blouson blouse
16 Jan 2017
Re: Income attractions As you will see from my post last month ( "value or value trap"
, I agree that this share has sound prospects for a good return over 3 years, underpinned by it's yield; and also agree that predicting the daily price is impossible.However you should be aware of the issue which has seen the SP fall in recent days. There is a legal issue around the resetting of the discount rates used for calculating the lump sum to be paid today to personal injury victims with long term care needs. It's very complicated but the essence is that the lower the discount rate the more expensive it is for insurers, as a bigger lump sum is required. If someone will need extensive medical care for say 30 years, then the sum DLG will need to pay NOW to meet that cost each year will be more if the discount rate ( effectively the real return that the lump sum can earn ) falls. It is currently around 2.5% and the thinking is that when the Government re-sets it in the next few weeks it could be close to zero. That could cause a £200-300m hit to DLG's numbers this year, and see even the normal dividend passedAs DLG ( unlike Admiral) doesnt reinsure, the extra cost is wholly payable by the company. And because the new rate will apply to all outstanding historic claims, the initial pain will cover effectively several years of claims. Going forward it shouldn't be a problem because premiums will increase to account for it. Also DLG seems to have been quite conservative in it's provisioning in the past and so could have some ability to release some funds from those reserves.The uncertainty is that no one knows how big the initial hit will be. But it is highly likely in my view to result in there being no, or only a token, special dividend for the current year. Hence why my dividend expectations are much lower for the current year but are based on an average dividend of 4%+ pa over a 3 year view.This is the reason for certain analysts reviewing their target prices down, and could see a further sharp sell off- or bounce- once the announcement is made shortly.I'm happy with the stock and if there is a further sharp drop intend to buy more. Generally with insurers the time to buy is after some catastrophe and the knee jerk market sell off as that enables premiums to go up. I suspect the same will happen here.
Guitarsolo
16 Jan 2017
Re: Income attractions I couldn't agree more Essential. DLG is a very well run company, albeit in a very competitive market. However, DLG's brand and market position (not getting into the price comparison game is smart - a race to the bottom) allow it to maintain better margins. Performance has been good, even in a world where insurers are making zilch on the investment side. I remember doing my insurance exams when you were supposed to factor in the investment return between premium payment date and claim date! I wonder if they have re-written that module?!DLG is run well, and run with a keen eye on investor returns (which pleases me as one). Full year dividends are swayed by any specials, but I am hoping for around 27pps which is a stonking yield of 7.7%. I added last week at just under 348p. It's not "cheap" at that price, but it is fair value and you have to pay that for a good company. I've given it a weak buy only because you could have bought much cheaper back along. Guitarsolo
EssentialInvestor
13 Jan 2017
Income attractions Accept there may be a small scaling back on dividend expectations,it still leaves a fat yield even allowing for a smaller contribution from any special dividends.DLG looks a very well run company, they may have leeway to take some share fromAdmiral over the next couple of years imv.The Buy is for the longer term only, sadly unable to estimate the daily price!.
Rhigos
13 Jan 2017
Re: Why today's 3% fall? I have been looking at fundamentals, using SharePad, for DLG and I see there are reasons to think DLG has become overvalued.VALUE (fc=forecast, y=year, avg=average, NAV=Net Asset Value, FCF=Free Cash Flow)fc PE 12.6 3y avg 9.8Price/NAV 1.9 3y avg 1.4Price/FCF 112 3y avg 10.2 suggest a dramatic fall in FCF along with rise in SP. FORECAST GROWTHfc Pre-tax profit -5.3%fc Norm EPS -13.5%DIVIDENDfc yield 8.0%fc div cover 1.0 this is worrying, suggests to me dividend could become unsustainable and may be cutfc div growth 102%, 3y avg 16.5% this seems very optimistic to meRETURNSROE (Return on Equity) 17%, 3y avg 14.5%, this increase is goodIt looks to me that market thinks the forecast dividend may become unsustainable and so might be less than expected. This would result in a sharp fall in SP if is lower. Perhaps market is anticipating this which would explain the SP falling 7% this year. At least it up about 0.5% this morning. I am holding as in the longer term I think SP will recover.
