This article is the latest in a series that aims to help novice investors with the stock market. To enjoy past articles in the series, please visit our full archive.
The Beginners’ Portfolio is a virtual portfolio, which is run as if based on real money with all costs, spreads and dividends accounted for.
With the March quarter behind us and all-important results now out, we have a new crop of dividends to add to our cash pile — in fact, in the past couple of months we’ve qualified for a total of £64.42 in new dividends.
Food and drugs
Tesco (LSE: TSCO), a bit of a disappointment in share-price terms, has still been coughing up the cash, and we reached ex-dividend date for a final payment of 10.13p per share on 30 April, giving us £16.11. The 14.76p per share total for the year yields 4.8% on the current share price of 306p.
That’s a pretty good yield for a supermarket, and it brings the total we’ve had in Tesco dividends to £46.94. Although the share price is pretty much unchanged since we bought, the dividends give us a cash return of 9.4% on our total investment over two years — and I’m happy to keep taking that while we await the hoped-for return to earnings growth.
We’ve done a little better with GlaxoSmithKline (LSE: GSK), with an 8% gain on the share price (after all costs and spreads) to today’s 1,620p since we bought in June 2012. On its own that’s not brilliant, but we have an extra 10.4% to add in the form of dividends to the tune of £52.36. That includes the latest interim of 19p per share (ex-div on 14 May) which added £6.46 to the pot.
Oil and insurance
BP (LSE: BP) has certainly had a tough time as it’s struggled with the aftermath of the oil-spill disaster, but we’re still up 11.4% on price appreciation at 504p — and the firm has kept its dividends going. The latest was an interim payment of 5.86p per share, netting us another £6.56. That takes our total dividends from BP to £51.07 for an additional 10.5%.
And then we come to Aviva (LSE: AV). With its shares soaring to 513p, we’re already on a gain of 57% in just 14 months! On top of that, a final dividend of 9.4p per share on 2 April has taken our cash from the insurer to £35.04 for an additional return of 7.4%. The total of 15p per share for the year represents a yield of 2.9% on the current price — not great, but it’s on the way back up after being slashed when previous levels proved unsustainable.
Computers and planes
A company famous for taking a very long time before paying out any dividends is Apple (NASDAQ: AAPL.US), and our two shares in the company earned us another £3.90 from the latest quarterly dividend on 12 May. This was at the new rate of $3.29 per quarter, and contributes to total cash of £22.70. Since buying, we’re 15.6% up at the latest share price of $603, and those dividends add 3.7%.
Engineering is not the most popular sector today, but we’ve done just fine with BAE Systems. We became eligible for a final dividend of 12.1p per share on 16 April, giving us £17.67 for a total cash return to date of £57.82. And the share price itself hasn’t done badly either — at 410p we’re on a return (after all costs) of 18.4%.
The value of dividends
Once again, I’m reminded what a good idea it is to make dividend payments a bedrock of your portfolio. If you can get a dependable 4-6% per year, you’ll beat inflation and savings accounts from dividends alone — and any share price gains can be seen as a bonus!
In fact, our portfolio is now 42% up since inception, with 8.3% of that coming from dividends.