New research shows how the interaction between Atlantic salmon and the ISA virus leads to the development and spreading of the influenza-like disease ISA in fish. The new findings may be of interest to research on influenza generally. …read more
Source: FULL ARTICLE at Phys.org
By Business Wirevia The Motley Fool
Filed under: Investing
Industrial Services of America, Inc. Announces Fourth Quarter and 2012 Results
LOUISVILLE, Ky.–(BUSINESS WIRE)– Industrial Services of America, Inc. (NAS: IDSA) , a company that buys, processes and markets ferrous and non-ferrous metals and other recyclable commodities for domestic users and export markets and offers programs and equipment to help businesses manage waste, today announced financial results for the year and fourth quarter ended December 31, 2012.
Revenue for 2012 was $194.2 million compared with $277.2 million in 2011. Net loss for 2012 was $(6.6) million, or $(0.95) per diluted share, which included a non-cash impairment charge to goodwill of $3.9 million, net of income tax, compared with net loss of $(3.9) million, or $(0.56) per diluted share for 2011. Excluding the goodwill impairment, the net loss for 2012 would have been $(2.7) million, net of income tax, or $(0.39) per diluted share.
Revenue for the fourth quarter of 2012 was $37.0 million compared with $50.0 million in the fourth quarter of 2011. Net loss for the fourth quarter of 2012 was $(4.5) million, or $(0.65) on a diluted share basis, which included a non-cash impairment charge to goodwill of $3.9 million, net of income tax, compared with a net loss of $(1.8) million, or $(0.26) per diluted share, for the comparable period in 2011.
The company continues to manage its way through a challenging market environment. During 2012, ISA reduced overhead costs by approximately $3,400,000 in an effort to adjust capacity to match the reduction in scrap processing volumes in the eastern U.S. The market remains intensely competitive for scrap materials.
Key Highlights 2012
ISA was recently recognized by the Institute of Scrap Recycling Industries (“ISRI”), the scrap industry’s leading trade group, as a leader in the safe and efficient operation of its …read more
Source: FULL ARTICLE at DailyFinance
By Business Wirevia The Motley Fool
Filed under: Investing
Industrial Services of America, Inc. Announces Exclusive Management Contract with Blue Equity, LLC
LOUISVILLE, Ky.–(BUSINESS WIRE)– Industrial Services of America, Inc. (NAS: IDSA) , a company that buys, processes and markets ferrous and non-ferrous metals and other recyclable commodities for domestic users and export markets, and offers programs and equipment to help businesses manage waste, today announced that it has entered into a management agreement with Louisville-based Blue Equity, LLC (“Blue Equity“).
For a 12 month term beginning April 1, 2013, Blue Equity will provide management services to Industrial Services of America, Inc. (“ISA“), including working with ISA‘s existing management team to review operations and identify opportunities for growth and profitability. ISA‘s Board of Directors considers Blue Equity‘s role as a key to ISA‘s future plans to develop and improve upon its core business operations, enhance the current platform, secure strategic alliances and to diversify corporate holdings in domestic and international markets.
Blue Equity‘s Chairman and Managing Director, Jonathan Blue, has extensive experience in the scrap recycling business. The Blue family owned and operated Louisville Scrap Material Company, which became a worldwide leader in the industry. Blue represented the fourth generation of his family to operate, grow and transform the business. He expanded the business into international railroad and other markets to become one of the largest suppliers to railroads and rail-related enterprises. In 1998, the company was sold to the largest worldwide operator in the sector, Progress Rail Services Corporation, now owned by Caterpillar (CAT-NYSE). Other Blue Equity executives have also worked in the scrap and recycling-related businesses.
“Blue Equity‘s business philosophies and practices have successfully transcended a diverse range of industries and now it seems we have come full circle, returning with this transaction to the scrap and recycling businesses. We look forward to working together with our partners at ISA to realize our shared vision for the future,” said Jonathan S. Blue, Chairman and Managing Director of Blue Equity, LLC.
Harry Kletter, ISA‘s Chief Executive Officer and Founder, commented, “I have known Jonathan Blue his entire life and have watched him develop into one of the region’s most successful businessmen. He and his team have an impressive track record which I am confident will benefit our company and our shareholders. I am thrilled that he and his team have agreed to take ISA into a new era of growth.”
“I am pleased to be able to build upon the 60 years of hard work and vision Harry Kletter has contributed to ISA and …read more
Source: FULL ARTICLE at DailyFinance
By Malcolm Wheatley, The Motley Fool
Filed under: Investing
LONDON — I’ve long been a fan of Individual Savings Accounts (ISAs) as tax-efficient wrappers for equity holdings. Quite simply, if you’re going to buy and sell shares — especially as a long-term investor — then it makes sense to do so inside an ISA.
There’s no further income tax to pay on dividends; no capital gains tax to pay at all; and total freedom from the burden of reporting both income and capital gains to the taxman. Want to know more? Start here.
And simply put, from both the capital gains and income perspectives, I reckon National Grid makes an ideal ISA share. Why? Let’s take a look.
Decent yield
Trading today on a forecast yield of 5.5%, an investor making full use of his or her £11,280 annual ISA allowance for 2012-2013 to buy National Grid could earn £620 in dividends next year — without having to pay a penny more in income tax. Which is especially useful if you’re a higher-rate taxpayer, of course.
Better still, National Grid is a cash cow with a long-term track record of throwing off juicy dividends — and juicy dividend growth — year after year. Which is why, of course, it’s long been a share that’s popular with income investors.
And just look at what that growth has delivered. Back in 2008 — the start of the worst recession in 60 years, you’ll remember — National Grid investors were rewarded with an annual dividend of 29.67 pence per share. For 2012, the dividend was 39.28 pence per share.
Over the period 2008-2012, that’s an annual growth rate of 7.3% — comfortably ahead of the rate of inflation over the period, and a decent return from a dull, boring utility.
And as a utility, what’s more, National Grid is also a strongly defensive share. Owning and operating networks that deliver electricity and gas across the U.K., the business also has millions of customers in the northeastern Unites States, with revenues split roughly 50-50 between the U.K. and the United States.
