Beginners’ Portfolio: News From Aviva plc, Persimmon plc And GlaxoSmithKline plc
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The Beginners’ Portfolio is a virtual portfolio, which is run as if based on real money with all costs, spreads and dividends accounted for.
A few of our Beginners’ Portfolio shares have been in the news recently, but before I tale a look at them here’s a quick valuation update:
| Company | Shares | Buy price | Total cost | Bid price | Proceeds | Gain/loss | % change |
|---|---|---|---|---|---|---|---|
| Vodafone | 289 | 168.5p | £499.51 | 188.3p | £534.19 | £34.68 | 6.9% |
| Tesco | 159 | 305.5p | £498.23 | 370.4p | £578.94 | £80.71 | 16.2% |
| GlaxoSmithKline | 34 | 1,440.5p | £502.22 | 1,668p | £557.12 | £54.90 | 10.9% |
| Persimmon | 79 | 617.9p | £500.55 | 1,110p | £866.90 | £366.35 | 73.2% |
| Blinkx | 1,319 | 36.9p | £499.68 | 133.5p | £1,750.87 | £1,251.19 | 250.4% |
| BP | 112 | 434.5p | £499.01 | 451.8p | £496.02 | -£2.99 | -0.6% |
| Rio Tinto | 16 | 3,048.4p | £500.18 | 2,946p | £461.36 | -£38.82 | -7.8% |
| BAE Systems | 146 | 332.3p | £497.59 | 440.2p | £632.69 | £135.10 | 27.2% |
| Apple | 2 | $458.4 | £605.98 | $487.5 | £611.53 | £5.55 | 0.9% |
| Aviva | 146 | 321.4p | £499.71 | 391.5p | £561.59 | £63.88 | 12.8% |
| Dividends | £265.55 | £265.55 | |||||
| Total | £5,100.66 | £7,316.75 | £2,216.09 | 43.4% |
With a 43.4% gain since we started, including dividends and all costs, we’re not doing too badly. I had a pleasant surprise checking these figures when I realised I’d forgotten to include the 75p-per-share special dividend paid by Persimmon (LSE: PSN) in June (the ex-dividend date was in April), and that gave us another £59.25 to add to the pot!
Aviva
Our favourite insurer Aviva (LSE: AV) (NYSE: AV.US) released first-half results on 8 August, and we haven’t had a look at them until today. (There’s a beginners’ lesson there — unless there’s anything unexpected on the day, as long-term investors we can take our time getting round to it.)
Things looked pretty good, with chief executive Mark Wilson saying “We have achieved profit after tax of £776 million, in contrast to the £624 million loss last year. Cash flows to the Group have increased by 30% to £573 million“. New business climbed 17% too, and the firm slashed its operating expenses by 9% to £1.5bn, though Mr Wilson was quick to point out that “tackling our legacy issues will take time“. (And that’s another note for beginners — I like it when a CEO is up-front about things like that, in this case right at the start of the report.)
There is clearly still work to be done, but I’m satisfied with the company’s turnaround progress so far and I’m happy to keep taking 4% dividends. I also remain convinced that the sell-off earlier this year was overdone and that Aviva shares are still cheap.
Persimmon
Persimmon also gave us first-half results, on 20 August, and they looked pretty good to me. Legal completions were up 7% to 5,022, revenue was up 12% to £899.9m, and underlying pre-tax profit soared by 40% to £135.3m. Net cash inflow is rising, the firm is investing in new land, and forward sales are up 21%. The government’s Help to Buy scheme is certainly helping Persimmon to sell, and all in all I’d say we’re looking at the pretty-much-inevitable recovery in the business.
As for that special dividend of 75p per share, we weren’t going to get any more until a 95p payment in 2015. But Persimmon has decided to accelerate its “capital return plan” and now intends to pay 10p per share of it in June 2014. There’ll be no complaints from me about that — the real attraction to me is long-term regular dividends, but a shorter-term boost to income is always welcome.
GlaxoSmithKline
When we added GlaxoSmithKline (LSE: GSK) (NYSE: GSK.US) back in June 2012, one of the big fears for the business was the expiry of patents and the resulting increased competition from generic drugs. But I thought Glaxo was more in tune with the need to expand into newer biotechnology and novel treatments.
News on 13 August gave me some confidence in that feeling, with the drug Tivicay (with the generic name dolutegravir) receiving approval from the US Food and Drug Administration (FDA) for the treatment of HIV-1. Tivicay has been developed by ViiV Healthcare, which is 76% owned by Glaxo after the firm pooled its HIV resources with Pfizer. This is potentially very big news, and I think Glaxo is handling its transition well.
Finally, my idea of the kind of shares that should make up the core of a beginner’s portfolio is the same as my choice for an ISA, or a retirement portfolio — or in fact, any portfolio. I’d start with good strong companies that should stand the test of time and potentially reward you for decades.
Not surprisingly, the Fool’s top analysts think similarly, and they have put together a special report detailing five blue-chip shares that I think would be ideal for anyone at the start of their investing career.
But it will only be available for a limited period, so click here to get your hands on these great ideas that could start you on the road to long-term riches.
> Alan does not own any shares mentioned in this article. The Motley Fool owns shares in Tesco and has recommended shares in GlaxoSmithKline.
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