June which means the property income stock is now trading at over a 30% discount to its current share price. Too high for a company investing in a property market that has not seen the excessive over valuations experienced in the UK and therefore it is on a much firmer footing. With a growing revenue stream leading to a potential rising dividend, this looks like a great income generating stock to hold.
Price 64 cents Projected yield 11%
MAPELEY (MAY)- success!
Well we don't like to boast but we did tell you so. Mapeley a share that this blog has mentioned continuously has plumbed the depths over the last few months but has recently rebounded as a result of a potential bid which saw its price soar. Mapeley's latest results just vindicate what we have being saying all along. Mapeley is a thoroughbred cash machine throwing off income and dividend payments.
Mapeley is a classic case of the City not understanding a company. Mapeley is a hybrid which has confused the City. It is partly property investment company but mainly an outsourcing company deriving much of its income from managing other companies property requirements. The result is that it generates much greater levels of income than traditional property investment companies.
The latest results for year ended 31 December 07 show:
dividends up 11.9% to £1.88
FFO up 23.4% to £56.4 million
EBITDA up 23.4% to £115.4 million
On there current share price of just over £15 the yield is a massive 12.5%.
The main downside was the fact that as a result of the fall in commercial property values Net Asset Values were down to £18.62 from £24.23 a year earlier.
This prices at a discount to asset value of 20%. However as Citi property analyst Harry Stokes observes Mapeley should not be valued as an investment company
"We use enterprise value/EBITDA because we consider property outsourcing an earning play, not a property play" he said.
This all means that you have a company with a cast iron and rising income stream, most of its properties are let to government or the Santander Bank (formerly Abbey). The company is paying a whopping and rising dividend and trading at a discount to underlying asset values into the bargain.
The worry is that short term jitters means that the majority shareholder and current take over interest Fortress will get away with underpaying for this great income stock should they decide to press forward with a full bid. Logically this company should be worth £25-30 on its income generating capacity, growth prospects and recession proof business model. However, since when have markets been rational?!
Price £15.07 Projected yield 12.5%
PROSPECT EPICURE J-REIT (PEJR)
PEJR is another example of an unloved stock in an unloved sector. This company originally floated in November 2006 at £1 was a £100 million in has been set up with the purpose of investing in Japanese REITs. This stocks like UK REITs invest in a variety of Japanese real estate and in return for preferential tax treatments are required to pay out most of their incomes to shareholders in the form of dividends.
The Japanese property market has been in a slump since the early 90's and was until the recent 'credit crunch' showing signs of life . The Japanese market like the German property market are amongst the best investment opportunities having missed out on the global boom in values experienced over the last 5 years.
Why invest in PEJR? Well if you believe in value investing and investing for income this stock is a must. The shares are now down from their 52 week high of and trade just of their lows. The most attractive thing about them are the investment fundamentals.
Prospect Asset Management, Inc., the investment adviser to the Company believes that low vacancy rates and limited supply of property,combined with robust demand are pushing rents higher. This provides strong fundamental underpinning for real estate capital values and rental yields. They note that some J-REITs are trading at discounts to stated book value as high as 48.7%, and some have yields of up to 9.9% p.a. The Investment Adviser believes that this discount to stated book value may be expected to narrow due to a shift in the attitude of J-REIT underwriters toward consolidation. PEJR estimates that the Company's current portfolio holdings are trading on a 36.8% discount to their net asset value.
Low interest rates om Japan - BOJ rate at 0.75% is practically zero means that finance costs are very low so this leveraged fund can borrow for very little and then invest in J-REITs yielding in the high single figures. The result is that they can afford to pay high dividends. The O7 dividend should total 6.5p which on its current share price of just over 50p means a whopping dividend of over well over 10%. This added to the fact that the companies ad visors announced earlier this month that they were about to embark on a placing to raise an additional $100m of funds to raise their investment in the sector. Most encouragingly this appears to be prompted by existing institutional investor demand who have expressed a firm commitment to take over $50 million of these new shares themselves. The main risk to investors is the currency risk as funds and income are derived in Yen.
Price 53.75p Projected yield 12%
Sunday, 27 January 2008
Apologies - but new income generating share to watch!