So investors can be reasonably assured that the revenues, earnings and dividend growth the share has delivered in the past, will continue into the future.
Capital upside
Now, the principal charm of safe and boring utilities is clearly for income investors, via the sector’s safe and predictable earnings.
But National Grid is a utility with a difference: here in the U.K., it leaves others to sell directly to consumers, restricting its own offerings to operating the networks through which gas and electricity flow. Which in terms of regulatory supervision, gives it a little more wiggle room, and scope for capital growth.
In the last week, for instance, National Grid‘s shares have hit a 52-week high, on the back of its announcement that it has agreed price controls with Ofgem for the next eight years, helping to pave the way for the company to decide on its future dividend policy.
In short, while the upside in National Grid‘s share price is never going to …read more
Source: FULL ARTICLE at DailyFinance
By Malcolm Wheatley, The Motley Fool
Filed under: Investing
LONDON — I’ve long been a fan of Individual Savings Accounts (ISAs) as tax-efficient wrappers for equity holdings. Quite simply, if you’re going to buy and sell shares — especially as a long-term investor — then it makes sense to do it inside an ISA.
There’s no further income tax to pay on dividends, no capital gains tax to pay at all, and total freedom from the burden of reporting both income and capital gains to the taxman. Want to know more? Start here.
And simply put, from both the capital gains and income perspectives, I reckon that British American Tobacco makes an ideal ISA share. Why? Let’s take a look.
Decent yield
Trading today on a forecast yield of 4.7%, an investor making full use of his or her 11,280 pound annual ISA allowance for 2012-2013 to buy British American Tobacco could earn 530 pounds in dividends next year — without having to pay a penny more in income tax. Which is especially useful if you’re a higher-rate taxpayer, of course.
Better still, British American Tobacco is a cash cow with a long-term track record of throwing off juicy dividends — and juicy dividend growth — year after year. Which is why, of course, it’s long been a share that’s popular with income investors.
What’s more, British American Tobacco is also a strongly defensive share, and a business whose customers — quite literally — are addicted to its products. So investors can be reasonably assured that the dividend growth that the share has delivered in the past can continue into the future.
And just look at what that growth has delivered. Back in 2008 — the start of the worst recession for 60 years, you’ll remember — British American Tobacco investors were rewarded with an annual dividend of 83.7 pence per share. For 2012, the company announced investors would receive 134.9 pence per share.
Over the 2008-2012 period , that’s an annual growth rate of 12.7% — not bad for a recession, and a business long since supposed to have gone ex-growth.
Capital upside
But if British American Tobacco‘s income performance is fairly compelling, its track record from a capital growth perspective is pretty decent, too. Over the last 10 years, the growth in British American Tobacco‘s share price has outstripped the FTSE 100 index by a factor of five.
Put another way, back in 2000 you could have picked up British American Tobacco shares for around 4 pounds. Today, they’re changing hands at over 34 pounds.
That’s right: This solid, unassuming cash cow turns out to have some pretty nifty legs. The result? Just the sort of capital gains that a savvy investor will want to shield from the taxman’s clutches.
Decent prospects
But will those gains continue? Has British American Tobacco‘s share price run out of steam? I don’t think so.
To be sure, tobacco continues to attract adverse headlines, smoking restrictions, and advertising restrictions. But people still continue to smoke …read more
Source: FULL ARTICLE at DailyFinance
By Harvey Jones, The Motley Fool
Filed under: Investing
LONDON — Crazy days! Interest rates have been stuck at all-time lows for more than four years, and the first rate hike could be another four years away. This has led to some crazy anomalies.
You can now get a five-year fixed-rate mortgage charging just 2.74%, up to 60% loan-to-value (LTV), or a 10-year deal at 3.99%, up to 75% LTV (subject to status, as they say).
At the same time, you can earn a yield of 5% and 6% by investing in solid FTSE 100 favorites, plus the prospect of capital growth if QE-fuelled markets keep rising.
I wouldn’t normally urge you to borrow to invest in shares, because gearing adds an extra layer of risk. But does it make sense today?
Borrow and buy
Do you expect your portfolio to deliver a total return of more than 4% a year over the next decade? I certainly do. If so, and if you’ve got enough spare equity in your home to access a best-buy home loan, then, maybe, just maybe, you should be in less of a hurry to pay down that mortgage.
If you’re tempted, I would suggest taking out a long-term fixed-rate loan, preferably for 10 years, so your plans aren’t scuppered by a sudden upward lurch in interest rates.
To add an extra layer of security, you could then invest into a fat FTSE high-yielder or three. Dividend income is taxable, so, if you’re bold enough to follow this controversial course, use your ISA allowance.
I’ll leave you to find out the cheapest way to borrow money, but here are three stocks you might consider investing in.
AstraZeneca
AstraZeneca currently yields a base-rate-busting 6.1%. Pharmaceutical stocks are supposed to be defensive, but it is some years since this one has appeared solid at the back. AstraZeneca scored an embarrassing own goal with its $15.6 billion acquisition of Medimmune in 2007, while sales and revenues have plunged lately, as lucrative drug patents expire, and the pipeline of new products remains blocked. New chief executive Pascal Soriot has just announced a major reorganization, axing 1,600 jobs, and investing in new research and development (R&D) centres in the U.S., U.K. and Sweden, in a bid to “put science at the heart of everything we do” and improve R&D productivity. The overhaul will last for three uncertain years.
These disappointments have knocked AstraZeneca’s valuation, which trades on a mere seven times earnings, roughly half the FTSE 100 average. Given its forecast earnings per share (EPS) growth of -19% in 2013, and -3% in 2014, that lowly valuation looks richly deserved. But it does give the share price plenty of scope to recover, if Soriot gets his strategy right. Despite its recent troubles, AstraZeneca is up 7% over the past 12 months, giving a total return of 13%. AstraZeneca is also the biggest single holding in dividend dangerman Neil Woodford‘s Invesco-Perpetual High Income fund, at 8.53%, and he tends to get these things right in the longer …read more
Source: FULL ARTICLE at DailyFinance
By Alan Oscroft, The Motley Fool
Filed under: Investing
LONDON — 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.
