Saturday, 4 February 2012

Imperial Tobaccco is cash generating machine

Questor share tip: Imperial Tobaccco is cash generating machine


A general sense of slight disappointment pervaded this week's trading update from Imperial Tobacco – but again, things aren't as bad as some fear.

7:00AM GMT 03 Feb 2012
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Imperial Tobacco
£23.08 +5p
Questor says BUY
Imperial Tobacco Group
Obviously, investing in tobacco shares is not to everyone's taste – but through good times and bad they continue to make money for shareholders.
A study this week released by BNY Mellon Wealth Management and Janney Montgomery Scott showed that the MSCI World Tobacco Index had the highest return out of 67 groupings in the MSCI World Index in the 10 years to 2011. The sector was the best place to put your money in the equity markets for the past 10 years.
Imperial said that it expected to meet full-year consensus expectations. However, volumes were hit by sanctions on Syria and a price war in Spain – a significant market for Imperial.
This meant the group's overall cigarette volumes fell by 7pc and net tobacco revenue slid 1pc.
However, Imperial is focusing on key emerging markets – and the pricing environment is positive.
"Combined stick equivalent volumes of our key strategic brands were up 3pc and net revenues up 10pc with our focus on driving growth in these brands in emerging markets and fine-cut tobacco in the EU," said Alison Cooper, Imperial chief executive.
Key global strategic brands include Davidoff, Gauloises Blondes, JPS and West. Luxury Cuban cigars were also a bright spot, with volumes rising 14pc.
The outlook for the rest of the year is positive. Volume declines should ease throughout the year and comparisons get easier.
Imperial's £500m share buyback is well on track, with £320m shares purchased between May and December. The company also confirmed its commitment to grow the dividend ahead of earnings per share.
By historical standards the shares are looking cheap, trading on a September 2011 earnings multiple of 11.2, falling to 10.3 next year. The prospective yield is 4.6pc, rising to 5.1pc, which is attractive for income-seekers.
Imperial has changed its dividend policy to increase the payout ratio to 50pc of adjusted earnings, instead of 47pc.
The shares were last recommended as a buy at £21.03 a share on September 22 last year. They are up 10pc since then, compared with a market up 15pc.
The sector should continue to generate significant amounts of cash to pay dividends and invest in its key brands.
The shares remain a buy for income-seekers.

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Finally, You Can Prevent — And Even Reverse — Heart Disease

Finally, You Can Prevent — And
Even Reverse — Heart Disease . . .

FREE video reveals the very same strategies heart expert
Dr. Chauncey Crandall uses with his own patients —
many of whom now live without the fear of heart disease
or dependence on expensive, side effect-laden drugs.

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Britons rush for Australian visas

The threat of changes to the Australian visa application process has led to a surge in applications by Britons to move Down Under, according to a migration agency

A view of Sydney bridge and opera house
Changes to Australia's visa system could make it harder to obtain permanent residency Photo: Peter Scholey / Alamy
By 
6:02PM GMT 24 Jan 2012
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VisaFirst.com is using Australia Day (January 26) to launch a campaign raising awareness of the changes, urging prospective migrants to act now or risk missing out.
The latest changes, which come into effect on July 1 this year, are set to lengthen the application process and make it harder to obtain permanent residence.
Nearly 24,000 UK citizens were granted permanent resident visas for Australia in 2011, despite a toughening of the “points system” in July of that year. The prospect of further changes has already sparked a rise in applications from would-be emigrants, claims VisaFirst.com, which registered a three-fold increase in applications in January alone.
“Currently, if you meet the points requirement you can lodge your visa application,” said Edwina Shanahan, director of the company. “After July 1, applicants will have to achieve the pass mark and will then be entered into a skills pool. Australian immigration authorities will then decide which applications they want to invite for further processing from the pool. Applicants can languish here for up to two years, with no guarantee of ever receiving an invitation to apply.”
She urged would-be migrants to act quickly even if they do not plan to move soon, adding: “Once the visa is granted, applicants have a five-year window to relocate, so it's worth submitting the application now, even if you're not planning the move just yet.”
Under the new system, applicants over 32 years of age or with limited work experience are most at risk of disappointment, due to scoring less points, but families in the "middle road" category shouldn't be complacent, warned Shanahan. “The immigration process is going to be a lot more selective, based on those who score the highest number of points. The Australian government will also be setting quotas on the number of skilled workers from each sector – carpenters, for example – in the pool at any one time,” she said.
Skills in demand vary from state to state, but nursing, engineering, trades and construction are among the most sought-after.
For would-be emigrants, Australia offers a better quality of life and higher living standards but the cost of housing in the major cities can be high, while the strength of the Australian dollar against the pound sterling affects the spending power of migrants who rely on sterling income or savings.



