Underperfomer pays dividends

In my last blog at the end of June, I intimated that I am currently scouring the market to identify potential investments. Whilst I have added a number of companies to my watch list, I have yet to take the plunge and add to my current portfolio. Patience is the key.

Meanwhile I thought I’d revisit a couple of companies that I have mentioned in the past.

Firstly Vodafone. Vodafone released a trading statement today which basically stated that trading was in line with market expectations. Of particular interest is that free cash flow is healthy and dividend targets on track. Given that the dividend is currently over 5.5%, it looks an attractive share for income seekers. It’s interesting to note that since Vodafone introduced dividend payments they have increased the payment every year except one.

I have also noted that press speculation in recent months has talked about the possibility of a Special Dividend.

As I mentioned in a previous blog, Vodafone has been an underperformer in terms of capital growth over recent years. Perhaps it will become an outperformer in the next few years?

I tend not to invest in large companies (particularly FTSE-100 companies) simply because they have less potential to multi-bag over short time periods (although the recent recession temporarily threw up one or two opportunities. I seem to remember Barclays Bank was one) and armies of people are watching and analyzing these stocks. However, if I was looking for a relatively safe haven that would provide a nice income stream then Vodafone would certainly merit further research.

Another company that released a trading statement today was the Mission Marketing Group. Again trading is in line with expectations and given that broker forecasts come in at around 4p for 2011 and 5p for 2012, it does appear that the shares are undervalued. If they do hit targets for the year then I can easily imagine the shares doubling or more from here.

 As mentioned in a previous blog, I did notice these at around 10p-11p when they were hovering around my own personal ‘margin of safety’ criteria. Since I am essentially a long term investor, I probably won’t buy shares in TMMG because it’s not the type of business that particularly appeals to me. However, if I had allocated some trading money then it looks good for a short/medium term bet.

Finally, Surgical Innovations released a RNS regarding a 5-year $8m agreement with SI US. This is one that I did own and sold for a five fold profit. As I stated at the time, the future does look bright for this company and I am sure there is further upside in the share price in the short, medium and long term and good luck to shareholders. However, the decision to sell my holding here was the right one for me. Sometimes the right time to sell is a very personal decision which can depend on a whole variety of reasons.