It’s taken a while, but I’ve finally decided on the last of the ten shares to take its exalted place in the Fool’s Beginners’ Portfolio. After deciding that an insurer could offer us good prospects while adding a bit of diversity, the choice was between RSA Insurance Group and Aviva , both of which have slashed their dividends recently and have seen their share prices falling.
The choice is Aviva.
We bought 151 shares at a price at 321.4 pence, which commission and stamp duty took to a total cost of 497.71 pounds.
Here’s what the final purchase tally looks like, with all ten portfolio places filled:
| Company | Buy Price | Share Cost | Charges | Total Cost |
|---|---|---|---|---|
| Vodafone | 168.5p | £487.07 | £12.44 | £499.51 |
| Tesco | 305.5p | £485.80 | £12.43 | £498.23 |
| GlaxoSmithKline | 1,440.5p | £489.77 | £12.45 | £502.22 |
| Persimmon | 617.9p | £488.11 | £12.44 | £500.55 |
| Blinkx | 36.94p | £487.24 | £12.44 | £499.68 |
| BP | 434.5p | £486.58 | £12.43 | £499.01 |
| Rio Tinto | 3,048.4p | £487.74 | £12.44 | £500.18 |
| BAE Systems | 332.3p | £485.16 | £12.43 | £497.59 |
| Apple | $458.40 | £588.48 | £17.50 | £605.98 |
| Aviva | 321.4p | £458.28 | £12.43 | £497.71 |
| Total | £4,944.23 | £129.43 | £5,100.66 |
We’ve invested 100 pounds more than our original target of 5,000 pounds simply because that’s what it took to get hold of two Apple shares. I could have reduced the investment in Aviva to compensate, but I really didn’t want to drop the final slice as low as 400 pounds.
Why Aviva?
Here are some of the valuation fundamentals of our two insurance candidates:
| Company | Price | Historic EPS | Historic Div, Yield |
Forecast EPS | Forecast Div. Yield |
Forward P/E |
|---|---|---|---|---|---|---|
| RSA | 116p | 9.5p | 5.8% | 12.5p | 6.3% | 9.3 |
| Aviva | 321p | -15.2p | 5.1% | 45.7p | 6.6% | 7.0 |
On these figures, both look cheap to me, but I think Aviva shareholders have been more shaken by the dividend cut and the shares have been oversold a little more fiercely. But really, I think I’d be happy to hold either of these companies (and I have owned RSA shares in the past, myself).
So the portfolio is now full, and I won’t be investing in any new companies unless I choose to sell one of the existing holdings. And I’ll only do that if I believe a share has become overvalued or there’s a significantly better place for the money. Knowing when to sell is my weakest point, so that will be a challenge for me.
Valuation update
I’ll do a valuation update in due course, but I think a quick mention of Vodafone is in order. As I wrote recently, I believe Vodafone is one of those great long-term investments that’s ideal for an ISA.
Though it’s still early days, Vodafone has already done well for the portfolio. Since I kicked off the series by buying the shares at 168.5 pence apiece in May 2012, we’re up 11.7% (excluding dividends) based on the current bid price of 188.3 pence.
Finally, my idea of the kind of shares that should make up the core of a beginner’s portfolio is the same as my choice for an ISA, or a retirement portfolio — or in fact, any portfolio. I’d start with good, strong companies that should stand the test of time and potentially reward you for decades.
Not surprisingly, the Fool’s top analysts think similarly, and they have just put together a special report detailing five blue-chip shares that I think would be ideal for anyone at the start of their investing …read more
Source: FULL ARTICLE at DailyFinance
By Tony Reading, The Motley Fool
Filed under: Investing
LONDON — If you’re looking to tuck some money away for a few years, then it can make sense to invest in growth stocks — companies whose earnings should rise faster than average.
It’s important to identify where the growth will come from. For example, a company could:
Does Barclays have any of these characteristics?
Turnaround
First, Barclays is a turnaround story. The strategy review from new boss Antony Jenkins was something of a damp squib; nothing like the scythe that John McFarlane took to Aviva. Mr Jenkins‘ intention seems to have been more to restore Barclays’ tattered reputation.
But the transformation story has much further to run. Sky News reported that Mr. Jenkins told investors he envisaged a bank with 100,000 employees rather than its current 140,000.
Out of the doldrums
Secondly, banking is in the doldrums. Partly that’s the poor state of the economy, and partly it’s because bankers loaded their balance sheets with dodgy assets. However, those issues should gradually improve.
Barclays currently trades at 0.6 times its book value. A well-run bank in a decent economy should be valued at double that multiple.
To boldly go
Thirdly, Mr Jenkins has identified where he is going to invest: geographically in the U.K., U.S., and Africa; segmentally in U.K. mortgages, Barclaycard, and wealth management. In the long term, those businesses, especially within Africa, should power Barclays’ growth.
These are three reasons why Barclays has great upside potential. But beware — with the massive overhang of debt in developed economies and the eurozone primed to blow up over the smallest spark, it could be a bumpy ride.
ISA time
Whether or not you fancy Barclays, it’s worth thinking about investing in an ISA before the deadline of 5 April. With shares sheltered within ISAs, you don’t pay any capital gains tax, and the dividends aren’t liable to additional income tax. You also don’t declare ISAs on your tax form, either, saving you paperwork. There’s more information about ISAs here.
For an opportunity with a lower-risk profile than Barclays, I recommend you read about this company. It has survived bigger changes in its industry than the banks have undergone, yet it hasn’t made a capital call on its shareholders in more than 70 years. It has increased or held its dividend every year since 1988, too.
Earnings per share have gone up by 44% since 2009, and there could be considerable value that isn’t reflected in the share price. That’s why it’s the Motley Fool‘s Top Growth Stock for 2013.
You can learn more by downloading this free report by clicking here.
The article Should I Buy Barclays for My ISA? originally appeared on Fool.com.
Tony owns shares in Unilever, Associated British …read more
Source: FULL ARTICLE at DailyFinance
By Harvey Jones, The Motley Fool
Filed under: Investing
LONDON — You have only a few weeks to use your ISA allowance before the April 5 deadline, so don’t fluff this great tax-saving opportunity. You can invest up to 11,280 pounds in the current tax year, and put the lot of it into stocks and shares. To find out more, click here.