http://www.telegraph.co.uk/finance/personalfinance/offshorefinance/9036643/Britons-rush-for-Australian-visas.html
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The Most Hated Company on Earth Is Making Investors Rich


I can't think of a stock that's more hated.

I've written about this company several times before. I've personally owned it for years. But just about every time I mention it, I end up receiving nasty emails admonishing the fact that I would cover... let alone recommend... investors own shares of this company.

In fact, it happens so often that I instruct our staff to put in a mention that this investment isn't for everyone whenever they cover it. If you don't want to invest in this stock, I can certainly understand. But if you have an open mind toward this black sheep, you're likely to appreciate what it can do for you.

Simply take a look at its performance so far in 2011...

In a year marked by credit downgrades, the European debt crisis, and stagnating growth, the most hated company on the planet -- Philip Morris International (NYSE: PM) -- is still making investors rich. And that comes when the broader market has been a roller coaster ride.

In fact, Philip Morris stock is within pennies of its 52-week high hit earlier this month.
Unfortunately, I've noticed that more and more investors seem to be tricked into thinking investing has to be complicated. But stocks like Philip Morris prove that making money doesn't have to be hard.

Philip Morris doesn't have a complicated business model. It is simply one of the most dominant and shareholder-friendly companies on the planet. The company does business in 180 countries and owns 7 of the world's top 15 global brands in its market. 

But it has also made a mission of rewarding its shareholders. In the last three years alone, it has returned more than $12 billion in dividends while increasing the payments per share by 43%. Today, the shares pay a yield of more than 4%.
Then there are the buybacks. Since May 2008 the company has repurchased more than $20 billion in stock -- or nearly 20% of the outstanding shares.

All of these moves simply make the stock more valuable, even if earnings don't rise a cent. And as you can see, that's showing up in the share price as well.

I must admit, I'm a bit biased though. I personally own Philip Morris and also selected it as one of my 10 Best Stocks to Hold Forever.

Of course, with investing there's never a surefire thing. There's no quality a company can possess that will guarantee its success.

But when you can find companies like Philip Morris that dominate their market and are returning billions to investors, these are the sort of stocks that can still deliver strong returns in nearly any market -- including this one.

http://globaldividends.com/newsletter.asp?d=5797&utm_source=outbrain&utm_medium=referral&utm_campaign=do-ob-1011
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Meet the Isa millionaires



Dozens of people have created huge pots of money by the simple act of investing in individual savings accounts.


Ivan McKay with his cattle herd
Image 1 of 2
Ivan McKay has managed to accrue an Isa pot of £1.6m  


7:00AM GMT 04 Feb 2012
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Ignore your tax-free Isa allowance at your peril – you could be missing out on a million-pound fortune. Savers who have religiously salted away their full annual Pep and Isa allowance over the past 25 years have amassed a tidy fortune; there are dozens of Isa millionaires across the country.
Brewin Dolphin, the private client investment manager, boasts nine Isa millionaires among its clients. Their investments have a combined value of £15.5m, with the highest having a combined Pep and Isa pot of £4.4m.
Charlotte Black of Brewin Dolphin said its Isa millionaires invested in individual shares, rather than funds – with many stocks at the smaller end of the FTSE scale.
Ms Black admitted that many of the shares that had made sizeable gains would have been off the average investor's radar – and too risky. But she added that everyone with spare cash should maximise their Isa allowance, which this tax year is £10,680.
"Isas and Peps [personal equity plans, Isas' predecessors] have been such a valuable savings medium over the past 25 years and we advise clients never to miss a chance to use them, either alone or as a tax-free zone within their portfolio. Our millionaires have each adopted a more risky investment strategy and it is exciting to see how that has paid off for some."

