On Friday I did a small add-on investment in Kvaerner of 5000 shares at 10,70 NOK. This company will most likely not be part of a long-term portfolio as I have very hard to judge its short-, medium- and long-term business prospects. The operating cash-flow recently has been wildly negative with 274 MNOK in the first half-year of 2014. The management claims that the cash flow is fluctating in this business and that is even illustrated separately on p13 in the latest Q2 2014 presentation.
However, at the current price it is yielding very close to 12,0%. This company I value mainly on the valuation metric of EV / EBIT of 3,24 (at the purchase price of 10,7 NOK). The company has a negative NIB (Net Interest-Bearing debt) of about 489 MNOK (cash of 972 MNOK and interest-bearing debt of 483 MNOK). TTM EBIT I have calculated to 738 MNOK. With the negative NIB, it gives me some comfort to invest in this company, more with the approach of a 'cigar-butt' investment that gives me some cash back short-term.
Hence it gives me a decent return without having to risk too much money while building the dividend portfolio. The company itself states its dividend policy as follows: "The ambition is to pay semi-annual dividends with increases, in order to give a stable and predictable dividend growth, balancing out the underlying volatility of earnings". The next declared semi-annual dividend of 0,64 NOK will be paid out on October 24th.
With this investment I expect some 270 kSEK in dividends (after tax) during 2015.
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