I bought a Pub!! Recent Investment June 2017

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.

Company Overview

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%.

Stock analysis

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.

Stock_Valuation GNK

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

Facts_GNK

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 new dividend Income
 
Before taxes my projected full year dividend income is now at 1 920.64EUR with a yield on costs of 3.92% and after taxes it is at 1 373.96 EUR with a yield on costs of 2.80%. That is an average of 114.49 EUR per month. This is still not a huge number but compared to where I was a year ago this number feels really great.

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

Dividend052017

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.

16 Comments

  1. CIao DC,
    I have been a stockholder of GNK for some time now, bought it originally after the Brexit fall, so far so good. Considering that the most of its sales are in the UK they should not feel too much pressure for currency depreciation and could actually enjoy a wave of tourism coming from people visiting the UK thanks to the cheaper pound.
    I think it’s a good company to hold!
    Ciao ciao
    Stal

    • Hi Stalfare,

      glad to find some fellow holder. I am with you at that point it does its business mainly in GB, so it should not suffer that much
      by the Brexit.

  2. Over $2k in income this month….AMAZING! I’m impressed with how diversified you income stream is. You aren’t receiving one dividend from a fund, but rather a nice menu of companies!

    • Hi Chris,

      Thanks for the kind words, but I am still far away from 2k per month 😊. It is per year. Nevertheless I see my progress and I get faster and faster.

  3. Don’t really know the company that well but looks like a great buy. I never got around to buying any alcohol related stock but they have always been interesting. The way I see it, no matter what the market condition up or down, it will make people want to drink haha. So they will always be making money. Adds a nice bit of dividend income for you as well.

  4. That’s interesting. It’s like mix between retail, real estate, and manufacturing (beer!). How do you think this stock would fare in a recession?

    I think that it would be fairly recession resistant because I find that people often spend more on alcohol during bad times, but you never know.

  5. I thought you literally just bought a local pub and now you’re a pub owner but I guess this is almost as cool.

    I haven’t heard of the company before but will add it to my list to take a closer look now.

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