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LONDON -- It's time to make another purchase for our beginners' portfolio. So far we've stuck to blue-chip, dividend-paying FTSE 100 shares. I really think the foundations of a solid long-term portfolio should be forged from a selection from the U.K.'s index of biggest companies -- and we'll certainly add another couple before we're done.
But for today I'm turning to something a bit different, going for a company in a cyclical sector whose fortunes have taken a hit over the past couple of years. Yes, we're buying a homebuilder -- Persimmon (LSE: PSN.L), to be precise, listed on the FTSE 250.
Purchase details
We snagged 79 shares at a price of 617.9 pence for a consideration of 488.11 pounds. Add the 10 pound flat-rate commission charged by TMF ShareDealing plus 2.44 pound stamp duty, and we have a total outlay of 500.55 pounds.
Why a homebuilder, and why Persimmon? Well, the sector finally looks like it's turning, and I was really quite impressed by Persimmon's trading update released yesterday -- even though a recent report suggests that construction fell last month.
I wouldn't recommend trying to time sectors as a general strategy, but when one looks generally undervalued, it makes sense to buy it when it's down. There are other depressed sectors. too, and Motley Fool analysts have identified three that they think are good value -- their "Top Sectors for 2012" report is still available for free.
Persimmon's figures
In the first six months of the year, Persimmon completed 4,712 new homes (up from 4,439 in the first half of 2011), which is a 6% increase. Also, the average selling price of 171,400 pounds was 7% higher, leading to a 13% increase in turnover to approximately 805 million pounds.
On current forecasts, December 2012 should bring in a total dividend for the year of only around 1.5%, but I think we can realistically hope for a lot more than that next year. Like all our other purchases, this one is for the long term.
Our portfolio is now looking like this:
|
Company |
Share Price (pence) |
Total Share Cost (pounds) |
Charges (pounds) |
Total Cost (pounds) |
|---|---|---|---|---|
|
Vodafone |
168.5 |
487.07 |
12.44 |
499.51 |
|
Tesco (LSE: TSCO.L) |
305.5 |
485.80 |
12.43 |
498.23 |
|
GlaxoSmithKline (LSE: GSK.L) |
1,440.5 |
489.77 |
12.45 |
502.22 |
|
Persimmon |
617.9 |
488.11 |
12.44 |
500.55 |
|
Total |
|
1,950.75 |
49.76 |
2,000.51 |
What news?
There hasn't been a lot of news about our shares in the past few weeks, but we did have one big story: the $3 billion fine handed out to GlaxoSmithKline as a result of investigations into the mis-selling of some of its drugs on the U.S. market. It was a very sorry affair, but it didn't affect the share price, because it had been known about since November last year and was widely expected.
We did get some news from Tesco yesterday, with the announcement that Jill Easterbrook is to move on from leading the firm's clothing business -- a job she was given only last September in an attempt to liven up sales. The shares did fall a few pence, but they're up a little since we bought them, and today they'd fetch 315 pence apiece -- not that that is really of any importance at this stage.
Next time
Next time, will it be back to blue chips, or perhaps something smaller? I really don't know yet.
He avoided techs in the dot-com bubble and banks in the credit boom. But just where is dividend expert Neil Woodford investing today? All is revealed in this free Motley Fool report: " 8 Shares Held By Britain's Super Investor ."
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