Unlike my recent purchases of Rio Tinto and Petrofac, The average yield over the last 5 years has been well above the target I look for of over 3.5%, with a stonking 7.86%. Their yield is currently at 5.15%. The yield has been consistently high for years. I have a breif example to demonstrate it's ROI.
You could buy Chesnara in January 2009 for 115p per share. If you had kept your investment until today (6 years), you would have received 90.85p in dividends per share, which would represent 79% of your initial investment in income alone. Not to mention tripling your money in capital growth. Now that's a nice ROI!
The companies P/E Ratio is currently at 7.96. It's worth noting that the P/E ratio was 6.80 at the end of 2012, and 7.50 at the end of 2013. I usually look for companies with a P/E ratio below 20.
The dividend payment has increased every year it's been on the stock market, which dates back to 2004. Over the last 5 years the average dividend growth rate was 2.83%. The most recent increase was 3.05%. This growth rate has been fairly consistent from when they initiated over 11 years ago. It's a little lower than what I normally target (6%).
Their average dividend cover has been a very consistent 1.99 over the last 5 years, and for the previous financial year, the dividends were covered by 2.4.
I've received some of my best returns from Non-life Insurance sectors last year. I've wanted to buy shares in a Life Insurance company to diversify my portfolio further. When I was comparing the companies within this sector, Chesnara's value and high dividend payment stood out to me. I'm not expecting substantial capital growth, but they've shown that since 2004, they've been able to grow at a steady rate whilst returning high dividends which rise every year.
£30,000 Investment Pot
I'm pleased to say that now I've invested in Chesnara, my NISA and Taxable account have surpassed the £30,000 marker for the first time. £20,000 to go this year now. Gulp!
The recent boost in capital has been from a Regular Saver payout I had with First Direct. I saved £300 a month for 12 months, and they paid 6% (before tax), as long as I didn't draw any money out. Unlike most consumers, I chose to invest the lot back into shares once I received the payout. The payout was just short of £3,700. I had some additional money (£800) to invest with from my January wages too. As I'm still developing my portfolio, I wanted to diversify it further and buy shares in a number of companies. I decided on 4 purchases. The downside to this decision has been absorbing the broker fees, but I was more comfortable with having 4 companies to spread the risk out. The last 2 purchases (Petrofac and Chesnara) have been in my iWeb taxable account and the broker fees are comparatively lower at £5 per deal rather than £11.95, so I was more comfortable in investing with less than £1,000 each.
What do you think of Chesnara? Are you a shareholder? What companies would you have bought in my situation?