Critique my Investment plan

Bazofts_Revenge

Aim to provide a top up to my pension (already guaranteed £10k+) in 20 years time. All dividends reinvested, £500 added per month using dividends to buy £1k of new stock at a time. I have approx £2k in each of the following. (On retirement I will have to pay off my interest only mortgage £56k @ BOE rate +1%)

AstraZeneca
Aviva
Balfour Beatty
British Land
Carillion plc
Catlin Group
Centrica plc
Direct Line
Esure
First Group
GlaxoSmithKline
Go Ahead
Greggs
Halfords
ICAP
Inmarsat Plc
Intermediate Capital
Man Group
Morrison
National Express
National Grid
Nestle
Provident Financial plc
RSA Insurance Group
Sainsbury (J)
Segro Plc
Severn Trent Plc
SSE plc
Stobart
TLPR
Unilever
United Utilities Group
Vodafone Group plc

somethingcorporate

What basis have you used to pick your stocks?

Bazofts_Revenge

My main criteria has been companies that return approximately 4% or more, they generally must have returned a good profit regularly and grown their dividend and must have been able to cover their dividends with their profits. I have avoided stocks with companies I don't like such as Tobacco manufacturers and Tesco.

bowlhead99

An observation, if you are only putting in 500 a month new money and relying on dividend income to top it up to 1000 a month, you need 6k a year net dividend income which is unrealistic on ~65k of stocks even if it is all inside an ISA (my 65k comes from the fact you said you had about 2k in each of your 33 stocks).

While I notice you have a need to settle a pounds sterling liability in 20 years, that's a long time away. Personally I would have a large proportion of my portfolio in other global asset classes on a 20 year view, and I'd use funds or investment trusts to achieve the allocations to the areas I couldn't efficiently self-invest.

Depending on interest rates 5 or 10 years down the line it might become sensible to settle the mortgage earlier, though hopefully not because you'd hope that long term a shares portfolio could beat base plus 1%. So if needing cash for the early settlement of the mortgage is unlikely, and the money does not need to provide an income now (only grow to a suitable size to be able to allow you to buy something that produces an income once you're retired), I see no reason to be 100% in UK high income stocks, a sector which has had a 'very good run' recently. They are not particularly cheap.

Nothing wrong with self selecting and taking a principled or ethical stance on certain individual companies (not sure why you have something against Tesco and not Sainsbury or Morrison) and buying shares in them for the long term. Generally largecap shares do better than cash and bonds in the long term (though you may need to promote and demote shares from your watchlist to your ownership list as their fortunes change).

But you asked for a critique. I don't know if you're expecting us to tell you the plus and minus points for every individual share, but you won't get that level of insight here. If you simply want to know if a self-select portfolio of individual equities with common financial characteristics in a single market is as balanced as holding multiple types of assets in multiple global markets, the answer is, it's not.

BLB53

Some good companies there, also some - shall we say average.

My personal view would be you appear to compromise on quality in the quest for higher yield. Over 5 yrs this may pay off but over 20 yrs the total return on quality shares - Diageo, Reckitt and BSKYB for eg - will probably be a lot better than the likes of ICAP, Tullett, Halfords, Aviva and Man (just my opinion of course).

I would also be looking at some overseas exposure via investment trusts and also some smaller companies eg Aberforth.

Good luck with it though!

Bazofts_Revenge

Thanks for the observations. I never intend to swap it for an income providing product. If I wanted that I would have chosen a SIPP. I expect to take the income from it in 20 years and when I die leave it to my heirs if the care charges don't get it. I appreciate it is not globally balanced but UK focussed with a little exposure to europe through Nestle and many of the companies do pull in a lot of income from overseas. I may look into some funds such as Henderson Technology. I used to invest in that under Aberdeen many years ago and managed to ride out the dot com crash long enough to make a small profit. I'll update this once every couple of months maybe detailing some of the highs (hopefully) and lows.

C_Mababejive

I would drop Balfour Beatty from the list.

http://www.telegraph.co.uk/finance/newsbysector/epic/bby/10024943/Balfour-Beatty-issues-second-profit-warning.html

I think BB have grown to big,too powerful and too fast on the backs of big fat deals and contracts which they have secured.

IMHO they are not a good ethical company.

They have been heavily implicated in the circulation of secret blacklists which caused many people to be denied work.

http://www.telegraph.co.uk/news/uknews/4946077/Firms-accused-over-union-worker-blacklist.html

From what i have heard from people who work for them,they seem to operate a bit of a bully boy culture with their employees.

mucgoo

Why not just go and buy a 60k stake in merchants trust or an equivalent fund/etf if you want a load of dividend stocks.

marathonic

Balfour Beatty has taken quite a hit since the original post - but that's the beauty of being so diversified given the number of stocks held.

It's a risky one now and, with the lowered profit expectations, I'd expect that a dividend cut is imminent.

For those considering investing, just make sure you are well diversified (as with investing in any individual stock).

kidmugsy

mucgoo wrote: »

Why not just go and buy a 60k stake in merchants trust or an equivalent fund/etf if you want a load of dividend stocks.

Quite: who the devil has the time to keep an eye on more than 30 shares?

C_Mababejive

marathonic wrote: »

Balfour Beatty has taken quite a hit since the original post - but that's the beauty of being so diversified given the number of stocks held.

It's a risky one now and, with the lowered profit expectations, I'd expect that a dividend cut is imminent.

For those considering investing, just make sure you are well diversified (as with investing in any individual stock).

Balfour Beatty should really rename their company Balfour Beatty Bully Boys IMHO...from what i have heard as to how they treat their employees and what can be read in the press about them.