Tuesday 6 December 2011

Portfolio Buy: Morgan Sindall (LSE:MGNS)

In my continuing search for good new dividend-paying shares for my High Yield Portfolio (Level 6 on the DIY Income Investor Income Pyramid), I have recently purchased Morgan Sindall Group. MGNS is in the UK construction sector, specialising in infrastructure, affordable housing, 'fit out' (for offices and shops), urban regeneration and property investments.

The company has weathered the recession quite well, holding its dividend at 42p per share for the last three years, giving it currently an historic yield of over 7% with a low historic p/e of 6.

The Motley Fool has identified this company as one of those likely to benefit from the Chancellor's recently-announced £30 billion Infrastructure Fund.

The company has a great pedigree for reliable payments, lifting the dividend more than 15-fold since 1994. No doubt having a large chunk of shares owned by the family helps.

To quote its latest
half-year interim management statement (for the period ending Novermber 2011):

"Morgan Sindall remains on track to meet its expectations for the current year. The macroeconomic environment continues to be challenging but our financial strength, breadth of capabilities and leading positions across a range of market sectors leave us well placed to emerge from the current market a stronger business than when we entered. In particular the benefit of our emphasis on regeneration is seen in the growth in our regeneration pipeline from £1.8bn to £2.2bn since the half year with a further £0.9bn of regeneration opportunities currently at preferred developer stage."

Back in February 2011 Motley Fool gave the company a vote of confidence, noting that the company seemed to be strong and well-managed company and was performing well during a severe downturn. The dividend is more than twice covered by earnings and the low p/e suggests that, once the industry picks up again, there's a good chance of share price growth.

Hopefully one that will return a good dividend as well as increasing in value.

Purchase price: £5.693

Update 22/2/12: This has been a good pick, so far - up over 20% since purchase. A review of the latest results from Motley Fool shows that although the performance is generally positive, cash and profit are down slightly.

Update 21/2/13: Faced with difficult market condition the company has cut the dividend by around 20%.

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.


  1. Update 1/12/12 Ouch!

  2. Yes, its down in 2012 - the price has fallen back to near where I came on board. But the yield is still over 7%, and I still like the business model, so I am not in a hurry to leave.