Callun
12 Jan 2017
Re: Why today's 3% fall? They're Aussies. Perhaps they have the graph upside down
VoxVoci
12 Jan 2017
Re: Why today's 3% fall? Not sure about Tuesday's drop but today's slide could be down too this.Macquarie today downgrades its investment rating on Direct Line Insurance Group PLC (LON
LG) to underperform (from neutral) and cut its price target to 295p (from 345p).
shabby 2 sox
11 Jan 2017
Financials on the slide generally on Brexit fears it seems. I suspect it is going to be a bumpy ride this year with a drip drip of forecasts, updates, comments and fakeness.
LINTON5
10 Jan 2017
Re: Why today's 3% fall? I've been in a wee while rhigos will buy more if goes under 352. A joke drop today being the biggest loser in ftse100 and good old Aviva is up. Admiral got done is as well (strange can't find any reason for it) also a juicy divi stock
highsnlows
03 Jan 2017
Diary Dates The following dates might be of interest to those that hold DLG in their portfolio:Final Ex Div Date 09/03/2017Final Div Pay Date 18/05/2017Interim Ex Div Date 10/08/2017Interim Div Pay Date 08/09/20172016 Prelim Results 28/02/20172017 1st Qtr Trading Update 03/05/2017Hope the upward trend continues.HnL
white_van_man
12 Dec 2016
Re: value or value trap Good points there blouson, much the same reasons I had a large top up last week
blouson blouse
12 Dec 2016
value or value trap Dipped my toe in here a few weeks ago and topped up today. There seem to be sound reasons on an investment basis ( as opposed to trading) for these. Minor impact from Brexit; a well covered and significant yield excluding special dividends ( circa 4%); a reasonable expectation that special dividends will continue ( which delivers a yield of circa 8%); and whilst safer cars will reduce the market, the medium term is that claims will reduce before premiums do. DLG seems to have a good positioning in terms of its investment in IT and also a conservative provisioning policy. The industry seems to be in a period of raising premiums . It is valued at a significantly lower multiple to its peers, and I would expect this gap to shrink over time, and the shares to be re-ratedOn a 3-5 year view ( allowing for market gyrations) I expect the compounded yield and closing of value gap to deliver a blended return of at least 50%, and potentially double that, with a downside risk of capital loss being minimal because of the yield- unless something dramatically goes wrong in the business or on a macro level. But in the next 5-10 years home and car insurance are essential requirements for consumers I suspect that because of automated cars and the inevitable chaos that the industry faces in due course some investors may be frightened away, which could prevent the significant increase in share price which ought to happen, but won't stop the dividend. As The dividend alone ( if special dividends continue) on 5 years- if reinvested- will deliver a 50% return; and even without ANY special dividends returns over 20%, the prospect of loss for the scale of realistic reward seems unusually low.And the prospects of NO increase in the share price in that period strikes me as very unlikelyFor those of you looking for RELATIVELY safe income, and a patient investment strategy ( 'get rich slow') this seems a sensible opportunity.
Rhigos
12 Oct 2016
Why did SP close +3.30% today? I could not find any new broker updates or news to explain sharp rise in SP for DLG on a day when FTSE 100 was down 0.66%. Anyone any ideas why?Fundamentals look good and it is one of my favourite shares in my portfolio, one which I first bought at IPO.
EssentialInvestor
14 Sep 2016
Well is all well Perhaps there are factors I am not seeing here, or least underestimating,this looks value near these levels.All IMV only.
Rhigos
17 Aug 2016
Re: Wow SP fell 4% on XD date as expected.Admiral CEO interviewed on Bloomberg this morning. He stated that during last recession most drivers held onto their cars and continued paying car insurance but saved money by reducing miles driven. This is a benefit to motor insurance companies as reduced usage of cars will lead to reduced number of claims, hence improve profit margins. DLG via Direct Line and Churchill are competitive with insurance premiums so in these troubled times when recession fears are about a strong buy IMO. Today's SP fall a buying opportunity IMO. These are just my views so as always DYOR.
II Editor
03 Aug 2016
NEW ARTICLE: The only way is up, probably "When a member of the FTSE 100 experiences such a vivid day, it's surely worth a glance to see why the market firstly bothered gapping it up and also, where they probably intend take the price.As LSELGirect Line's chart below illustrates, the ..."[link]
