Why I Love Halfords Group

LONDON -- I guess it's debatable whether a year is a long time in the world of long-term investments. But for me, it certainly is. Simply because within the next couple of weeks, I celebrate the first anniversary of my first buy-to-hold stock. And I'm proud to say that that stock is Halfords  (LSE: HFD  ) .

According to some, this was a slightly odd choice for a first buy. It had had a topsy-turvy 2011, it was a retail stock and there were rumors of a potential dividend cut if sales continued to suffer. So why did I buy? Well, for two reasons, really, which intertwined quite nicely.

1. Buy what you know. As a self-confessed petrol head when I was (much) younger, I was a regular customer at my local Halfords, spending my hard-earned cash on everything from car stereos to wiper blades. And why did I choose to shop at Halfords? Well...

2. Halfords, in my opinion, is still the only recognised high-street brand that focuses on motoring and cycling products/accessories. For me, this gave it an edge on other retail stocks such as Next or Primark (owned by Associated British Foods), where there is a number of competitors competing for the same market share.

So, how has the year been? The share price has had some pretty dramatic fluctuations, dropping to 25% below what I paid for it, and then rising to a 15% gain around the time of the appointment of the new CEO, Matt Davies. And the recent interim management statement seemed relatively positive, too. Retail revenue was up a modest 0.1% but, more excitingly, revenue from Halfords' newly acquired Autocentres business was up over 12%. And, very importantly, shareholders received a solid dividend of 14 pence per share.

And for the future? Well, I expect more transition, but I remain bullish. There is clearly going to be a change in brand direction after the departure of the marketing director and advertising agency, which for me can only be a positive move in helping to find extra revenue. After the success of Sir Chris Hoy and co. at the Olympic Games, I was hoping for the inspired British public to pump their cash into cycle sales, but this seemingly didn't happen. In fact, it seems cycle sales had actually dropped by nearly 2% this quarter.

If you are looking for good dividend-paying stocks like Halfords to add to your portfolio, why not follow one of the U.K.'s most successful investors ever? Just click here for your free report and the FTSE shares that Neil Woodford is backing now.

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8/21/2014 11:35 AM
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