Friday, 6 May 2011

Portfolio Buy: Cable & Wireless Worldwide (CW)

The lastest portfolio purchase is a high yield dividend share - Level 6 on the DIY Income Investor Income Pyramid.

As I described in a recent post, I was looking for a new purchase for a SiPP - one that has a good yield, can be purchased in relatively small lots in the SiPP and is low risk.

One of the options was Cable & Wireless Worldwide (CW.), which I already have a small holding in. According to ShareCrazy.com: "Cable & Wireless Worldwide Group specialises in the provision of critical communication infrastructure and services for large users of telecommunications. Worldwide Group provides high quality managed voice, data, applications and Internet Protocol (IP) based services to its customers, focusing on serving large corporates, multinational companies, governments, carrier customers and telecommunications resellers."

This share was identified previously as one of the 'Picks of the 5% Dividend Yield Club'. However, I was hesitant, as this relatively new offshoot of Cable & Wireless was struggling a bit and the share price has been battered down - hence (partially) the high yield. According to Digital Look the historic yield is 6.4% and the forecast yield is 9.4% (the dividend covers drops from 2.8 at present to 1.5 in future).

However, today the share price jumped 6% off a 52-week low, indicating to me most likely that a takeover bid is in the air. So, I have taken a bit of a risk and jumped in at £0.49 a share. If I have guessed right, I will have locked in a terrific yield and can look forward to an increase in capital value.

However, I would say that this is at the edge of my 'risk-taking boundary', and is clearly speculative - so I have not fulfilled my 'low risk' criterion. It can go wrong - and has done in the past!

Update

This has proved to be a bad investment with the dividend being stopped, the price falling by 60% and a new management team being put in place, including the former boss of Vodafone (I'm not the only investor caught out - see the article by This is Money). Taking the risk has not been worth it in the short term. I am now holding an hoping for a recovery.


I am not a financial advisor and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.

2 comments:

  1. I got out,mainly because I hate owning a share I'm not happy with
    Perhaps I'm a bit of a fretter.

    I'm glad I don't have to worry about it any more.

    But in the long run. it's a decision I might come to regret.

    They might just e going through a bad patch.
    They're not a Mickey Mouse outfit, and I doubt if they'll actually go bust.
    And even if the divvy's halved, it's still worth having.

    Anyway, best of British luck.

    PS
    What about CWC?

    ReplyDelete
  2. I got out,mainly because I hate owning a share I'm not happy with
    Perhaps I'm a bit of a fretter.

    I'm glad I don't have to worry about it any more.

    But in the long run. it's a decision I might come to regret.

    They might just e going through a bad patch.
    They're not a Mickey Mouse outfit, and I doubt if they'll actually go bust.
    And even if the divvy's halved, it's still worth having.

    Anyway, best of British luck.

    PS
    What about CWC?

    ReplyDelete