Income Investors’ Results Review (17 Feb 2013)

Sunday, Feb 17 2013 by

I like to think of income investors as the Zen masters of investing. When the City is deafening us with noise and distraction, the income investor sits there with a quiet mind, only to wake briefly from their meditative state on results day to ask the question: “okay, so how much did my dividend go up by this time?“.

They know all of the short termism and macroeconomic navel gazing propounded by the financial pundits is of little relevance to them. They don’t care much for the “I’d better sell up, the FTSE’s a bit high now and I’ll get back in cheaper in the summer”, “Great my portfolio is up 1% today!”, “Damn my portfolio is down 1% today!”, “How is the Eurozone mess going to affect my shares?”, “What will happen to inflation and interest rates?”, “Will there be a triple dip recession?”. No, the income investor’s third eye is on the long term where everything will be just fine as long as their income keeps rising at a satisfactory rate.

Nearly 7 weeks into 2013 we have already seen a number of results announcements for the raft of 31st December financial year ends so I thought it would be a good time to have a quick review as to what’s been happening with some of the larger cap income stocks. As I jotted down a list of recent final results announcements I noticed that I had a pair in each of 4 “sectors” so I shall present them in that way below.

Consumer products (RB., ULVR)

It is generally well recognised that shares in well ran companies producing consumer products can prove to be excellent investments. Quality products and brand loyalty can create a powerful moat, enabling those companies to preserve higher margins and return on capital over the long term. Usually their global growth opportunities also offer the possibility of deploying additional capital at those high rates of return, creating long term earnings growth with, importantly, a high level of free cash flow generation at the same time. This gives the possibility to pay out dividends and invest in organic growth opportunities without the need for raising borrowings, albeit debt will often be increased as a result of acquisitions.

The world’s most famous investor, Warren Buffett, is a fan of such companies and has had great success over…

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Unilever PLC is a supplier of food, home and personal care products. The Company's portfolio ranges from nutritionally balanced foods to indulgent ice creams, soaps, shampoos and household care products. The Company operates through four segments: Personal Care, Foods, Home Care and Refreshment. The Personal Care segment includes sales of skin care and hair care products, deodorants and oral care products. The Foods segment includes sales of soups, bouillons, sauces, snacks, mayonnaise, salad dressings, margarines and spreads. The Homecare segment includes sales of home care products, such as powders, liquids and capsules, soap bars and a range of cleaning products. The Refreshment segment includes sales of ice cream and tela-based beverages. The Company has approximately 400 brands found in homes around the world, including Persil, Dove, Knorr, Domestos, Hellmann's, Lipton, Wall's, PG Tips, Ben & Jerry's, Marmite, Magnum and Lynx. The Company operates in over 190 countries. more »

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GlaxoSmithKline plc (GSK) is a healthcare company. The Company is engaged in the creation and discovery, development, manufacture and marketing of pharmaceutical products, including vaccines, over-the-counter (OTC) medicines and health-related consumer products. The Company's segments include Pharmaceuticals, Pharmaceuticals R&D, Vaccines and Consumer Healthcare. The Pharmaceuticals business develops and makes medicines to treat a range of acute and chronic diseases. The Vaccines business develops, produces and distributes over 1.9 million vaccines every day to people across the world. The Consumer Healthcare business develops and markets products in various categories, such as Wellness, Oral health, Nutrition and Skin health. The Pharmaceuticals Research and Development (R&D) focuses on the discovery and development in various areas of research, which include human immunodeficiency virus (HIV) and infectious diseases, oncology, immuno-inflammation, respiratory and rare diseases. more »

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Beazley Ireland Holdings plc, formerly Beazley plc, is a holding company for the Beazley group, a specialist risk insurance and reinsurance business. The Company's segments include Life, accident & health, which underwrites life, health, personal accident, sports and income protection risks; Marine, which underwrites a spectrum of marine classes, including hull, satellite, aviation, kidnap and ransom, and war risks; Political risks & contingency, which underwrites terrorism, political violence, expropriation and credit risks, as well as contingency and risks associated with contract frustration; Property, which underwrites commercial, homeowners’, and construction and engineering property insurance; Reinsurance, which specializes in writing property catastrophe, casualty clash, aggregate excess of loss and pro-rata business, and Specialty lines, which underwrites professional liability, management liability and environmental liability, including healthcare and business services. more »

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  Is Unilever fundamentally strong or weak? Find out More »

2 Comments on this Article show/hide all

tournesol 18th Feb '13 1 of 2

Excellent article and very interesting blog. I look forward to spending some quality time reading it in detail.

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Miserly Investor 18th Feb '13 2 of 2

Hi Tournesol, thanks for the kind comments.

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About Miserly Investor

Miserly Investor

Stock market investor/trader.


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