Lucky Timing (Portfolio Buys)

Source

Usually it is a mug's game to try to time your purchases or sales. The market is such a seething mass of information, opinion, fear and greed that it is almost impossible to know where it is going.

Sometimes, however, you get lucky and buy at the right time...

It was a bit like Monopoly: 'Your bond has matured - collect £200".

Some of our family 5-year savings bonds have matured (4.5% with Birmingham Midshires  - remember when you could get those!) and the cash must be put to good use. At the moment we have so much in Ratesetter and other cash savings that we risk exceeding our (collective) tax limits. So the solution is to take advantage of a new personal tax allowance - the dividend tax allowance. This allows you to earn up to £5,000 in dividends, outside an ISA or a SIPP - without paying tax on the income. (Capital Gains Tax still applies, but there is a comfortable annual tax allowance for that too.)

So, I'm back to looking for good dividend shares on the London Stock Exchange. I've done a fairly cursory review of the FTSE 350 top yielders and came up with three possibilities - all of which I have owned before, so I didn't need to do as much research as usual.

The three are:

• Royal Dutch Shell (RDSA)
• The Berkeley Group Holding (BKG)
• Carillion (CLLN)

All three share the characteristics of having:

• a high dividend yield (all above 7%, going forward)
• reasonably secure dividends (taking into account the Earnings Per Share and debt)
• an attractive business model for the future

Shell

Shell is pretty obviously a bet on the future oil price. It seems to me, in the medium to long term, that oil for transport is always going to be in demand and supply is always going to be finite.

And as it happens, the Saudis decided to restrict supplies the very next day - so the price jumped 5%!

I have held Shell before (and I never remember which one I should buy - the 'A' or 'B') but I can't find my 'sell' details right now.

Berkeley

House building is in the news. My recent purchase of Galliford Try (also involved in housing) has been a good choice.

I sold BKG in June 2015 at a nice profit when the price spiked (to £34!), which proved to be a good move.

Carillion

Carillion builds infrastructure (especially rail infrastructure), which we need more of - and which I think more will be built.

I sold CLLN back in March 2014, taking a nice profit (at £3.87) but being worried about its future performance. It looks like the management has improved since then. We'll see.


So - although I didn't actually check at the time (!) - it looks like I bought back the shares I previously owned at a lower price and a higher yield. Result!



[Purchase prices: RDSA £18.14; BKG £25.68; CLLN £2.57]

 

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.