But which stocks should you buy? How about AstraZeneca ?
The power of Zen
I’ve been a bit rude about AstraZeneca in the past, complaining that its share price has gone nowhere, slowly.
But this FTSE 100 pharmaceutical giant has some impressive admirers, notably income supremo Neil Woodford, so maybe I’m missing something. Should I buy AstraZeneca for my ISA?
This stock crushes cash
There is one big fat juicy reason to buy AstraZeneca. It currently gives you a stonking dividend yield of 6%, one of the best in the FTSE 100.
That 6% yield is twelve times the Bank of England base rate, and three times as much as any “best buy” cash ISA can deliver, which struggle to pay more than 2%.
Yes, shares are more volatile, but they should be more rewarding over the longer term. Over the past five turbulent years, AstraZeneca’s share price has grown 66%, with all those juicy dividends on top.
Show me the cash account that has done that, and I would pour my life savings into it. It doesn’t exist.
Astra’s weakness
Woodford may have put his faith in this pharma, but the market has been divided.
In January, new chief executive Pascal Soriot warned that 2013 revenues would fall by mid-to-high single digits as product patents expired and a blockage of new products in the pipeline.
Total sales fell 16% in the last three months of 2012, to $7.28 billion, and AstraZeneca’s share price fell 6% in response.
While rival GlaxoSmithKline has a flourishing consumer-health care operation, with familiar brands such as Sensodyne, Panadol, Aquafresh, Lucozade, and Nicorette, AstraZeneca is a pure play on pharmaceuticals and treatment development.
This lack of diversification is dangerous, especially in a time of austerity, when governments are desperately squeezing health budgets along with everything else.
To Russia with hope
Similar to many FTSE 100 companies, AstraZeneca is looking for a healthy injection of emerging-market growth, with revenue from countries such as China, Saudi Arabia and Russia growing 6% in the fourth quarter.
Management has also been working hard to restructure the business and make it more competitive. A full strategic update is due shortly, and if the market receives it favourably, that could give the share price a fillip.
Despite worries over its product pipeline, AstraZeneca still has 71 projects in the clinical phase of development, with another 13 either approved, launched or filed. It also has a joint collaboration with Amgen, the world’s largest biotechnology company, to sell five pipeline products.
Think income
AstraZeneca’s dividend yield may thrash cash, but naturally, the yield is riskier. The good news is that the share’s income is covered 2.3 times by earnings, so management has little need to tamper.
The group’s healthy operating margin of …read more
Source: FULL ARTICLE at DailyFinance
By Alan Oscroft, The Motley Fool
Filed under: Investing
LONDON — We’re reaching the end of the current ISA year, so which companies should you be looking at for a last minute top-up? I reckon the tax-efficient investment wrapper is best suited to decades-long investing in solid blue-chip shares.
One great approach is to transcend the short- and medium-term ups and downs of cyclical sectors, and tuck some cyclical shares away when they’re cheap. That means companies such as Rio Tinto , the FTSE 100 miner of iron, aluminum, copper and other metals and minerals.
All share-price appreciation in an ISA is tax-free and there is no additional tax to be paid on dividends. But don’t forget, this year’s allowance of £11,280 must be used up by April 5 — just click here for more ISA information.
Why buy now?
Every company that digs up metals and minerals tends to see profits go up and down in tune with the world’s economies — demand and prices are higher during economic booms, and lower during busts.
The recession in the West, coupled with a slowdown in Chinese demand, is really the only reason that mining shares have been stagnating over the past couple of years. In the long run, demand will almost certainly rise again and prices will surely recover. If we can buy in when the economic cycle is not riding high, and when major investors are keeping away because they’re focused more on the short term, we should hopefully power up our ISAs nicely.
Current valuation
Though things have been improving over the past few months, at 3,314 pence today, Rio Tinto‘s shares are down nearly 30% from their peak of 4,712 pence from 2011. Earnings per share fell by 38% for the year to December 2012, which is not great, but it is largely in line with the sector. And the full-year dividend for the year was actually raised by 15% to 167 cents per share (approximately 104 pence) — that’s a yield of 3.1% on the current share price.
Forecasts for the next two years are looking good, with City analysts expecting earnings to gain 17% for 2013, with a further 12% suggested for 2014. That puts the shares on a forward P/E for this year of only 8.5, which is a lot cheaper than the average FTSE 100 rating of just over 14 — and it drops to just 7.6 for 2014 estimates.
Nice dividends
The dividend is expected to rise by 11% this year, for a yield of 3.5% on today’s price, and by another 11% for 2014 to yield 3.9%. Of course, forecasts for two years ahead are always pretty tentative, but it’s still nice to see strong projections. It’s also good to see a big majority of analysts tipping Rio Tinto as a buy.
All told, what we have here is a company in the down phase of a cyclical industry, and one of the most diversified in its sector — it’s not dependent on the price …read more
Source: FULL ARTICLE at DailyFinance
By G. A. Chester, The Motley Fool
Filed under: Investing
LONDON — ISA season is upon us again! If you haven’t yet used this year’s £11,280 allowance for a stocks and shares ISA, you only have a short time left before the April 5 deadline.
Remember, you don’t pay any tax on share gains held within an ISA or any additional income tax on dividends — giving a significant boost to your investment returns. (For more information about ISAs, click here.)
Today, I’m going to tell you why I believe utility SSE is a bright choice for your stocks and shares ISA.
Name of the game
Scottish & Southern Energy has shortened its name to SSE since the last ISA season, but don’t let that worry you. The name of the game with the company is still dividends.
SSE describes its “key financial objective” as “the delivery of annual above-inflation increases in the dividend paid to shareholders.” This focus means SSE is now one of just five long-serving FTSE 100 companies to have delivered above-inflation dividend increases every year since 1998, the year the company was formed.
Why does SSE concentrate so resolutely on dividends? Among other reasons, “receiving and reinvesting dividends is the biggest source of an investor’s return over the long term.”
As I mentioned earlier, canny investors who shelter the shares in an ISA will pay neither additional income tax on the dividends, nor tax on the long-term capital gains those reinvested dividends are likely to produce.
