On Wednesday 22nd October 2014, I bought 690 shares in FTSE 100 supermarket Morrisons (Wm) PLC. The share price at the time of purchase was 157.27p. The total cost with charges included was £1,102.54.
Morrisons' dividend average over the last 5 years was 4.04%. Their dividend for this year is currently prices at 8.52% at the time of writing.
The dividend payment has increased every year for 11 years, aside from one year where it matched the dividend payment from the previous year (2005/06). The dividend growth rate averaged over the last 5 years is 18.1%. The dividend payment increased over 10% for the most recent 3 years.
Their average dividend cover is 2.31 over the last 5 years, and for 2014, the dividends were covered by 1.94.
The companies revenue has increased almost every year since 2003. Companies won't increase revenue every year, but I want to see a very high percentage of progressive increases.
Morrisons' adjusted earnings per share have increased every year out of the last five apart from 2014, where they're in line with their 2012 performance. This demonstrates more consistency from this company, showing that it has a solid history of increasing revenue and profits.
There's uncertainty around whether Morrisons is a good investment at the moment. It's share price is almost half of what it was 12 months ago, it's under intense pressure to compete against the other Big Supermarkets - Tesco, Asda, and Sainsbury's, and they're all trying to cope with the increasing market share Lidl and Aldi are taking. As a long term Income investor, who's looking for value, I see an opportunity here. I'm investing for the long haul, and although the share price might very well decrease further, it has a large opportunity to increase back to what it was 1-3 years ago (328p at it's peak), and I'm willing to wait for that to happen. Morrisons are now at a 10 year low in their share price. Their revenues and profits have consistently increased almost every year within this period up until 2014. This years performance hasn't warranted the near 50% drop in share price that we've seen in my opinion, as their revenue has only dropped to it's 2012 level. I think there's a possibility to make a sound return on investment from capital gains, as well as benefiting from their consistent and stable dividend payments.
This is my second and and likely to be my final investment into the supermarket sector until I sell one of my holdings (Tesco and Morrisons). I want to make sure I have a well diversified portfolio and I want to limit the amount of companies I have in each sector to 2 or 3 maximum.
Morrisons are my supermarket of choice for shopping, as they are the largest retailer in our town. There's a small Sainsburys, but the prices are generally higher there for seemingly the same items, and there's also less range. It's nice to invest in a company where I regularly use their service. Every penny I spend there is contributing towards my future dividend payments.
What do you think of Morrisons as an investment right now? Have you invested in them? Would you?
Labels: Stock Purchase