UK Edition
Questor’s Inheritance Tax Portfolio now has 20 stocks. How are they performing?
Today we publish the first detailed update on the performance of our Inheritance Tax Portfolio of Aim shares since we added seven new names in June, taking the total to 20.
Any reader who followed all our tips at the prices prevailing at the time would have made a modest overall gain of 1.6pc and outperformed the FTSE 100 index by 2.5 percentage points.
Had we avoided our regrettable advice in March to buy Conviviality, the drinks business that went bust shortly afterwards, the portfolio’s gain would have been 7pc.
Nine of our stocks stand in the black and 11 in the red. Several have produced significant returns, the largest being Dart Group’s 43.5pc gain since the travel firm was added to the portfolio in January.
Shares in Craneware and IMImobile, two software companies added on the same date, have risen by 31.1pc and 29.6pc respectively, and a further four stocks have produced double-digit gains.
Our worst performer, Conviviality aside, has been Gama Aviation, whose shares have lost 16.7pc since they were bought for this portfolio, also on Jan 19. The losses on four other stocks are in double digits.
Aim is often seen as a “growth” market and investors may therefore not expect dividends. In fact, all but three of our holdings do pay divis and a rough-and-ready calculation suggests that the portfolio as a whole yields about 1pc.
Manx Telecom has the highest yield at 6.7pc, followed by Murgitroyd’s 2.8pc. Michelmersh yields 2.4pc and Nichols 2.3pc.
We will publish updates on stocks in the portfolio as appropriate over the coming months but for now they all remain “holds”. As we have discussed in previous columns, it is not possible to say categorically that a particular Aim-quoted share will qualify for exemption from inheritance tax if held for the required period, but we believe that all should do so.
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Income Portfolio update: Royal Mail
On Monday, Royal Mail was fined £50m by the regulator, Ofcom, for breaches of competition law in 2014.
The company is to appeal to the Competition Appeal Tribunal and the case could take years to resolve if further appeals are lodged. Royal Mail said “no fine is payable until the appeals process is exhausted”. The fine would amount to about 10pc of forecast adjusted pre-tax profits for the financial year to March 31 2019.
But even if Royal Mail made £450m instead of £500m, the dividend should be safe: the 24p-per-share payment for the financial year to March 2018 will have cost the company a total of £240m when the final instalment is paid on Aug 31.
This suggests that cover for next year’s divi, if held at the current level, would be not far short of two times, which is a decent safety margin. Hold.
- Questor archive: telegraph.co.uk/questor
Income Portfolio update: Regional Reit
Last week we reported that Regional had made a tidy profit on the disposal of a property in Leeds. This week it announced the completion of the sale of an industrial estate in Cumbernauld, near Glasgow, for £26.4m – 21.1pc more than its valuation at the December 2017 year-end.
The firm said the sale represented “another example of our track record of increasing asset value through active asset management”. Hold.