So just how easy is it to become an Isa millionaire?

It may sound a long shot but Killik & Co, the stockbroker, which has around 16 Isa millionaires among its clients, reckons that modest growth of 5pc a year and the small matter of a 25-year horizon will do the trick for a couple pooling their Isa allowances. "Assuming a 5pc rate of growth a year, this could be worth £1.074m, or £1.686m assuming 8pc growth," said a spokesman.
John Cotter of Barclays Stockbrokers (which also has 16 millionaires) said: "Some have achieved Isa millionaire status by having a lot of eggs in just a few baskets – a risky strategy. Some have backed their judgment in one or two companies and their strategies have paid off; again, risky. They have also recognised the importance of reinvestment of the dividends."

The savvy investors

Not surprisingly, few Isa millionaires want to put their head above the parapet and, like many National Lottery winners, they shun publicity. But fortunately there are a couple of savvy investors who are happy to share their Isa joy.
One such couple, John Housden and his wife, Judith, from Kent, have accrued a combined pot of £1.3m having invested around £190,000 each since the first year of Peps in 1988. It pays them a handsome income of £57,000 a year. Mr Housden kicked off his portfolio with £3,000 worth of Midland Bank shares. He has added to his holding in the company (which was taken over by HSBC in 1992) since and his stake is worth around £40,000 today.
It has not all been plain sailing for the Housdens. Among the winners there have been some losers – notably, he says, Woolworths, Yell and Jarvis. But he rates his decision to buy Rolls-Royce shares as, perhaps, his smartest move. Mr Housden, who does his own research, bought £3,500 of the shares when they were worth 147p – they are now priced at 738p.
A top tip for all would-be Isa millionaires is to be patient, even when you are gripped by fear as share prices plummet amid rumours of stock market Armageddon.
"As a rule I don't worry about fluctuations in capital value as I tend to think of the Isas as a source of retirement income," said Mr Housden. "Just as well really, because the value now (£1.34m) is much the same as in June 2007, although in March 2009 it had fallen to just £760,000."
Ivan McKay, a sheep farmer and Daily Telegraph reader from Northern Ireland, has amassed a Pep and Isa pot worth £1.6m. He uses two brokers, Barclays Stockbrokers and Walker Crips Weddle Beck. Mr McKay said he had never forgotten the advice his local accountant gave him when he was about to invest in his first Pep. "He said to me, 'be your own man'.
"If I read a paper with a star-studded share panel, I won't follow their tip if I think the price is high," said Mr McKay. "I have often been proved right."
Mr McKay said he had had two "outstanding" buys and his top secret to investors was "to take profits" along the way.
For example, he bought Babcock International when its share price was just 53p but has taken profits as it continued its climb (it is now priced at 740p). He also bought Scottish & Southern Energy in 1989 at 240p (the shares now stand at £12.35) and this year it is paying a dividend of 80p – that's a return of 33pc in itself, he says proudly.
Mr McKay added: "I'm a livestock farmer so I work long 16-hour days when the weather is dry, but can catch up on my reading about shares when it's been raining – and it has been raining a lot recently."
His most recent purchase is XP Power, the power components company, which he bought at 925p, having watched its price slide from a high of £19 since the start of the year. The price has since ticked up to 983p.
"My school never put me forward for exams so I went back to the plough when I left. But I always believed I was as clever as those who went on to university," Mr McKay said.
Another Isa millionaire is a 71-year-old reader from the Midlands who wished to remain anonymous. The former stockbroker, who uses Redmayne Bentley, said he followed the cliched mantra of "run with your profits and cut your losses". He is also not afraid to go "liquid" if he feels the market is a little choppy. He has done this only twice, before the dotcom bust of the late Nineties and just before the credit crunch got into full swing in 2008.
"You should only ever sell a share when it is overvalued, not because it has gone up by 100pc," he said.
One of his oldest holdings remains in his portfolio today. The company, FW Thorpe, a family-run business that provides lighting to the public sector, has seen its share price rise from around 100p in 2000 to 837p today. "It's a fascinating company that has always had a Thorpe at the helm," he said.
And his latest purchase? "This week I have bought Imperial Tobacco for the first time. It looks undervalued to me, has an attractive yield and is unlikely to go bust."

