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The Beginners’ Portfolio is a virtual portfolio, with all costs, spreads and dividends accounted for. Transactions are for educational purposes only and do not constitute advice to buy or sell.
We’ve had some important news from some of our Beginners’ Portfolio shares, so it’s time for an update:
BP
BP (LSE: BP) released annual results on 5 Feb, bringing to an end a pretty tough year. Underlying replacement cost profit came in at $17.6 billion, down on 2011’s $21.7 billion, while operating cash flow dropped to $20.4 billion from $22.2 billion. But net debt fell, from $31.5 billion to $27.5 billion, putting the firm’s gearing, at 18%, near the top end of its target range of 10-20%. There will be a quarterly dividend of 9 cents per share, payable in March. The price has fallen a little to 447p.
Chief executive Bob Dudley said “We have moved past many milestones in 2012, repositioning BP through divestments and bringing on new projects. This lays a solid foundation for growth into the long term“. And I’m happy with that — with the shares still on a forward P/E of only 8 and with a dividend yield of 5% expected for 2013, BP is still a firm Buy for me.
GlaxoSmithKline
Results from GlaxoSmithKline (LSE: GSK) followed on 6 Feb, and they were pretty much in line with expectations. Overall sales were flat, with reported earnings per share down a little. But it’s the long-term that I’m interested in, which I really think is the only way to approach a company like this.
During the year, GlaxoSmithKline filed six new drugs, with 14 sets of Phase III data expected this year and next. And the firm has reiterated its strategy of returning cash to shareholders, after spending £2.5 billion on share buybacks, and lifting its full-year dividend by 5.7% to 74p per share for a yield of 5% on the current share price of 1,473p. Long term Buy and Hold, that’s what this is.
Vodafone
We had a third-quarter update from Vodafone Group (LSE: VOD) on 7 Feb. European troubles weighed heavily upon service revenue, which declined by 2.6% overall, as expected — UK service revenue was down 5%. But that was offset by an 18% rise in Turkey and 9% in India. Data revenues were up 8.7%, supported by Vodafone’s stake in Verizon Wireless.
Vodafone confirmed its full-year guidance, which puts the shares on a forward P/E of 11 based on the current share price of 167p. And perhaps more importantly, we have a dividend yield of a very nice 6.2% forecast, which should be safe.
There’s more news today, as Vodafone announced a strategic five-year partnership with BAE Systems, itself a member of the Beginners’ portfolio, and there has also been recent speculation that Vodafone might launch a bid for German cable operator Kabel Deutschland.
Neil Woodford, the highly successful manager of the Invesco Perpetual High Income fund, might have sold his Vodafone shares. But I’m Holding.
Blinkx
We had another share price surge from Blinkx (LSE: BLNX) after the video technologist revealed, on 11 Feb, that full-year sales could be ahead of target. After a “strong” third quarter, the firm is now expecting sales for the 12 months to March to be in the range of $180 million to $185 million.
The Blinkx share price has been more erratic than I think the company’s fundamental performance deserves, but we have been through scary economic times when many people shied away from risk. We were fortunate to add Blinkx shares to the portfolio at 37p, near their 12-month low, especially as the price is now standing at 86p.
The portfolio
We shouldn’t dwell too much on portfolio performance at this early stage, but so far we’re up around 19% since inception — though without Blinkx, that would drop to a gain of about 8%.