After a ending last week with a cinema tip we start this week with a trip to the pub as Greene King have announced an interim management statement today. This looks fine in my view with headlines being: retail like for like up 5% in the last 6 weeks and 3.8% year to date, average EBITDA per pub in Pub Partners up 5.6% and strong growth in Brewing & Brands; core own-brewed volume up 5.8%.
Finally, in the outlook statement the Company said "Overall, our expectations for profit, cash flow and our balance sheet are unchanged and we remain confident that we will continue to provide growth in earnings and dividends, and improving returns, to our shareholders."
Which is what this one is all about really as they say "the board’s policy of maintaining a minimum dividend cover of two times underlying earnings, while continuing to invest for future growth, and maintains our long-term track record of annual dividend growth."
I bought this one back in May 2009 during their rights issue at the time and achieved an average in price of around 444 pence so at the time it would have been on a prospective rating of around 9 x and a 5% net yield. Having held it patiently since then I have seen the dividend rise from 21 pence to a likely 28.4 pence forecast for this year which would represent a compound growth of 6.26% per annum over 5 years and a 6.4% yield this year on my original purchase price. They have achieved similar rates of growth for a lot longer than that too.
Since then the shares, like the market, have risen and been re-rated to stand on a prospective 13.7 x and 3.39% yield for the year to April 2015 according to Stockopedia. This seems reasonable without being outstandingly cheap, so having doubled my money in 5 years or so and having enjoyed a total return of around 20% per annum including the dividends I am happy to hold for more of the same. However, given the re-rating since I bought them I would not expect such strong returns in the next 5 years, unless it get re-rated even further, which I am not forecasting. Assuming it can at least maintain its current rating then it looks like total returns of around 9 to 10% per…
About the Author
Jjis
Worked in the City of London for over 20 years as a Fund Manager for a number of top institutions. In my career I managed billions of £'s across a whole range of different funds from Distribution funds, Investment Trusts, OEIC's / Unit Trusts & Pension funds. I was also involved in the management of Income funds more generally. In March 2009, I quit the City and escaped the rat race to earn my living from my own investments. Since then I have been managing my own income funds. I focus on UK stocks with a value / yield / quality bias and select from the whole market down to about a £50 million market capitalisation, although on occasions I stray into micro cap if I feel the investment case is compelling. This is becasue I have VCT holdings which give me micro cap exposure. I also invest in Investment Trusts and ETF's for overseas markets or exposure to other asset classes, but again with the aim of achieving an income as well as diversification. I'm now trying to give something back by writing more regularly on my Blog / website - but can't make any promises about how regularly I will write here on Stockopedia, so check out my site and sign up for free e-mail updates if you want my latest posts in your in box. more »
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