Monday, 14 March 2016

New Purchase - Empire

I first bought shares of Empire Company (Sobeys, IGA) in 2009 and sold for a handsome profit in 2014. The dividend yield and dividend growth were just too low.

The recent uptake in the market has left very few deals on the table. I've been on the hunt and I think I may have found one. EMP.A is trading at BV, the Graham price is $26 and the CAPE is 16. But it's not without problems. The March 9, 2016 press release says:

"The challenges that we experienced in the first half of fiscal 2016 related to the integration of our Safeway business only intensified in the third quarter. In addition, increased promotional activity across the West as well as a difficult economic environment mainly in Alberta and Saskatchewan, resulted in sales erosion in our Safeway banner and West business unit," said Marc Poulin, President and CEO, Empire Company Limited.

"While these challenges, and the implementation of associated mitigation plans, remain a top priority, it has become apparent that stabilizing our business will take longer than originally expected and has required us to take an impairment charge this quarter. Our focus is on rebuilding top-line sales in the West through initiatives such as our Better Produce at Lower Prices initiative introduced into the market at the end of the third quarter.


So today, I bought back in.


Number of shares purchased
145
Price per share
$22.20
Commission
$9.95
Total cost per share
$22.27
Total cost
$3,228.95
Annual dividend per share
$0.40
Initial dividend yield
1.80%
Increase in forward 12-month dividends
$58

With this purchase and the reduction in BHP's dividend, my 12-month forward dividend income stands at $10,475 per year.

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