After making the decision to fill up my remaining allocation of my shares ISA with some surplus money I had in my cash ISA (£4,745), see Filling up ISA - Use it or lose it, I now had some share shopping to do!
I'm still in the early stages of Dividend growth investment, and as you can see from my portfolio, I haven't invested in a lot of companies at present. I was planning on spreading out the money I had into 4 companies (£1,186 per company including fees). This would expand the number of companies I owned shares in, and would spread the risk of my investments. My plan was to buy shares in some stable companies, with positive Dividend growth (at least 6%), sufficient dividend cover (at least 1.5), and ideally at a price that is viewed as undervalued.
My final purchase for March (and the current financial year) is Pearson PLC.
I bought 117 shares at a price of 997.82p per share, which came to £1185.24. It paid out a conservative 3.6% dividend for 2013, and it has had a dividend cover of 1.46. For the 4 years previous to 2013 it had between 1.8 and 2.06. It's averaged a dividend payout of 3.74% over the last 5 years.
As a dividend growth investor, I was pleased to see a solid 7.2% growth in it's dividend for the last 5 years. I'm currently looking for shares that show a consistent growth of around 6%.
Pearson is 27% lower than it's 52 week high share price. I believe there's plenty of value to have here.
This company has ticked all the major boxes for me to make a purchase. It's pays dividends at a steady rate (over 3.5%) it's shown consistent dividend growth over 5 years (7.2%), it has a dividend around 1.5 for 2013 and comfortably over for the previous 4 years, and in my opinion is currently slightly undervalued.
Thank you for reading!
Labels: Stock Purchase