Two new October stock buys: SAB and GSK

I added two more stocks to my portfolio this month:

  • 20x SABMiller (SAB): This is somewhat of a gamble on the acquisition by AB Inbev going through. At present my position is up ~9.5% but today’s stock price of £39.38 is still trading far below AB InBev’s takeover offer of £44 per share. Depending on how long completion of the acquisition takes, which is estimated to be around a year, SABMiller will likely pay one more interim dividend and one final dividend for book year 2015.
  • 40x GlaxoSmithKline (GSK): I added a bit more shares of this healthcare stock. GSK had some issues in the last two years resulting in a big drop in revenue and profit but it slowly seems to be getting back on track. The current yield is around 5.6% and the company will pay out a special one-off dividend of £0.20 on top of its Q4 2015 dividend in April 2016. Market expectations are rather low and the company is saddled with a pretty high debt load. The dividend is barely covered by current earnings and will be frozen at £0.80 per share until at least 2017. I now consider this to be a full position and will not be adding further in the foreseeable future.

Combined these purchases add 48.53EUR to my annual dividend income, which is projected to be 1154.12EUR at current currency exchange rates. It’s pretty exciting how close I’m getting to the 1200EUR mark, looks like I may be able to hit my 100EUR/month goal towards the end of December or January.

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5 thoughts on “Two new October stock buys: SAB and GSK

  1. ambertreeleaves

    So close to a major milestone… 100EUR/month is great. I probably do not need to ask: what will you do with the money? Reinvest?

    The approach on SAB is an interesting one. Is it a cash deal or will you be able to get ABI shares in exchange?

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    1. Dividends Are Coming Post author

      1. Yes, every dividend payment gets reinvested to grow the dividend income stream. I use manual dividend reinvestment, largely because my broker doesn’t support share dividends on non-Euronext shares nor Dividend Reinvestment Plans (DRIPs).

      2. It’s an all-cash deal, SABMiller shareholders receive £44 per share in cash. There is a partial share alternative but that offer is lower so not really interesting for the average shareholder, it’s designed so that Altria and the Columbian Santo Domingo family can get shares in the enlarged SAB InBev instead of having to pay a lot of capital gain tax. There’s a big spread between the current share price and the takeover price due to uncertainty and the fact that the deal is going to take a long time to close due to regulatory issues.

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  2. Geblin

    Hi DaC,

    Some nice additions to the porfolio. I was also considering SAB but in the end I went for some other stocks this month. 1200 EUR in dividends is a nice mark, it means you get 100 extra EUR every month for doing nothing except stay alive.

    Keep pushing that snowball.

    Cheers,
    G

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