Here’s to hope, and to my pals who stuck it out
ILIKE MY DIVIDENDS . . . probably much more than the next investor. I get huge satisfaction from seeing my distributions drop through — albeit these days with 20% lopped off in dividend tax (and a growing fear, noting Sars’ collections shortfall, that this dastardly tax may again increase in the not-too-distant-future).
My ploy — on paper — is to collect distributions, and then mobilise these cash flows into more adventurous (nondividend paying) positions. In reality, I tend to just buy more high yielding stock.
I might also add how envious I am of my friends who stuck it out at consumer brands conglomerate AVI — which showed no signs of being cowed by current trading conditions when it stuck firmly to its generous dividend policy of paying out 80% of earnings to shareholders.
One cannot but be impressed by unflappable AVI CEO Simon Crutchley’s efforts to balance market share and margin considerations as well as grasp operational nettles like fishing subsidiary I&J and shoe business Green Cross.
In any event, I did take up a position in security products specialist Trellidor — which is hardly stingy with its payout policy. The business is fairly easy to understand, and I found some safety in the company’s year-end numbers (and their acquisition of Taylor Blinds delivered the goods).
I remain morbidly fascinated with industrial services group Howden Africa. This hugely profitable company, which has compelling cash flows and a cash pile of around R1.1bn, has not paid a dividend since mid-2013. It is also not buying back its shares or making acquisitions. So why it needs R1.1bn sloshing around its balance sheet is anyone’s guess. There was no indication of an interim dividend for the halfyear to end-June — but, as ever, I am hopeful that something will (eventually) give.
Empowerment counter Grand Parade Investments (GPI) is also one to watch, having held back a payout for the year to end-June. Yes, the rolling out of fast-food interests like Burger King, Dunkin’ Donuts and Baskin-Robbins is a capital-chomping affair, and sustainable profits may be some way off. But GPI holds a valuable interest in the GrandWest casino and a significant minority stake in a profitable limited payout machine venture. If these assets are sold, there would be scope for a substantial special dividend, especially if Burger King’s cash flows were looking richer. GPI has an intrinsic net asset value of nearly 700c/share, so a special distribution may be very rewarding for patient investors.
Because it’s our annual Broker of the Year edition. It would be remiss of me not to thank and congratulate Stuart Theobald and his fantastic team at Intellidex for another comprehensive, insightful examination of the local stockbroking sector. Congratulations to all the winners. I trust readers will again find the survey valuable.