On Wednesday 29th October 2014, I bought 119 shares in FTSE 100 Bank Standard Chartered. The share price at the time of purchase was 991.95p. The total cost with charges included was £1,198.27.
SC's dividend average over the last 5 years was 3.18%. Their dividend for this year is currently priced at 5.51% at the time of writing. Their dividend has got progressively bigger over recent years as a result of the share price decreasing.
The dividend payment has increased every year for 5 years. The dividend dropped in 2008, but prior to that it had increased every year from 1996. The dividend growth rate averaged over the last 5 years is 5.66%.
Their average dividend cover is 2.5 over the last 5 years, and for 2014, the dividends were covered by 1.96.
The companies revenue increased every year from 2004 to 2012. It took a slight drop in 2013, and is currently 3% down for 2014. Companies won't increase revenue every year, but I want to see a very high percentage of progressive increases. The recent drop in revenue has contributed to the share price reduction.
The share price is the lowest it's been since May 2009. Following 2009, the share price rose to it's peak of 1940p in November 2010, and just 12 months ago, it was 1519p per share. It has declined 37% in one year, and I believe it now offers a great opportunity. The company are paying a dividend in excess of 5%, it has shown consistency in paying increasing dividends, and there is now a possibility to make capital gains from an increase in share price.
I've been following them for a while now, and my benchmark for buying was under 999p. Once the price went under the mark this week, I went for it. It looks like I jumped the gun on the purchase. The day after I bought shares in the company, US prosecutors re-opened their investigations into the company withholding information into the possible violation of the sanctions regime on Iran and they dropped another 5% percent. Their week in total resulted in a 16% drop! I bought in between that drop.
On a more positive note, the non-executive Director Byron Grote gave a show of support by purchasing 10,000 shares at 952.30p (£95,230). Whenever a Director/Non-executive Director buys shares in their company it's a sign that they back their company financially. Conversely, if they sell a large amount, it could be quite the opposite.
SC operate largely outside of the western world, with less than 15% of their revenues coming from UK, Americas and Europe. I want to diversify my portfolio in sector and geography. I don't want to hold a portfolio that just operates in the UK, I would like most of it to come from the UK, but not all. I want to spread to location of where my companies money is coming from to prevent the impact of something like a UK recession. The FTSE 100 has a large amount of money coming from outside of the UK, so why not benefit from that additional exposure.
I have a smaller amount of shares in HSBC, and an even smaller amount in Lloyds. I'm happy with my current holdings in the Banking sector and I wouldn't write off an increase in my position in HSBC/Lloyds if an opportunity arises. I don't think I'm going to be buying more companies in this sector for the time being.
What do you think of Standard Chartered as an investment right now? Have you invested in them? Would you?
Labels: Stock Purchase