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 fast-moving consumer goods (FMCG) company. The Company's segments include Personal Care, which primarily includes sales of skin care and hair care products, deodorants and oral care products; Foods, which primarily includes sales of soups, bouillons, sauces, snacks, mayonnaise, salad dressings, margarines and spreads; Home Care, which primarily includes sales of home care products, such as powders, liquids and capsules, soap bars and a range of cleaning products, and Refreshment, which primarily includes sales of ice cream and tea-based beverages. The Company's geographical segments include Asia/AMET/RUB, The Americas and Europe. Its brands include Axe, Dirt is Good (Omo), Dove, Family Goodness (Rama), Heartbrand (Wall's), Hellmann's, Knorr, Lipton, Lux, Magnum, Rexona, Sunsilk and Surf. The Company operates in more than 100 countries, selling its products in more than 190 countries. The Company operates approximately 310 factories in over 70 countries. more »

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GlaxoSmithKline plc is a global healthcare company. The Company operates through three segments: Pharmaceuticals, Vaccines and Consumer Healthcare. The Company focuses on its research across six areas: Respiratory diseases, human immunodeficiency virus (HIV)/infectious diseases, Vaccines, Immuno-inflammation, Oncology and Rare diseases. The Company makes a range of prescription medicines, vaccines and consumer healthcare products. The Pharmaceuticals business discovers, develops and commercializes medicines to treat a range of acute and chronic diseases. The Vaccines business provides vaccines for people of all ages from babies and adolescents to adults and older people. The Consumer Healthcare business develops and markets products in Wellness, Oral health, Nutrition and Skin health categories. Its product portfolio includes Adartrel, Bexsero, Daraprim and Quinvaxem. Its brands include Panadol, abreva, polident and physiogel. more »

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Beazley plc is a holding company. 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, energy, cargo and specie, piracy, 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, high-value homeowners' and construction and engineering property insurance on a worldwide basis; Reinsurance, which specializes in writing property catastrophe, property per risk, casualty clash, aggregate excess of loss and pro-rata business, and Specialty lines, which underwrites professional liability, management liability and environmental liability, including architects and engineers, healthcare, cyber and lawyers. 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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