June just started and I already did my first investment. And to be honest this company was not on my watch list at all, I just came across it an article about stocks you should own your entire life. Most of them I already knew and I actually have them in my portfolio. But I did not know Greene King, it owns several pubs and restaurants in the UK and has an impressive dividend history, and it is also my first british stock.
Greene King plc is an integrated pub retailer and brewer. The Company operates, tenanted, leased and franchised pubs, restaurants and hotels, including brands, such as Hungry Horse, Chef & Brewer, Flaming Grill, Farmhouse Inns and its Greene King locals estate. The Company’s segments include Pub Company, Pub Partners, and Brewing & Brands. The Company’s ale brand portfolio includes Old Speckled Hen, Greene King IPA, Abbot Ale and Belhaven Best. The Pub Company segment operates approximately 1,820 pubs and restaurants across Britain. Currently it pays a yearly dividend 0.326 GBP per share that makes it a yield of 4.37%.
After the Brexit vote the share price of GNK suffered a lot, its 5 year high was at 9.68 GBP in the beginning of 2016, currently it trades at 7.45 GBP, that means the current price is around 23% below the 5 year high. At the same time revenue almost doubled in the last 5 years and EPS grew from 0.49 GBP in 2011 to 0.64 GBP in 2016, that is an average annual increase of 5.5%. In the same period the dividend were increased from 0.23 GBP to 0.30 GBP, which makes it an average increase of as well 5.5% per year. As you can see the pay out ratio is also still on a heathy level, around 50%.
Looking at the current valuation the stock looks also undervalued.
As probably most the of the british stocks aGNK had to suffer because of the Brexit vote, but this makes it currently an attractive investment for me.
All in all I have purchased 180 shares at a price of 7.45 GBP. This investment will add 58.8 GBP to my annual dividend income before tax.
How much dividend income am I expecting in the future
As you can see in the table above I am staying with increase rate of 5% and it will deliver me a decent income in the next couple of years. All in all I am very happy with owning that company as it is in one of my favorite sectors Beverage & Food. To my opinion this sector is one of the safest when it comes to investing. By having a couple of on site visits I am also very convinced about the business model of Greene King :).
My goal until the end of 2017 is to have a dividend income of 1 400 EUR after tax.
Development of my projected dividend income
Seeing the graph going up and up, gives you a real good feeling about investing and for me this is the most important chart, it is not that important how my stocks are valued as I am not selling them anyways…
Please be aware this number might vary considering the changes in the exchange rates.
What do you think about Greene King? Do you also have it in your portfolio or are you considering buying it?
Disclosure: Long GNK
I do not recommend any decision to the reader or any user, please consult your own research. Thank you for your understanding.