Yesterday’s newsletter explained that Highcroft’s (LSE:HCFT) net current asset value is 25% above its current market price. This was one factor prompting me to buy its shares at £8.75. Today I look at another enticing feature of the company: it’s solid earnings and dividends flow to shareholders over the past decade. This history and the firm’s quality property assets encourages me to think that there is a reasonably high probability that good returns will be made by shareholders in the future.
Key numbers on earnings, dividends and net assets .....Dividends per share over the ten years total £4.15 a large payout on a share trading at £8.75. And yet in the same period the directors have grown net rental income by an average of 12.9% per year (from £1.83m to £5.46m) and net asset value by 4.9% per year (from £7.20 to £11.04). So, it seems that a good dividend yield (currently 6.5%) can be accompanied by a growth in regular profits from income producing properties and growth in the asset base. The earnings per share measure excluding gains/losses in property values rose from 40.1p to 67.7p, an average percentage gain of 6%, over the decade. If we assume that future annual dividends do not rise from the 57p received last year then investors benefit from a 6.5% regular dividend. If ………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
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Glen ArnoldI'm a full-time investor running my portfolio. I invest other people's money into the same shares I hold under the Managed Portfolio Service at Henry Spain. Each of my client's individual accounts is invested in roughly the same proportions as my "Model Portfolio" for which we charge 1.2% + VAT per year. If you would like to join us contact Jackie.Tran@henryspain.co.uk investing is about making the right decisions, not many decisions.
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