May investment portfolio update

May started brightly for the UK stock market, but in the end there wasn’t too much to get excited about. Perhaps the surest sign investors are increasingly confident is that the FTSE 100 managed to just about stay over 7,000.  

My portfolio

My shares were broadly flat as well. Capital growth was 3%. On a positive note, lower than expected house moving costs meant I was able to put substantial savings into my ISAs, which will help me towards my plan with achieving financial independence within the next decade or so.

In May I didn’t add any new positions to the portfolio. I offloaded Blue Prism and reduced my position in Artemis SmartGARP Global Equity. I actively added to my holdings in CQS New City High Yield Fund Ltd and Marlborough UK Micro-Cap Growth. These were both previously very small positions and still remain as the chart below shows smaller positions within the overall portfolio.

This is how the whole portfolio looks now, at the end of May 2021.

Pie chart of The Income Investor holdings.

Updates from top holdings

In terms of updates there wasn’t a lot of interesting updates from the portfolio companies. Most notable were updates from National Grid and Diageo. The former’s full year results showed underlying operating profit fell 3% at constant currency to £3.3bn as higher costs offset higher revenues. The dividend was increased by 1.2% year-on-year.

The latter said it expects full year organic operating profit growth of at least 14%. Its restarting its £4.5bn share buyback and special dividend programme. The group intends to return £1bn before the end of the 2022 financial year.

AstraZeneca remains a surprisingly high profile company following its very public spats with the European Union. At the end of May it was able to announce that the latter had approved its Tagrisso cancer drug following a phase 3 trial. Less positively, the UK’s Competition and Markets Authority (CMA) announced it’s looking into AstraZeneca’s $39bn acquisition of America’s Alexion Pharmaceuticals. The deal has already been approved by shareholders.

Dividend income

When it came to dividends, I had four dividend payments in May. Most of the income came from Legal & General. There were more modest contributions from Murray International, Merchants Trust and fairly recent addition to the portfolio, CQS New City High Yield Fund.

Total dividend income in 2021 to date is £974. This represents a yield on the total value of investments of 1.87%, but this is only for the calendar year so far. I’d expect by the end of the year to be much nearer 4-4.5%.

Progress towards financial independence

Overall, I remain happy with my progress towards financial independence. The buying of a house this month, while knocking the value of my investments as I paid a substantial deposit has set me back less than feared. Lower monthly mortgage payments versus rent should free up cash to invest into my ISA.

My review at work went well, so I’m hopeful of being able to negotiate a better higher paid position within the next 12-18 months, or move on to a role that can help me progress my career and boost my earnings. In turn I’ll add additional income into my ISA to try and maximise the allowance, something I currently fall short of being able to do.

So far this year on average I’ve been adding around £2,121 p/m, although this figure is distorted by May’s far larger than usual contribution. In the first four months of the year, it was more like £1,370. I anticipate the rate will pick up in the second half of the year as I spend less on housing-related costs.

In line with the plan, I’ve been looking at some growth shares. From a long list I’ve done some basic research into ratios and so forth and think Gamma Communications looks very promising on the basis of its history of revenue growth, strong quick ratio, low debt and a decent valuation when the PEG is applied instead of the PE.

For interest, Judges Scientific and Belvoir also scored quite highly in my light touch screening and I know are popular shares with private investors. There’s a lot to like about both.

I’m holding off on more ETFs for now as the market seems quite buoyant. I’m thinking I’m likely to be relatively cautious over coming weeks and possibly months given concerns over new Covid variants, whether the June lifting of lockdown measures will actually happen and so on. I’m less sure now that there are obvious buying opportunities, so I’ll mainly stick with what I have and see what happens.

3 thoughts on “May investment portfolio update

Add yours

  1. I think your last statement sums up the current market nicely… “I’m less sure now that there are obvious buying opportunities, so I’ll mainly stick with what I have and see what happens.”

    Like

    1. Thanks John. Did add #GAMA but otherwise struggling a bit. Looking to analyse some small caps over the coming weeks, as that’s an area mostly missing from my portfolio at the moment, apart from through the Marlborough fund.

      Like

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