Firstly, I would like to apologise to fellow Income Monkeys for my lack of postings over the last few weeks. Pressure of work being the editor of the fast growing buy-to-let website Property Hawk and trying to keep up with the Stock market in the fast moving & volatile conditions have kept me too busy to allow for me to keep Income Monkeys up to date with the latest developments & there have been plenty:
Anybody who took our ongoing advice about buying into commercial property shares might have just got in before the rush. The papers including the Financial Times have been full of stories over the last few weekends about how sentiment towards commercial property shares is just about to turn. The latest developments have been the talk of property vulture funds which are likely to herald a whole raft of takeover activity and speculation after February when they first start to appear.
The Income Monkey has already made several income generating share tips see previous postings on which income generating property shares to buy.
The bank have also had a rocky ride with the fall out in the sub prime market but again some kind of stability may have returned.
Those Income Monkeys that took my advice and bought Northern Rock PIBS rather than the shares should be showing a healthy capital profit and potentially with a semi private public rescue now proposed by the Government could be in line for a very healthy income over the next few years.
Retail stocks have been hammered, but whilst there is a likelihood that dividends on these shares could be cut in the short term those Income Monkeys that are prepared to take an 18 month view on these shares could start to see an improving situation and a recovering dividend yield and ultimately a good long-term investment opportunity.
So that’s the past but what about new opportunities. One income generating investment opportunity that has caught my attention and one that I have already have a holding in is Northern European Properties (NEPR).
Northern European Properties Limited is a Jersey incorporated company which invests in real estate opportunities in the Nordic and Baltic Regions and Baltic Russia. The company has been listed on AIM, a market of the London Stock Exchange, since 15 November 2006. As per December 18, 2007 the company is listed on Euronext Amsterdam in addition to the current AIM listing.
The company has a strong income bias in that it is committed to paying 90% of its FFO - Funds From Operations (A figure used by real estate investment trusts (REITs) to define the cash flow from their operations. It is calculated by adding depreciation and amortization expenses to earnings, and sometimes quoted on a per share basis)
NEPR now valued at 385 million euros is mainly invested in Sweden and Finland although it sees substantial opportunities in Russia and has just started to acquire properties in the area which should yield far more than their portfolio in the Nordic countries.
The share price has been hammered by the sentiment toward property companies shares and now stands at 0.81 euros just above the year low of 0.64 euros but well of the high of 1.31 euros. The interesting thing is that the company has recently agreed several large disposals in the Swedish and Finnish part of its portfolio which will give it substantial funds to either take up opportunities from overstretched investors or to return substantial funds to investors or both. All this is potentially good news for income seeking investors.
The other interesting thing is that one of the non executive director investors Ian Livingstone a non executive director clearly things that the shares are undervalued. He has purchased 3 million shares on a CFD (so he is borrowing money to purchase them) during the last week. To my mind if a director and one with the track record and experience is confident enough to put £2 million of his own cash on the line, then I'm happy to put a few grand into NEPR. Other Income Monkeys might also want to follow suit.
I hope that the next week sees more vindication of the new paradigm of investing. Remember fast buck capital growth is dead. Its all about the income. Get that right and the capital growth will look after itself.
Finally a request. Any Income Monkeys with income generating ideas of their own, please feel free to share them with the rest of us. Any genuine income generating tips featured will be rewarded with a organic Income Monkey banana signed personally by my own fair hand. So what are you waiting for.....
Anybody who took our ongoing advice about buying into commercial property shares might have just got in before the rush. The papers including the Financial Times have been full of stories over the last few weekends about how sentiment towards commercial property shares is just about to turn. The latest developments have been the talk of property vulture funds which are likely to herald a whole raft of takeover activity and speculation after February when they first start to appear.
The Income Monkey has already made several income generating share tips see previous postings on which income generating property shares to buy.
The bank have also had a rocky ride with the fall out in the sub prime market but again some kind of stability may have returned.
Those Income Monkeys that took my advice and bought Northern Rock PIBS rather than the shares should be showing a healthy capital profit and potentially with a semi private public rescue now proposed by the Government could be in line for a very healthy income over the next few years.