Change at the top
At the start of this year, SSE‘s chief executive, Ian Marchant, decided that after leading the company for ten years the time had come to step down. It’s always a bit of a jittery time when a boss who’s been as successful as Marchant decides to move on.
However, I don’t believe the risks of succession in a regulated business are as great as in other industries. Furthermore, the new leader, Alistair Phillips-Davies, already knows SSE inside out: he’s the current deputy chief executive and has been with the company since 1997. Just for good measure, there’s further continuity in the shape of finance director Gregor Alexander, who’s been with the business even longer — since 1990.
Dividends and more dividends
I expect it to be business as usual at SSE — and that means dividends and more dividends.
The board has already indicated, in an interim management statement during January, that it expects to announce a full-year dividend of around 84 pence per share when the firm’s annual results are published during May. The forecast payout meets SSE‘s 2012-13 target of “at least 2% more than RPI inflation” and shareholders can look forward to more ahead-of-inflation increases in the years to come.
The 84 pence per share dividend for the current year gives an income of 5.8% at a share price of 1,450 pence — which looks pretty sparky to me with the expectation of further annual growth ahead of inflation in the future.
I think SSE is one of a number of great …read more
Source: FULL ARTICLE at DailyFinance
By Roland Head, The Motley Fool
Filed under: Investing
LONDON — Not many companies can currently provide you with a 5.5% dividend income from a payout that hasn’t been cut for more than thirty years.
One company that can, however, is Royal Dutch Shell , the world’s third-largest oil company. In 2012, Shell delivered net profits of $26.5 billion on sales of $467 billion — that’s more than the GDP of Finland and Austria.
Although there is no guarantee that the firm will maintain its impressive dividend record, Shell’s payout is probably one of the safest in the FTSE 100, with more than three decades of consistency behind it.
A tax-efficient income
There’s no denying that dividend income is the main reason for owning shares in Shell. The firm has provided an average dividend yield of 5.2% over the last five years, 60% higher than the current FTSE 100 average of 3.2%.
Shell pays a quarterly dividend and recently announced a 2% increase to its fourth-quarter payout for 2012, as well a planned 4.7% dividend increase for the first quarter of 2013. In total, analysts expect Shell’s payout to rise by 7.9% in 2013 — more than twice the rate of inflation.
By holding Shell shares within an ISA (just click here for more information about the benefits of ISAs), you can ensure that this generous income does not attract any further tax. This could really boost your returns over the long term, especially if you are a higher-rate tax payer.
Profit from scale
Shell is one of the world’s five super-major oil companies, meaning that it is one of very few that have the combined financial and technical might needed to take on the very largest of projects.
One of the areas the company has focused on is increasing its share of the global gas market, and around half of Shell’s production is now natural gas. This production provides the group with a more diversified production profile and should help it adapt to future changes in demand.
At the end of 2012, Shell was producing 3.4 million barrels of oil equivalent per day, and had proved reserves of around 13.6 billion barrels. Shell reckons these reserves would maintain production for another eleven years, but it’s focused on growth, and is currently developing a further 20 billion barrels of resources across 60 projects.
2013’s top ISA income stock?
If you like the idea of using an ISA to hold high-yielding income shares, then as well as Shell I’d also recommend you take a look at the Motley Fool‘s latest free report, “The Top ISA Income Stock for 2013“.
You see, the company analyzed in this report currently offers a yield of 5.7%, and the Fool’s expert analysts believe that its current share price of 700 pence could be 20% below its true value. To learn more, then click here to download your free copy of this special report, while it is still available.
The article Should I Buy Royal Dutch Shell …read more
Source: FULL ARTICLE at DailyFinance
By G.A. Chester, The Motley Fool
Filed under: Investing
LONDON — ISA season is upon us again! If you haven’t yet used this year’s £11,280 allowance for a stocks and shares ISA, you only have a short time left before the 5 April deadline.
Remember, you don’t pay any tax on share gains held within an ISA, which means the high capital appreciation of a successful growth stock is sheltered from the reach of HMRC. (For more information about the tax benefits of ISAs, click here.)
Today, I’m going to tell you why I believe blue-chip oil and gas explorer BG Group (NYSE: BRGGY) is a great choice for your ISA this year.
Overlooked growth
Many investors looking to build a diversified portfolio of U.K. blue chips don’t look beyond the FTSE 100’s top two oil companies, Royal Dutch Shell and BP. These super-majors certainly have their attractions, one of the biggest at the moment being dividend yields of more than 5%.
BG doesn’t distribute as much of its earnings to shareholders as Shell and BP, and offers an income of just 1.5%. However, there are good reasons why BG keeps back much of its cash. Despite being a £40 billion giant, BG remains a growth company and prefers to reinvest the bulk of its earnings in the business to keep driving the growth.
Assets for growth
There’s no doubt that BG owns valuable oil and gas assets with the potential to deliver superior earnings growth. In particular, the company’s interest in the hydrocarbon-rich Santos Basin off Brazil could have investors dancing the Samba for decades to come.
The secret to success will be how well BG manages the commercialization of its largest and most valuable resource, but I believe the company’s track record and the potential of the Santos Basin make for a favorable risk-reward outlook.
Growth at the right price
BG‘s shares have become out of favor with the market since last autumn as a result of the company revising down its production targets for the next couple of years.
In my opinion, though, the short-term horizon of many big institutional investors has created an opportunity for any private investor who is prepared to take a longer view to buy growth at a reasonable price.
At the time of writing, BG‘s shares are trading at 1,175 pence, which equates to a little over 14 times forecast earnings for 2013. But perhaps more significantly, analysts reckon the company could be valued at a discount of as much as 30%-40% to the true value of its assets.
Such a discount means that there’s not only the potential for a significant rerating of the shares for long-term holders, but also the possibility of a premium bid for the company in the shorter term. Either way, the capital gains would be out of reach of the taxman for investors who had the foresight to hold the shares in an ISA.
