Dividend Analysis : UNION ASSURANCE PLC(UAL.N0000)

This is the first post of this year and market is showing positive signs already. Having gone through the CBSL Road Map, I'm excited about the next 24 months. Few things to not is Per-capita Income of $4,000 by 2016 is on track, Inflation target is around 5% for next two years and CBSL intends to keep interest rate low around 7.5%. This environment will increase the disposable income of individuals as well as industries. 

For this post I selected UAL because it had the second highest 5 year average dividend yield. With the expected increase in disposable income, I believe counters like UAL will perform better in the long run.

UAL.N0000

This is the out put from Health Check tool. As an investment UAL  is very safe.

Dividend history of UAL is as follows. Currnt payout ratio is 43%.

To me UAL is a perfectly safe investment, but not without a catch. UAL is a extremely illiquid counter. JKH hold 85% and top 20 share holders have locked nearly 98% among them. Free float is less than 2% and wild fluctuation of the share price is a result of this.

This is the order book at the time of writing this. If you are going to collect 1000 shares you will have push the price up by 10%

Here is a gain/loss simulation of UAL from 2003. Because of the illiquid nature of the counter, trading seems to be yielding better than dividend investing. But it is interesting to note that dividend investors never made a loss for the past 10 years.

Light Blue line indicate the YOY loss or gain
Dark Blue line is the annualized gain with dividend being re-invested
Red line is the annualized gain without dividend being re-invested

Conclusion

Unlike the other counters I went through before, UAL is unique due to it's illiquid nature. Things might change in the future as SEC has implemented rules on minimum free float.  For the time being I'm going to monitor UAL for a good entry point. If you managed to grab a good quantity at a discounted level, it will be great for a short term investment as well as a dividend investment.

Cheers..