Retail stocks have been hammered, but whilst there is a likelihood that dividends on these shares could be cut in the short term those Income Monkeys that are prepared to take an 18 month view on these shares could start to see an improving situation and a recovering dividend yield and ultimately a good long-term investment opportunity.
So that’s the past but what about new opportunities. One income generating investment opportunity that has caught my attention and one that I have already have a holding in is Northern European Properties (NEPR).
Northern European Properties Limited is a Jersey incorporated company which invests in real estate opportunities in the Nordic and Baltic Regions and Baltic Russia. The company has been listed on AIM, a market of the London Stock Exchange, since 15 November 2006. As per December 18, 2007 the company is listed on Euronext Amsterdam in addition to the current AIM listing.
The company has a strong income bias in that it is committed to paying 90% of its FFO - Funds From Operations (A figure used by real estate investment trusts (REITs) to define the cash flow from their operations. It is calculated by adding depreciation and amortization expenses to earnings, and sometimes quoted on a per share basis)
NEPR now valued at 385 million euros is mainly invested in Sweden and Finland although it sees substantial opportunities in Russia and has just started to acquire properties in the area which should yield far more than their portfolio in the Nordic countries.
The share price has been hammered by the sentiment toward property companies shares and now stands at 0.81 euros just above the year low of 0.64 euros but well of the high of 1.31 euros. The interesting thing is that the company has recently agreed several large disposals in the Swedish and Finnish part of its portfolio which will give it substantial funds to either take up opportunities from overstretched investors or to return substantial funds to investors or both. All this is potentially good news for income seeking investors.
The other interesting thing is that one of the non executive director investors Ian Livingstone a non executive director clearly things that the shares are undervalued. He has purchased 3 million shares on a CFD (so he is borrowing money to purchase them) during the last week. To my mind if a director and one with the track record and experience is confident enough to put £2 million of his own cash on the line, then I'm happy to put a few grand into NEPR. Other Income Monkeys might also want to follow suit.
I hope that the next week sees more vindication of the new paradigm of investing. Remember fast buck capital growth is dead. Its all about the income. Get that right and the capital growth will look after itself.
Finally a request. Any Income Monkeys with income generating ideas of their own, please feel free to share them with the rest of us. Any genuine income generating tips featured will be rewarded with a organic Income Monkey banana signed personally by my own fair hand. So what are you waiting for.....
Sunday, 23 December 2007
Property investment expert comments
I recently came accross this comment by Chris Turners the property manager in the Interim Statement for TR Property Investment Trust featured on www.iii.co.uk discussion board which I rather like and illustrates very vividly what situation we are in currently with respect to income generating property stocks.
"As investors, we feel akin to the residents of a City threatened by a hurricane. We know that there is a storm out there offshore, and the media is getting increasingly excited about all the dreadful damage that could occur. They may be right but dire predictions are good copy, and storms sometimes moderate or veer off in another direction. We batten down the hatches and, if we can, leave town, only to sneak back after the storm has passed to see that well protected property is still there and damage is generally less than predicted.
The two really dreadful property share markets in my lifetime have been 1973-75and 1989-92. Both came against the background of sky high interest rates, large scale overdevelopment and a sharp rise in unemployment which drove down rental values. We do not have overdevelopment today, no-one is forecasts sky high interest rates or a doubling of unemployment. So the fall in property values is a pricing issue.
For the moment uncertainty prevails and markets don't like it. All news is taken as bad news. What we can say is that, short of Armageddon, we have seen the worst of the share price falls in the well run well financed property companies.
I think that the point of maximum pessimism is still to be reached. An event may mark that point, but what event I cannot tell. That event could conceivably occur anytime now or it may still be twelve months away.
So we wait with our hatches battened down - staying in town as an investor dedicated to property - trying not to be too brave or too pessimistic. We will search for opportunities in others' distress and look forward to the day when we can report a return to decent growth."
Wednesday, 19 December 2007
Crystal ball gazing for 08
The secret of intelligent investing including income investing is sometimes to see beyond the here and now and go against the trend.
When everybody is telling you to sell, this can sometimes be the time to buy. In order to do this successfully investors sometimes have to look beyond the investment climate however stormy it might look.
