Dividend income September 2015

Another month has flown by, it’s time to take a look at my monthly dividend income:

• Unilever: 9.76EUR
• McDonalds: 4.75EUR
• Royal Dutch Shell: 74.1EUR
• BHP Billiton: 20.38EUR

In total, that’s 108.99EUR in passive income for September. Some months are bigger than other due to the way my portfolio is currently allocated and because some companies only pay out once or twice a year instead of quarterly.

The last time I checked my annual forward dividend income stood at 1044EUR (excl. any special dividends) so this is an above average month.

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New Buy: Moury Construct – Undervalued stock with massive cash reserves

Today I went off the beaten path by buying some shares of Moury Construct (EBR:MOUR), a largely forgotten small cap on the Brussels stock exchange. This construction firm is 95 years old and gained a bit of popularity thanks to the recent wave of delisting attempts in Belgium (Pairi Daiza, CMB, Spadel).

Optically expensive, but massive pile of cash
Moury Construct is optically expensive, it trades around 135EUR and with earnings of 5.9EUR per share for 2014 this results in a trailing P/E of 22.88. At first sight there’s nothing special about the stock, so what’s the big deal with Moury Construct?

One of the reasons why the company is so attractive is its huge pile of cash. Moury Construct’s balance sheet is debt free and contains a massive 91EUR per share in cash reserves! To put it in other words, 2/3rds of the company’s share price is backed by cash on hand. Excluding the cash reserves, Moury Construct’s P/E is in the mid-single digits.

The company’s financials are sound too, in the first half of 2015 its net profit per share soared 15.3 percent to 4.24EUR. Moury’s backlog is at a record height of 124.5 million EUR in upcoming projects and margins are improving too.

Owned for over 60% by the Moury family
Moury Construct  is a family-owned company, just 39.43 percent of the shares are owned by the public so investors have been speculating for years on a potential delisting because this is a company that seems to have little reasons to remain on the stock market.

While it seems very safe thanks to the huge cash pile, there are some obvious cons:
– It’s a small cap, the shares trade on the fixing market and are illiquid.
– It could take long before the undervaluation is resolved, so far management seems to have no plans with the massive cash pile.
– Site and reports are only available in French, poor communication with shareholders

It’s not a dividend growth stock but I find it to be an interesting value play that pays out a nice dividend while you wait for the stock’s real value to materialize. Last year Moury Construct paid out a dividend of 4.4EUR per share, if this year is the same  amount it would mean a dividend yield of around 3.26%. The dividend is paid out once a year, in the month June.

Stocks I’m considering for September

The end of the month is coming near and that’s usually the time I add more shares to my portfolio.

Here are my top three picks for this month:

1. Van de Velde (EBR:VAN)
After further researching Van de Velde, this company has made it to the top of my list. Last year I bought it a couple of days before the ex-dividend date in November, something a lot of people apparently did as a nice run-up in the share price occurred right after my purchase. The result was that I not only pocketed the dividend but saw my shares increase in value too.

While I’m not counting on a return of what happened last year, the company is once again paying out a juicy interim dividend that I want to collect with some extra shares. Including the special interim dividend, the current net yield is 4.80% after 25% Belgian dividend tax.

2. AB Inbev (EBR:ABI or BUD)
Not really a typical dividend growth company, it has a spotty dividend record, a staggering amount of debt and sluggish sales as of lately. The SABMiller deal excites me though, if it gets approved and the 3G boys can work their magic once more investors in the future SAB InBev (?) can look forward to significant earnings growth over the next couple of years.

The current net yield (after 25% Belgian tax) is 2.28 percent but I think it’s likely that there will be a dividend cut after the SABMiller acquisition as the company will need to prioritize debt reduction. For foreign investors there may be an additional reason to cheer as rumors point to a move of the HQ from Leuven to London, which would remove the foreign withholding tax.

3. Diageo (DEO)
This drinks company has been on my watch list for some time, the stock price has been slumping this year resulting in a P/E of 18.65 and a dividend yield of 3.05 percent. The company seems fairly valued right now but one potential worry is that Diageo is under SEC investigation under suspicion of channel stuffing.

Unless something else pops up, this could very well be my buy list for the next 2-3 months.

A closer look at Van de Velde (VAN)

I have written an analysis of Van de Velde, a Belgian small cap that makes luxurious lingerie. You can read my piece over here:

Van De Velde: A Hidden Dividend Gem In Intimate Apparel

The company makes up a small position of my portfolio and I’m considering to add some more shares later this month. Van de Velde has a remarkably strong balance sheet with no long-term debt and the company likes to shower shareholders with its excess cash.

Since going public in 1997, Van de Velde has offered investors an annualized total return of close to 15% and has grown its base dividend at an annualized rate of 15.48%!