Investing tax-efficiently and buying quality growth companies at reasonable prices are two of the tools investors like us can employ to build …read more
Source: FULL ARTICLE at DailyFinance
By Maynard Paton, The Motley Fool
Filed under: Investing
LONDON — You only have a few weeks to use your tax-efficient ISA allowance before the April 5 deadline. ISAs are issued on a use ’em or lose ’em basis, so don’t fluff it. You can save up to 11,280 pounds in the current tax year, and put the lot of it into stocks and shares. To find out more, click here. But which stocks should you buy? How about Lloyds Banking Group ?
Failures or safe?
Loathe them or loathe them, the major U.K. high street banks are too big to fail. The taxpayer knows this, to their cost. Politicians know it, and feel helpless. The Bank of England knows it, and sets monetary policy accordingly. Does this make Lloyds a failsafe investment for your ISA?
Up, up, up
The big banks have enjoyed a share-price resurgence over the past twelve months.
Royal Bank of Scotland is up 18%, Barclays is up 32%, but Lloyds has trumped them both with a 48% rise. That compares to a return of around 7% from the FTSE 100.
The banks have been the major beneficiaries of the central-banker policy of flushing markets with loose money and liquidity. Lloyds did particularly well out of the Bank of England‘s Funding for Lending Scheme, picking up 22 billion pounds to fund cheap loans, compared to just 9 billion pounds for Barclays.
Lloyds has also been working hard to mend its broken business and simplify its sprawling operations, off-loading everything from private-equity assets to Irish property loans, and selling 632 branches to the Co-operative Bank. Lloyds has also pulled out of ten territories, and is now focused mostly on the U.K.
Cutting its losses
Lloyds’ full-year results for 2012 showed a dramatic slowdown in the rate at which it is losing money.
Losses fell to 570 million pounds, down from a massive 3.5 billion pounds in 2011. The 2012 figure included 1.9 billion pounds set aside for mis-selling payment protection insurance (PPI) and interest rate swaps. Excluding mis-selling claims, the bank’s underlying group profit actually rose to 2.6 billion pounds, up from 638 million pounds in 2011.
Compare that to the 5.2 billion pounds pre-tax loss posted by RBS, and Lloyds starts to look positively healthy.
Lloyds also plumped up its financial cushion, or core tier 1 ratio, by another 12%, and cut group costs by 5% to 10 billion pounds, two years ahead of schedule. Management now plans another 9.8 billion pounds of cost cutting in 2013.
And the bank continues to raise money by off-loading assets, scooping 520 million pounds from institutional investors by selling a 20% stake in financial advisor St James’s Place. Lloyds still has a 37% holding, but won’t sell any more shares for at least a year. Every little helps.
One scandal after another
If you’re considering Lloyds for your ISA, you also have to be aware of every scrap of potential downside.
We’re all victims of the banks, but the banks are their own worst enemies. The PPI mis-selling scandal has so far cost …read more
Source: FULL ARTICLE at DailyFinance
By Alan Oscroft, The Motley Fool
Filed under: Investing
LONDON — What kind of shares should you be choosing for your ISA? Well, in my view the tax-efficient investment wrapper is best suited to decades-long investing in solid blue-chip shares. And for me, that means companies such as BP .
But first, remember that this year’s allowance of £11,280 must be used by April 5, and don’t forget within an ISA that all share-price appreciation is tax-free and there is no additional tax to be paid on dividends — click here for more information on ISAs.
What about the disaster?
To many people, BP means disaster: the Gulf of Mexico oil spill, to be specific. And it certainly cost the company dearly — as of BP‘s full-year results published on Feb. 5, the estimated total hit was $42 billion. And with various asset sales raising the cash to cover the costs, BP lost some downstream capacity and ended up with production 6% down and full-year profits 19% down.
But events such as the Gulf spill are not things we can predict, and there is always a risk of catastrophe in any investment we make — which is one good reason for holding a diversified ISA portfolio. And anyway, just how badly did things actually go for BP investors?
Assuming you bought the shares five years ago, you’d have paid around 530 pence each for them. Today they’re worth 453 pence, so you’d be down 77 pence per share, or 14.5%. But over the period, you’d have accumulated 113 pence per share from dividends, taking your current valuation up to 566 pence per share. Over one of BP‘s worst periods, you’d still have made a profit of 7% — not a great return over five years, but not a financial tragedy either.
Looking forward, not backward
Assuming there isn’t another major disaster in the near future, how well are you likely to do if you pop some BP shares into your ISA now?
Current City forecasts suggest BP will enjoy a rebound in earnings per share for 2013 of about 40%, putting the shares on a forward P/E ratio of just 8. To put that into perspective, the long-term average P/E ratio of the FTSE 100 is about 14 — BP‘s shares are currently valued at little over half of that!
And don’t forget those dividends. Analysts are currently forecasting a dividend this year of around 23 pence per share. That’s a 10% increase on the 2012 payout and represents a very nice 5.1% yield on the current share price.
An irreplaceable company
And what about the nature of the business? Well, there’s much talk of ending our dependence on fossil fuels — but for the foreseeable future, that’s all just hot air. Renewable energy sources take a long time to develop, and they just do not produce the energy density of oil and gas.
So next time you hear of a new wind farm covering many hectares of countryside that can produce enough power for a …read more
Source: FULL ARTICLE at DailyFinance
By Tony Reading, The Motley Fool
Filed under: Investing
LONDON — Aviva might seem a strange choice to invest in just now. Last week the insurer angered investors with a 44% cut to its dividend, sending the shares down 15%.
The merits of the dividend cut are debatable It seems new chief executive Mark Wilson won the argument with chairman John McFarlane, who said last year he was working to maintain the payout. Reducing the dividend helps strengthen Aviva’s balance sheet, but it’s moot whether the benefit is proportional to the adverse impact.
Buying opportunity
The share-price drop creates a buying opportunity. It’s not only me who thinks that. Mark Wilson has just shelled out 500,000 pounds on the shares.
Directors are prevented from buying or selling shares in the run-up to announcing results, because they have “inside information.” Thus it’s common to see directors dealing shortly after results. It’s a good thing that a new boss should buy shares.
Of course, Wilson must have known the impact the dividend cut would have on the share price when he recommended it to the board.
