Trading212 Portfolio- 15/06/20

Weeks summary


Stock picked: Taylor Wimpey

Ticker: TW.L

Shares added: 3.3

Total shares owned: 6.4

Dividend yield: SUSPENDED

Payout ratio: N/A


Dividends received: £0.16


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This weeks stock


For this weeks poll I decided to put our 4 biggest loss stocks in as this gives us the most opportune time to average down and so the winner is Taylor Wimpey ticker TW.L. In the portfolio Taylor Wimpey is down 15% at the current moment, with £5 invested this next investment it reduced the loss to -10%.

What does Taylor Wimpey do?

Taylor Wimpey is a residential house developer. The company operates at the local level in the UK, across 24 regional businesses. But they also have operations in Spain building houses. The UK segment has 5 divisions: North, Central, South West, London and South East. The company builds various home sizes from one to two bedroom flats to six bedroom detected houses. Found in 1880 Taylor Wimpey has quite a history behind it. TW is part of the Consumer sector under Residential construction sub-sector.


Fundimentals:

Dividend Yield: Suspended

Payout ratio: N/A

Profit margin: 15.52%

Return on assets: 10.06%

Return on equity: 20.62%

P/E ratio (price to earnings): 7.35

Adjusted EPS: 20.6

EPS (Earning per share) Growth: -5%

BETA: 1.42

Cash: £630.4M

Debt: £112.6M

EBITDA: £842.5M


Stock breakdown:

The first thing which pops out when researching Taylor Wimpey is….the dividend! More or less the lack of one. The reason behind TW suspending their dividend was due to covid 19. They have stated that though their dividend has been stress tested and would normally be payable in an normal downward turn in the market, the fact is that this is no normal downturn. With Covid 19 it pushes this beyond normal and created an exceptional case.


Link here to TW explanation.


Turning our heads now to the profit which the company makes, we can see they have quite healthy profit margins at 15%. What I do like is that not only they have operations in the UK but also Spain, meaning they as a house builder are quite diversified. Looking at the P/E ratio of 7.35, this makes this stock look quite undervalued, as I normally look for a P/E ratio of around 15 or under.

But looking at the UK house builders average P/E ratio, the average is actually 7.7, which puts it more closely inline with other FTSE100 house building companies. This indicates to me that as a whole the UK house building sector is undervalued.


The BETA for TW (which is 1.42) is quite high, indicating that this stock is much more volatile in stock price compared to the index itself. What I do like about Taylor Wimpey is the amount of cash to debt, with almost 6X more cash on hand it seems like a fairly healthy and undervalued company.


Though this stock is volatile I like their dividend policy and the fact it has been stress tested, but now it's just a waiting game till they reinstate the dividend. With house builders gone back to work I believe we could see the dividend reinstated by the end of the year, all depending on economical circumstances.


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Dividends received

This week we received 3 dividend payments.

AGNC @ £0.11

HON @ £0.03

MSFT @ £0.02

With this weeks dividends totalling to £0.16, we added another £0.04 to the charity donation.


Total dividend (Month): £1.80

Total dividend (6 month): £4.16

Amount for charity (6 month): £1.04


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General account summary


We will find that some of the stocks held in this portfolio has suspended or cut their dividend, but that is the nature of the beast when a recession clashes with dividend paying companies. But neither the less investing into strong companies with healthy balance sheets is a must. Constant evaluation of the company you hold is a must, I’m not talking about every day but every month or couple months. Though we can see TW has suspended their dividend, they are still a healthy company and I am sure they will reinstate their dividend, like many other companies which have suspended also. Though with the companies which have suspended their dividend will effect our charitable donation, we are able to buy the stocks cheaper than before, meaning when they do start paying a dividend again we would benefit from the lower stock price and higher amount of shares we were able to purchase. We still have many stocks in the portfolio with a loss so in the future it would be great to average down more into these for long term growth of the portfolio.


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What is:

P/E ratio EPS Payout ratio BETA Dividend


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