Thinking of 08 one can only see dark clouds hiding possibly darker events for income investors. However, the events and the investments currently hardest hit could well turn out to be the best investments to hold.
I refer specifically to income generating property stocks. The FT this weekend had several articles about the prospect for income generating property shares. One highlighted the fact that the FTSE 350 Real Estate index has fallen a massive 43% in just 11 months. Some would argue it has further to fall. For instance the FT argues that in the property slump of the late 80's and early 90's the index fell 64% from it's peak in September 89 before bottoming out in September 92, therefore there are risks of buying in too early. However, the investment market is very different this time.
The economy is relatively strong with low unemployment and more importantly vacancy rates are low and there is not the over supply experienced in previous property booms. This means that as long as occupancy rates stay high then the income generating attractions of this asset class are strong.
So where next for income generating property stocks in 2008?
First of all. The credit crunch is biting. It's slowing investment. Economies such as the UK's which has been buoyed by consumer spending financed by cheap credit will slow in 2008. The Government and the Bank of England fearing a collapse in the housing market which would cause a melt down in the UK economy are likely to cut interest rates aggressively The Sunday Times has predicted that this could be done 4 times next year which would put the base rate at 4.5%. Falling interest rates suddenly stop making the returns on cash deposits look quite attractive. Suddenly the 8% plus income generated by some of the property stocks and share i have looked at start to look very attractive indeed, particularly when viewed against the already heavy discounts to asset values. Have a look at my previous article for some specific income generating property stocks to buy.
Appearance of property vulture funds in 08
I would expect to see in 08 the appearance of property vulture funds that are set up probably by hedge funds to fund the acquisition of property companies that are undervalued and/ or are having temporary funding problems because of the credit crunch. One likely victim would be Invesco Property Income Trust
Correction in property shares overdone
I am not alone in my view that the correction in property shares has been overdone. Anthony Bolton the widely respected fund manager was reported in the FT has started to buy property stocks, reportedly telling his special situations trust that there are discrepancies in valuations.
INCOME MONKEY VERDICT
I'm keeping the faith that i have expressed all along that there are some real income generating bargains amongst property shares if investors take a cautious and steady approach to buying. They should look to buy on weakness and average down where necessary. This is the approach i will continue to take into 2008. I'm confident that as the credit crunch unwinds, the economy cools and interest rates have fallen my investments in income generating property stocks will show a rebound in their capital value, a strong and growing dividend yield and look a damn sight more stable & attractive proposition than most other investments.
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.
When everybody is telling you to sell, this can sometimes be the time to buy. In order to do this successfully investors sometimes have to look beyond the investment climate however stormy it might look.
Thinking of 08 one can only see dark clouds hiding possibly darker events for income investors. However, the events and the investments currently hardest hit could well turn out to be the best investments to hold.
I refer specifically to income generating property stocks. The FT this weekend had several articles about the prospect for income generating property shares. One highlighted the fact that the FTSE 350 Real Estate index has fallen a massive 43% in just 11 months. Some would argue it has further to fall. For instance the FT argues that in the property slump of the late 80's and early 90's the index fell 64% from it's peak in September 89 before bottoming out in September 92, therefore there are risks of buying in too early. However, the investment market is very different this time.
The economy is relatively strong with low unemployment and more importantly vacancy rates are low and there is not the over supply experienced in previous property booms. This means that as long as occupancy rates stay high then the income generating attractions of this asset class are strong.
So where next for income generating property stocks in 2008?
First of all. The credit crunch is biting. It's slowing investment. Economies such as the UK's which has been buoyed by consumer spending financed by cheap credit will slow in 2008. The Government and the Bank of England fearing a collapse in the housing market which would cause a melt down in the UK economy are likely to cut interest rates aggressively The Sunday Times has predicted that this could be done 4 times next year which would put the base rate at 4.5%. Falling interest rates suddenly stop making the returns on cash deposits look quite attractive. Suddenly the 8% plus income generated by some of the property stocks and share i have looked at start to look very attractive indeed, particularly when viewed against the already heavy discounts to asset values. Have a look at my previous article for some specific income generating property stocks to buy.