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Family finances will not improve until 2020 in UK

Family finances will not improve until 2020

Low to middle income earners will not see their disposable income approach pre-recession levels until 2020 at best, a report from think-tank the Resolution Foundation has warned.

A broken union jack piggy bank
Family finances won't improve until 2020 Photo: PA
8:49AM GMT 23 Jan 2012

The Squeezed Britain study said households in this bracket, which typically bring in just over £20,000 in take-home pay a year, are also facing a 22-year wait to save up enough cash to buy their first home.
The report exposed the "daily struggle" of these families, which account for 5.8 million households and nearly one third of working age homes in Britain. It suggested that incomes for this group will decline before flattening out around 2016-17.
If this is followed by strong growth, it will take until 2020 for low to middle income households to return to the levels of disposable income they had before the recession, but if growth is stagnant real incomes could be 8% lower than in 2007.
Under both scenarios, the gap between low and middle income earners and those on higher incomes will widen, the report warned.
The study also charted the "disappearing" property ladder for these households, who typically took four years to save for a first-time buyer deposit in 1991.
By 2001 this group took eight years to raise a deposit and by 2011 this wait had more than doubled to 22 years, with those aged under 35 facing being stuck in rented accommodation, perhaps forever.
Researchers put the sharp rise down to house price rises as well as bigger deposits as a percentage of house prices needing to be raised, while wages remain flat.
They based their calculations on a deposit of around 20% currently being needed to purchase a first-time buyer house, typically costing just over £124,500.
Low and middle income earners saving around 5% of their annual wages, amounting to just over £1,000 a year in savings before interest, would take 22 years to raise a deposit of just under £25,000.


http://www.telegraph.co.uk/finance/personalfinance/consumertips/9032130/Family-finances-will-not-improve-until-2020.html
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Chinese save four times as much as Britons


The average household in China has four times more savings than the average household in the UK, new research shows.


Chinese save four times as much as Britons
Currently, Britons save around 7 per cent of their disposable income. This compares with 47 per cent in China Photo: ALAMY
James Hall
By , Consumer Affairs Editor
7:00AM GMT 03 Feb 2012
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According to Lloyds TSB, the typical British household has £5,000 in savings and investments. This compares to over £19,000 in China.
German households, meanwhile, have average savings of almost £9,000.
The bank said that the “remarkable” findings reflect the fact that there is no “social safety net” in China, such as state pensions and benefits, meaning that families must provide for themselves financially.
Lloyds TSB also said that the so-called savings ratio in the UK – that is a person’s savings as a proportion of their disposable income – has been falling over the last decade.
Currently, Britons save around 7 per cent of their disposable income. This compares with 47 per cent in China.
Greg Coughlan, head of savings at Lloyds TSB, said: “Despite significantly higher income levels, today’s British and German households are both being roundly beaten in the savings stakes by urban Chinese households.”
Dr Karl Gerth, author of As China Goes, So Goes the World: How Chinese Consumers are Transforming Everything and a lecturer in modern Chinese history at Merton College, Oxford, said that Chinese people save out of necessity because they have to pay for healthcare, education, housing and their retirement.
“It has nothing to do with ancient Confucian wisdom and all to do with contemporary realities,” said Dr Gerth.
He said that savings levels among young Chinese people are far lower than among their parents’ generation.
“In China, young people are learning to spend,” he said.
Lloyds TSB’s findings were based on over 3,000 interviews with adults in the UK, China and German.

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