Stock Purchase: Amlin

Image result for amlin


It’s a new financial year, and with it we have a new allocation to top up our ISA’s. I mentioned on previous posts that I was going to open an ISA with iWeb. I’ve been happy with my service with them so far in my taxable account, and their trading fee is one of the lowest around (£5 + Stamp duty). 


On Thursday 9th April 2015, I bought 250 shares in the FTSE 250 non-life insurance company AmlinThe share price at the time of purchase was 514.67p per share. The total cost with charges included was £1,298.11


The average yield over the last 5 years is a stonking 6.1%. Their payout this year is currently at 5.53% without taking into consideration their special dividend, which is 80% of the value of the final dividend payment itself. The special dividend addition will produce a yield in the high single digits this year. 

As I mentioned on the Forced Stock Sale post, I’ll be loosing a non-life insurance company from my portfolio. My experience to date has been excellent with this sector, and I was sorry to see the back of Catlin Group. 


Out with the old ‘lin’ and in with the new

When I purchased Catlin back in August, I was torn between them and Amlin. On that occasion I went for Catlin, and luckily for me it paid off handsomely. 


My last few purchases have been for companies that are near their 52 week low that represent good value to me. Amlin were on the opposite end of the spectrum, and were nearing their all time high. Yet the companies P/E Ratio is currently at 9.97. At the end of 2014 their P/E was at 10.10 and in 2013 it was 7.60. Amlin provides a lot of bang for it’s buck!

The dividend payment was held in 2010 and 2011 but prior to that it’s increased it’s dividend every year since 2002. Over the last 5 years the average dividend growth rate was 6.2%. The most recent increase was 3.85% (not including the special dividend). 

Their average dividend cover has been less convincing with a 5 year average of 1.36. This was largely down to it having -1.36 dividend cover in 2011 (The year they held the dividend payment). For the most recent financial year, the dividends were covered by 1.76

I’m not expecting to earn a lot from capital growth with Amlin, as their share price has only risen 20% in 5 years, but I hope to benefit from their substantial dividend income for some time to come. 


What do you think of Amlin? Do you agree with the Non-life insurance replacement? Or would you have invested in another company that ends in ‘lin’?

0 Comments

  • Dividend Drive

    Reply Reply 21st April 2015

    A good purchase I think. I chose Amlin as the replacement for Catlin as well (see here: http://bit.ly/1BTW4qi). It is a very good company. I am currently considering perhaps putting some more of my Catlin money back into Amlin. There was not a lot between them in general.

    As you say, capital growth is not spectacular when looked at from a historical perspective. Even if you go back to 2006 it still sits at about 280p per share. Not a big capital gain over that period! But the yield is more than ample to compensate. I think you can probably think of it from the flip side: there have not been the steep capital drops either!

    There's Value went for Beazley recently and that looks pretty good as well. Novae also.

    I hold Lancashire which is very good but rather unorthodox. You get most of your dividend return from special dividends (I did a little summary of it here: http://bit.ly/1F9tl0K). The ordinary dividend has been at $0.15 for many, many years!

    Overall, I hope that you and me will be as happy with the new 'lin' as the old one! I am optimistic!

  • weenie

    Reply Reply 22nd April 2015

    Hi Huw
    Good luck with the Amlin shares – I'm in the same boat as I went for them last month – dividend potential looks great!

  • Huw Davies

    Reply Reply 22nd April 2015

    Hi DD,

    I think we're singing from the same hymn sheet there. I'm predominantly looking for investments that will provide constant, growing income over time rather than capital gains. I would agree that it's likely not to fluctuate too much (although you never know what the future holds).

    Thanks again for stopping by and sharing your thoughts!

    Cheers
    Huw

  • Huw Davies

    Reply Reply 22nd April 2015

    Hi Weenie,

    Thank you very much. It does indeed. If they continue to supply a dividend over the 5% I'll be a happy shareholder!

    Congratulations fellow shareholder.

    Cheers
    Huw

  • UK Value Investor

    Reply Reply 22nd April 2015

    Well I hope Amlin does well for us all. I've had it in my portfolio for a couple of years and just topped up this morning with a bit of spare cash. I don't have any particular views on how well it will or won't do, but the yield is good and it appears to be a solid company.

  • Huw Davies

    Reply Reply 22nd April 2015

    Hi John,

    Well said. It looks like a solid company, and the yield is excellent. I hope we can all reap the benefits for years to come.

    All the best!
    Huw

  • Dividend Drive

    Reply Reply 25th April 2015

    I think we are indeed. With Amlin still dropping I am very, very seriously considering using my Catlin cash (or at least part of it) to top up my Amlin holding.

    When you look at their income and dividend record you really do see that they have dealt with such difficult periods before and kept their dividend rattling higher (and often with a safe margin). To see that time and time again is very encouraging. It reminds me of No More Waffles recent buy, MunichRe: http://bit.ly/1yVSbjn. Dealing with risk and planning very long-term is their business. I would not be the one to bet against such companies!

    As you say, if you're investing for income then capital gains is almost a non-worry. Of course, they can come but I think the most likely capital gains will come from acquisitions like Catlin. When you see how well they held up during the financial crisis is also encouraging to see!

    All in all, should be a great investment over the long term!

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