Stock Purchase: Amlin

Image result for amlin

It's a new financial year, and with it we have a new allocation to top up our ISA's. I mentioned on previous posts that I was going to open an ISA with iWeb. I've been happy with my service with them so far in my taxable account, and their trading fee is one of the lowest around (£5 + Stamp duty). 

On Thursday 9th April 2015, I bought 250 shares in the FTSE 250 non-life insurance company AmlinThe share price at the time of purchase was 514.67p per share. The total cost with charges included was £1,298.11

The average yield over the last 5 years is a stonking 6.1%. Their payout this year is currently at 5.53% without taking into consideration their special dividend, which is 80% of the value of the final dividend payment itself. The special dividend addition will produce a yield in the high single digits this year. 

As I mentioned on the Forced Stock Sale post, I'll be loosing a non-life insurance company from my portfolio. My experience to date has been excellent with this sector, and I was sorry to see the back of Catlin Group. 

Out with the old 'lin' and in with the new

When I purchased Catlin back in August, I was torn between them and Amlin. On that occasion I went for Catlin, and luckily for me it paid off handsomely. 

My last few purchases have been for companies that are near their 52 week low that represent good value to me. Amlin were on the opposite end of the spectrum, and were nearing their all time high. Yet the companies P/E Ratio is currently at 9.97. At the end of 2014 their P/E was at 10.10 and in 2013 it was 7.60. Amlin provides a lot of bang for it's buck!

The dividend payment was held in 2010 and 2011 but prior to that it's increased it's dividend every year since 2002. Over the last 5 years the average dividend growth rate was 6.2%. The most recent increase was 3.85% (not including the special dividend). 

Their average dividend cover has been less convincing with a 5 year average of 1.36. This was largely down to it having -1.36 dividend cover in 2011 (The year they held the dividend payment). For the most recent financial year, the dividends were covered by 1.76

I'm not expecting to earn a lot from capital growth with Amlin, as their share price has only risen 20% in 5 years, but I hope to benefit from their substantial dividend income for some time to come. 

What do you think of Amlin? Do you agree with the Non-life insurance replacement? Or would you have invested in another company that ends in 'lin'?