LONDON -- Ace dividend investor Neil Woodford revealed a trio of share tips this morning after reviewing the performance of one of his portfolios.
The high-yield expert, who delivered gains of 300%-plus during the 15 years to 2011 and currently manages some 20 billion pounds on behalf of retail and institutional investors, provided the three ideas within today's half-year results for Edinburgh Investment Trust
Woodford said today, "News that the Australian Government had been successful in defending a challenge from the tobacco industry against the introduction of plain packaging had largely been expected, but appeared to act as a catalyst for profit taking in a sector which has performed very strongly over the past few years."
Woodford has been a longtime fan of British American Tobacco
Importantly, Woodford said he did not believe tobacco shares were "valued appropriately" at present. BAT, for instance, offers a potential income of 4.2% at 32 pounds a share, with the dividend forecast to advance a further 10% during 2013.
At the last count, BAT represented 7% of Woodford's Edinburgh trust portfolio.
Woodford had a few words to say about BAE Systems
Anyone buying BAE shares today at about 300 pence could be paying just seven times possible 2012 earnings and be in line for a 6%-plus income. City brokers reckon the dividend could be raised a fraction during 2013, as well.
Finally, Woodford confirmed today that his Edinburgh trust "took advantage of a placing of shares" to increase its investment in Capita
He said Capita had issued the additional share capital to allow the company to make further bolt-on acquisitions, and at the time the company said, "The current acquisitions environment continues to offer a rare opportunity to broaden the business."
Capita is perhaps not a traditional FTSE 100 income share, with a possible yield at a market-average 3.4% available at the 685 pence Woodford paid in the placing. However, the outsourcer has a tremendous record of dividend growth: Its payout has expanded at a 19% average compound rate between 2006 and 2011. So perhaps Woodford is hoping a faster-growing payment can complement some of the other higher but slower-growing yields in his portfolio.
Capita currently represents nearly 4% of Woodford's Edinburgh trust.
Other Woodford favorites
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