Meggit (MGGT) anyone?

[ZipserSir]

I've noticed that there are investors here who have Meggit in their HYPs and I'm wondering what the attraction is given that it isn't a HYP share with a yield of just 3.3% (on Friday).

It has popped up on my radar as the share price has dropped this year. Now the price is going back up and I'm wondering if I've missed (flying) boat.

What I like is that Meggit has a long record of sustaining or increasing its dividend. On the other hand, I also hold British Aerospace (BA.), so I'm a little concerned about doubling up on engineering and aerospace.

What do other HYPers think?

[Gengulphus]

With my bold:

I've noticed that there are investors here who have Meggit in their HYPs and I'm wondering what the attraction is given that it isn't a HYP share with a yield of just 3.3% (on Friday).

I think the word you're looking for is "was"!

Around this time of year 2 years ago, a share price chart says that Meggitt's price was about 365p. With a historical dividend of 14.4p at the time, that would have made its historical yield just under 4%, and its forecast yield at the time was probably a bit higher. I think either of those yields would probably have qualified as 'high' at the time - not hugely high, but probably sufficiently so for a lot of HYPers. Especially as at the time, we didn't have the requirement for a yield over that of the FTSE 100 in this board's guidance - or even this board itself!

That's not the only time it's made a visit into the lower reaches of high yield. Another was a few months earlier in late 2015/early 2016, and more recently, a month or two back the share price dipped to around 420p and its yield might have briefly poked its nose into high-yield territory. Also, I've only looked at a 5-year share price chart, so there might well be other times further back when Meggitt qualified as a high-yield share even by this board's fairly strict standard.

It's got a good dividend record - a couple of slight dips and one dividend freeze since 2000 in its unadjusted dividend record, but the two dips are due to rights issues and when the standard adjustments are made for those, the only blemish left is the freeze in 2009 - and by the standards of height-of-the-financial-crisis blemishes, a one-year freeze is very mild! Also, its dividend growth from 4.77p (adjusted) for 2000 to 15.85p for 2017 is an annualised 7.3% growth rate, which is pretty good.

Other than that, it's a FTSE 250 share, but I think fairly close to the top of it judging by its £3.8b market cap, and it's a possible share from the Aerospace & Defence sector. Admittedly one that's dwarfed by BAE Systems and by Roll-Royce, which are the more obvious candidates from the sector when it's out of favour - but some might regard that as a plus, given BAE Systems' tendency to come up on the political radar: there's something to be said for companies that keep a low profile and just get on with the job.

All in all, I can see that Meggitt is a plausible HYP purchase when its price is right. That's not now, as you quite rightly say - but a share like that will get into some people's HYP when it is a purchase candidate and then stick around!

Gengulphus

[monabri]

Negative earnings growth forecast for the next 1-3 years.

They have a new CEO in post ( Tony Wood) ..approx 3 months .

Maybe the time to buy was a month ago.... directors have been buying but not anything serious ( total £186k over 6
Individuals.).

The share price is "fair" ( based on future cash flows) so it's not a steal nor is it overpriced.

Yield is < 4%....

Unless you have a deep desire to fill in an aerospace/defence "stamp" hole in your HYP it does not grab me as a must have HYP buy.

[ZipserSir]

Thank you for the feedback, chaps, it really is appreciated.

One of the reasons I am contemplating buying into Meggit is that it does look boringly safe, with a reasonable yield. Having bought into Capita, Carillion, Centrica, Mirco Focus, Mitie, and Provident Financial, I'd like a quieter life please. I've been adding to the blue-chips like BATS, BP, GSK, Imperial, Shell and Vodafone, but I'd still like a little more diversity, and even though I hold British Aerospace (which has perfored well), Meggit looks like a boring, relatively reliable addition to the family - I added Close Brothers and St James Place in a similar vain.

Going forward I suspect I will be looking at ITs more as my experience suggests that the HYP options at the margin - numbers 12 through to 18 - tend to be the most flakey (though there have been some winners like Close Bros, IGG and Royal Mail).