Appearance of property vulture funds in 08
I would expect to see in 08 the appearance of property vulture funds that are set up probably by hedge funds to fund the acquisition of property companies that are undervalued and/ or are having temporary funding problems because of the credit crunch. One likely victim would be Invesco Property Income Trust
Correction in property shares overdone
I am not alone in my view that the correction in property shares has been overdone. Anthony Bolton the widely respected fund manager was reported in the FT has started to buy property stocks, reportedly telling his special situations trust that there are discrepancies in valuations.
INCOME MONKEY VERDICT
I'm keeping the faith that i have expressed all along that there are some real income generating bargains amongst property shares if investors take a cautious and steady approach to buying. They should look to buy on weakness and average down where necessary. This is the approach i will continue to take into 2008. I'm confident that as the credit crunch unwinds, the economy cools and interest rates have fallen my investments in income generating property stocks will show a rebound in their capital value, a strong and growing dividend yield and look a damn sight more stable & attractive proposition than most other investments.
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.
Thursday, 6 December 2007
DDs for dividends
Firstly, for all those income investors who have got fed up with the volatility haunting the share prices of many of the income generating property stocks that i have featured so far. Words of comfort from a Mr Warren Buffet, who by all accounts has done quite well at investing in his time.
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:
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.
"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.
Monday, 3 December 2007
Investment income gem
Some people have asked me where do i find my income stocks.
Well quite often i just come across them by chance whilst checking on the performance of my portfolio. The next share is a classic case. I was looking at one of my favourite share information sites www.digitallook.com when i noticed the name of a company. The Small Company Dividend Trust. As someone who is always seeking new income generating opportunities I immediately thought this share was worth further investigation; particularly as one of the shareholders had just shelled out near £30,000 on over doubling his stake.
The company which invests in shares in high yielding shares on the UK market has the following investment policy
It is currently trading close to its year low at 163.75p and well short of its high of 241p. The company is small with a market cap of just over £26 million. However, its big attraction is its' yield. The company pays quarterly dividends which are projected to total 13.85p for the forthcoming year putting it on a income yield of almost 8.5%.
If income monkeys do decide to take the plunge, they will be some fairly distinguished company. One of the directors is no less than the former Chancellor of the Exchequer Norman now Lord Lamont of Lerwick who has taken the opportunity of the slump in the price to top up on his holding.
INCOME MONKEY VERDICT
For those income monkeys that want exposure to the UK stockmarket without the risks inherrent with investing in a single share or stock, this trust is an ideal way of benefiting from rising valuations whilst taking a tidy income into the bargain.
Well quite often i just come across them by chance whilst checking on the performance of my portfolio. The next share is a classic case. I was looking at one of my favourite share information sites www.digitallook.com when i noticed the name of a company. The Small Company Dividend Trust. As someone who is always seeking new income generating opportunities I immediately thought this share was worth further investigation; particularly as one of the shareholders had just shelled out near £30,000 on over doubling his stake.
The company which invests in shares in high yielding shares on the UK market has the following investment policy
The Company's funds will be invested principally in companies with a market capitalisation of up to £500 million; a maximum of 20 per cent. of the Company's portfolio may be invested in companies without reference to their market capitalisation at the discretion of the Investment Manager. The Company's portfolio will comprise companies listed on the Official List and companies admitted to trading on AIM. The Company will not invest in preference shares, loan stock or notes, convertible securities or fixed interest securities or any similar securities convertible into shares. The Company will not invest in other investment trusts or unquoted companies.
It is currently trading close to its year low at 163.75p and well short of its high of 241p. The company is small with a market cap of just over £26 million. However, its big attraction is its' yield. The company pays quarterly dividends which are projected to total 13.85p for the forthcoming year putting it on a income yield of almost 8.5%.
If income monkeys do decide to take the plunge, they will be some fairly distinguished company. One of the directors is no less than the former Chancellor of the Exchequer Norman now Lord Lamont of Lerwick who has taken the opportunity of the slump in the price to top up on his holding.
INCOME MONKEY VERDICT
For those income monkeys that want exposure to the UK stockmarket without the risks inherrent with investing in a single share or stock, this trust is an ideal way of benefiting from rising valuations whilst taking a tidy income into the bargain.
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