Friday 19 April 2013

Portfolio Sale: Persimmon (LSE:PSN)

Persimmon - the horse
Like the racehorse it is named after, house-builder Persimmon saw the finish line and raced for it.

I put my money on it - and I have now been to the bookie's window to receive my winnings.

Although this is a dividend share, I was looking this time for a quick profit (to cover some previous losses) - unlike my other purchases, which I normally buy and hold.

So, what is different?

Persimmon was one of my 'legacy' holdings: bought in 2007 and topped up in 2008. Then the company went downhill - together with the rest of the housing market - in the convulsions of the financial crisis.

Being a 'holder' by nature, I put the share out to pasture (figuratively), hoping for a recovery - which was slow to come.

Following the pick-up to the housing market, I bought some more Persimmon at the end of February 2013 on the basis of the 75p dividend promised (since raised by a further 10p). After I bought those (at £8.90) the price has risen by around £2.45 - much more than the dividend that was being trailed and a reflection of the improving state of the UK housing market. That's a 27%-odd gain in under two months and an overall return for all the holdings of around 23% since 2007 - not brilliant but then again, not a loss.

Now, as I am a DIY Income Investor, I don't really want to hold anything that is not returning a good yield. And if it is showing a capital gain equivalent to 5-years-worth of current/forecast income, I reckon it is time to take a profit and move on to something else.

So it is with Persimmon. After the current excitement has died down (when the share goes ex-div) this might be a good share for a recovery/value portfolio. But it won't be a high-yield dividend share, only a medium-dividend one.

And yes, I may be grabbing a smaller profit than I could make if I held on for a while more - but I'm hoping there is something even more interesting out there, just waiting to be found.

[Sale price £11.35]

I am not a financial adviser 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.

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