The post is a little bit late, but I was seriously sick latterly. Last week I exited from 2 of my Baltic companies OEG, which decided to cut their dividends and exit the market and VSS, which did not paid dividends last year and is probably will not pay them this yeas, so these two assets were not generating any income. So sold shares of both of these companies 625 OEG for 1,9 EUR and 125 VSS for 3,52 EUR and received over 1,6 kEUR free capital. I’m very sad regarding OEG as this company was one of my largest dividend payers with annual dividends of -53 EUR after tax. This is what I bought to compensate this loss:
- 20 shares of VZ for 47,26 USD which cost us 792 EUR. With present paid annual dividends of 2,36 USD and YOC after tax 3,4% brought us annual dividends of +26,9 EUR. Company is a direct rival of my largest US holding T. Both of these companies own absolute majority of USA telecom industry so if one out competes the other in L/T i’m safe. What relates to VZ rezults they are a bit flat with sales stuck at 125-130 bnUSD level for the past 5 years. Earning before amortization declined from 48 to 42 bnUSD. Leverage look a bit on the high side with NetDebt/EBITDA x2,7 due to their stock buyouts from VOD and equity of just 17% but has improved lately from just 5% in Y2014. Forward P/E is just 10, which makes the stock kinda undervalued.
- 20 shares of GIS for 44,27 USD costing us 522 EUR. With paid annual dividends of 1,96 USD YOC after tax is nice 3,0% will add +15,6 EUR annual dividend income to us. Company is one of largest US food manufacturers. Company has been struggling to find growth in the past few years with sales steady declining from 17 bnUSD to 15 bnUSD in the past 5y. EBITDA declined less from 3,5 bnUSD to 3,2 bnUSD due to their cost saving program. I don’t like that sale decline fighting with bigger cost decline keeping the profit flat. This is straight way to more decline as most of cases cost cut touch companies staff and there is no worst thing then demotivated staff. Anyway hope that GIS will recover. I heard they will freeze their dividends, but I suppose at first they might stop their 1-1,5 bnUSD share repurchase. Their leverage stands at x2,7 which is a bit on a high side equity stands at 20% a bit low also and declined due to share repurchase, which I don’t like also. So this company has two things that I don’t like. So why did I bought it? Diversification, best dividend yield and lowest Forward P/E of just 14 in food sector.
- 10 shares of KHC for 59,96 USD costing 506 EUR. With paid annual dividends of 2,5 USD YOC after tax is 2,8%. Quite nice yield I say and this company will pay us +14,2 EUR annual dividends. Company went trough major merge in Y2015 and was stuct in 26 bnUSD sales ever since. EBITDA increased on the other hand and reached 7,8 bnUSD. Leverage with financial debt of 30 bnUSD is on the high side x3,8 on the other side Equity level is excellent 55% and forward P/E level of 15 the high leverage looks acceptable. And you can see the main reason why I bought it – I buy their ketchup. Damn they make the best ketchup in the world! Its another greast food manufacturer company added to our portfolio .
So these 3 wonderful companies brought us 56,7 EUR annual income and with 53 EUR loss the Net result is +3,7 EUR and now out portfolio generates 385 EUR.