From here on, up
Wilson will be accused of kitchen-sinking. But the cold reality is that, from here on, Aviva’s prospects look brighter and there is still a good investment case — made stronger for new investors by the share-price fall.
Prudential‘s boss nearly lost his job in 2010 when shareholders revolted against a $30bn Asian acquisition. Yet today Prudential is a darling of the stock market, with Asia its biggest cash contributor. The best time to back good companies and management is when they’re at their lowest ebb.
Aviva is still a strong turnaround story. McFarlane instituted a program to sell underperforming units, scythe through costs and instill a new culture. Wilson brings strong credentials and has changed the management team.
He’s also separating U.K. general insurance from the rest of the group, which might presage a future sell-off. The rebased dividend still yields a decent 5.9%, too.
ISA time
It’s worth thinking about putting money into an ISA before the tax-year deadline of April 5 if you haven’t done so already. With shares held in ISAs, you don’t pay any capital gains tax, and the dividends aren’t liable to additional income tax. You also don’t declare ISAs on your tax form, saving paperwork. There’s more information about ISAs here.
Whether Aviva appeals to you or not, I recommend you also have a look at this company. It’s yielding roughly the same as Aviva, but it operates in a sector well-known for dividend reliability.
Unlike many stocks, the company isn’t exposed to events in the eurozone, and it’s been chosen as “The Motley Fool’s Top Income Stock for 2013.” You can find out more in an exclusive report. Just click here to download it — it’s free.
The article Should I Buy Aviva for My ISA? originally appeared on Fool.com.
Tony owns shares in Aviva.
The Motley Fool has a disclosure policy. We Fools …read more
Source: FULL ARTICLE at DailyFinance
By G. A. Chester, The Motley Fool
Filed under: Investing
LONDON — ISA season is upon us again! If you haven’t yet used this year’s 11,280 pound allowance for a stocks and stocks ISA, you only have a short time left before the April 5 deadline.
Remember, you don’t pay any tax on share gains held within an ISA or additional income tax on dividends — giving a significant boost to your investment returns. (For more information about ISAs, click here.)
Today, I’m going to tell you why I believe pharmaceuticals giant GlaxoSmithKline is a great choice for your stocks and shares ISA.
Ideal candidate
I often think the ideal share for an ISA is one you could tuck away and leave alone if you were going away for ten or twenty years… or more. For many investors, backing Britain’s biggest and best companies should fit the bill.
GlaxoSmithKline is the FTSE 100’s biggest pharmaceuticals company and, with a valuation of 74 billion pounds, is among the industry’s largest groups. Glaxo’s prodigious cash flows and generous dividends underscore its credentials as a core blue-chip ISA holding.
An added attraction is that Glaxo is a “defensive” stock, meaning its business is less affected than many industries by the general state of the economy — and its shares don’t swing so wildly with the ups and downs of the stock market.
More than pills
Defensive industries aren’t completely immune to the state of the wider economy, however. Pharmaceutical firms are currently feeling the pinch because health budgets are under pressure in the U.S. and Europe as indebted Western countries attempt to rein in public spending.
Glaxo’s diversification into higher-growth areas, notably emerging markets and consumer health care, stand it in good stead. Sales in emerging markets grew 10% during 2012 and now account for more than a quarter of Glaxo’s business, while consumer-health care products account for about a fifth.
Many of Glaxo’s iconic consumer brands — such as energy drink Lucozade, the Nicorette nicotine-replacement products, and Sensodyne toothpaste — are familiar the world over. In fact, Sensodyne became Glaxo’s first billion-dollar brand in 2012.
Is the price right?
At the time of writing, Glaxo’s shares are trading at 1,500 pence, which equates to 13 times forecast earnings for 2013. Back at the turn of the millennium, you would have been paying more than 30 times earnings.
In addition to a relatively cheap earnings rating, Glaxo currently offers investors a healthy prospective dividend yield of 5.2% — attractive not only for income investors but also for investors looking to reinvest their dividends to benefit from the significant effect of compounding future capital and income.
I think Glaxo is one of a number of great dividend shares for an ISA available at the moment. If you’re interested in similar shares, I recommend you help yourself to this free Motley Fool report.
You see, the blue chip in this report offers a solid 5.6% dividend yield, might be worth 850 pence compared with less than 750 pence today — and has just been declared the Motley Fool’s …read more
Source: FULL ARTICLE at DailyFinance
By Tony Reading, The Motley Fool
Filed under: Investing
LONDON — It’s ISA season again, the time of year when the tardy among us rush to make use of our tax-efficient savings allowance before it runs out on April5 — while more organized investors prepare to make use of next year’s allowance.
Whichever you are, sheltering shares within ISAs can be an attractive way of boosting your returns. You don’t pay any tax on your gains, and the dividends aren’t liable to additional income tax. There’s also a real benefit at that other time of year, the tax-return season. You simply don’t declare investments held within ISAs on your tax form. (For more information about ISAs, click here.)
ISAs work especially well if you plan to tuck an investment away for a long time. One share I plan to do that with is Unilever
Economic moat
Brands underpin Unilever’s strength as an investment. It owns a multitude of household names, with 14 of its brands generating sales of more than 1 billion euros each year. That gives it what Warren Buffett calls a “wide economic moat”: The company can defend market share and margins because competitors would have to spend prohibitive amounts of money to displace it.
That’s one reason Unilever managed a 7% sales rise last year, split evenly between volume growth and price increases.
Defensive
Unilever operates within a defensive sector. The company’s food, drink, personal-care, and home-care products are some of the last things people skimp on in hard times. When the FTSE 100 lost half of its value between the end of October 2007 and the beginning of March 2009, Unilever’s shares went down by just a quarter. They rebounded further and quicker, too.
In these uncertain times, with intermittent fears over the eurozone, the U.S. “fiscal cliff” and a hard economic landing in China, it’s worth having a good slug of defensive shares in your portfolio.
Growth
Emerging markets are the engine of growth for Unilever. Sales there make up more than half of the company’s turnover and have grown by 11.5% in each of the past two years. Unilever was an early mover into emerging markets and is now reaping the rewards.
