Wednesday 10 August 2016

Try, Something New (Portfolio Buy)
The DIY Income Investor portfolio continues to storm ahead in (Sterling) value at the moment. It feels somehow strange - but reassuring.

Having become a bit bored by just topping up existing holdings, I decided to try something new...

One major factor in the appreciating value of the portfolio is the fall in value of the Pound - so the increase in wealth may be illusory in the longer term. But there are some individual 'success stories', like the HSBC Holding shares (LSE:HSBA), which seem to be recovering nicely whilst retaining an attractive yield.

But on to the new purchase, which I made a few days ago.

Galliford Try plc (LSE:GFRD) is one of the UK's leading housebuilding and construction groups, organised in five Divisions; Building, Infrastructure, PPP Investments, Housebuilding (including Linden Homes) and Affordable Housing & Regeneration.

What first attracted me - of course - was the dividend yield, currently reported as over 7%. The P/E ratio is quite modest (at under 7) and the dividend cover is just about reasonable (at 1.85). After the Brexit vote, housing shares went into a seemingly undeserved nosedive - hence the attractive yield; but it seems to me that housebuilding is just what we need. Particularly on brownfield sites, which is GFRD's speciality.

The latest guidance (published in July 2016) looks very positive, with the company expecting record results. Reduced debt, bulging order book and an increased landbank add together to paint a very attractive picture. So why the high yield - particularly given the on-going low interest rate environment?

I put it down to Brexit uncertainty. But remember that the DIY Income Investor approach is based on the assumption that Mr Market is a manic-depressive. We'll see.

[Purchase price: £9.57] 

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.


  1. Let's hope it does better than Manchester PIB

    1. I was being churlish - you were clear on the risks and it still might come good! You are the only blogger that puts cards on the table - keep it up!

  2. Give the sage credit - you called Galliford T very well indeed (so far)....

    1. Thanks. The portfolio is doing quite well so far in 2016 - up 22% at the moment! But it can all change, of course.