Unilever has great prospects for growth, but it comes at a price. Its shares are at an all-time high, trading on a multiple of 20 times earnings. But if you’d prefer to look at something cheaper, then what better to put in an ISA than “The Motley Fool’s Top Growth Stock for 2013“?
Indeed, this alternative share is trading on a prospective multiple of 14, yet its earnings per share have surged 44% since 2009. What’s more, there could be considerable “hidden” value that isn’t reflected in the share price.
You can find out the name of the company in an exclusive free report. Just click here to download this report straight to your inbox.
The article Should I Buy Unilever for My ISA? originally appeared on Fool.com.
By Royston Wild, The Motley Fool
Filed under: Investing
LONDON — I am backing ARM Holdings to remain on course for excellent earnings growth. Exploding demand for smartphones and tablets, particularly in the fruitful emerging markets of Asia, should continue to drive demand for ARM‘s tech savvy.
However, I reckon the current share price suggests the group’s future growth prospects are currently priced in, while an unattractive dividend policy also undermines the investment appeal presently.
But bear with me, as I believe there are other fantastic opportunities with which to bolster your tax-efficient stocks and share ISA, one of which I’ll mention in a minute (just click here for more information on how to maximize your returns from ISAs).
A strong sales processor
ARM — which designs and licenses intellectual property in the semiconductor market — saw revenue increase 21% in the fourth quarter to $263 million, bucking the enduring weakness seen in the wider semiconductor industry.
This excellent performance was prompted by greater royalty rates and gaining market share, particularly with digital TVs and microcontrollers. Furthermore, the company’s promising, higher-value Cortex-A processor range, which are used in smartphones and tablets, also printed increased royalty percentages during the quarter.
Last month’s results also showed ARM‘s order backlog in the October-December period rose 25% from the third quarter. This advance provides assurance that ARM should continue to ride out the current troubles affecting many of its peers.
The price is right?
City analysts expect earnings per share to continue rocketing higher in coming years, with growth of 28% to 19 pence predicted for 2013, and a 26% increase to 24 pence anticipated next year.
But ARM currently trades on gargantuan P/E readings of 49.4 and 39.3 for this year and next, far in excess of the forward multiple of 26.5 projected for the broader technology hardware and equipment sector.
And the firm’s premium rating is underlined by price/earnings to growth (PEG) estimates of 1.8 and 1.5 for the next two years (a figure under 1 is generally considered decent value for money). ARM‘s share price has leapt more than 1,000% during the past five years, and current levels suggest the optimistic growth prospects are currently priced in.
Diddy dividends
ARM‘s commitment to stellar growth is reflected in a miserly dividend yield, projected at 0.6% and 0.7% for 2013 and 2014, respectively, and well below the 3.5% FTSE 100 average.
The tech company continues to build its yearly dividend, and projected payouts of 5.3 pence and 6.5 pence per share for this year and next are up from 4.5 pence per share for 2012. However, such amounts still lag the payments from most of the UK‘s other large caps by quite a distance.
Electrify your ISA income with the Fool
So in my opinion, the combination of a small dividend combined with an ultra-high P/E rating undermines ARM‘s case as a profitable ISA pick, at least for the time being.
But if you are looking for other lucrative payout plays to turbocharge the income from your stock and shares ISA, I recommend …read more
Source: FULL ARTICLE at DailyFinance
By Roland Head, The Motley Fool
Filed under: Investing
LONDON — U.K. banks have not covered themselves in glory during the last five years, and while HBSC Holdings has managed to remain profitable and avoided a bailout, a $1.9bn fine for money laundering last year was hardly the firm’s proudest moment.
Despite the fine, I reckon HSBC is the best of the U.K. banks and has a lot to offer ISA investors interested in building up a diversified, tax-efficient portfolio (just click here for more details on the tax benefits of ISAs).
Emerging-market growth
HSBC describes itself as “the world’s local bank,” and for me, this is its main attraction. The majority of HSBC‘s business is in Asia, where growth rates remain high.
For example, the latest figures from China show the country’s industrial production rose by 9.9% during the first two months of 2013, during which time retail sales rose by 12.3%. Yet both figures were lower than expected and were considered a mild disappointment by the markets!
That kind of growth is driving huge amounts of banking activity, and HSBC is positioned well to benefit, as its profits for 2011 and 2012 show:
| Region | 2012 Pre-Tax Profits | 2011 Pre-Tax Profits |
|---|---|---|
| Europe | -$3,414m | $4,671m |
| Hong Kong & Asia-Pacific | $18,030m | $13,294 |
| Middle East & N. Africa | $1,350m | $1,492m |
| North America | $2,299m | $100m |
| Latin America | $2,384m | $2,315m |
| Total | $20,649m | $21,872m |
Source: HSBC company reports.
This year, HSBC‘s bumper Asian profits underpinned the losses it incurred in Europe and helped ensure that overall profits fell by just 6%.
Dividend boost
HSBC increased its dividend by 10% last year, taking its 2012 payout to 31.3 pence per share, equivalent to a dividend yield of 3.9%, at the bank’s recent 730 pence share price.
Although HSBC‘s share price has risen by 30% during the last six months, to therefore reduce its dividend yield, the company remains the highest-yielding U.K. bank share, and its forward dividend yield of 4.3% still appears very attractive.
Invest globally with U.K. shares
I think the world’s emerging markets are likely to continue to outgrow stagnant Western economies for many more years. I want exposure to this growth in my ISA portfolio, but I don’t want the risk and complexity of owning foreign shares.
As one of the largest banks in the Asia-Pacific region, HSBC will be involved in funding and supporting much of the economic growth in those markets — and will profit accordingly if things go well, as I expect them to.
By owning shares in HSBC, I enjoy direct exposure to these key growth markets, but I also benefit from the safety and simplicity of owning ISA-friendly shares in a FTSE 100 company that pays a solid dividend.
2013’s top ISA income stock?
If you like the idea of using an ISA to hold high-yielding income shares, then I recommend you take a look at the Motley Fool‘s latest free report, “The Top ISA Income Stock for 2013.”
The company in question offers a yield of 5.7%, and the Fool’s expert analysts believe that its current share price of 700 pence could be 20% below its true value. To learn more, just click here to …read more
Source: FULL ARTICLE at DailyFinance
