Derek Pain: After some rocky adventures, BT is again in good shape
No Pain, No Gain
Saturday 18 June 2011
A famed City editor of yesteryear relied heavily, when judging the merits of an investment, on the type of service offered by the company under investigation. Evidence of an efficient and friendly environment would endear him to the business and often contribute significantly to any share recommendation he made.
I am talking about the distant pre-internet, pre-big bang City. In the 1950s and 1960s, before corporation tax and price earning ratios were imported, dividend and earning yields reigned supreme. Investment tools were in short supply; hence our City Ed's dedication to personal service. I found myself recalling his attitude last week when I was confronted, just as I was about to send the no pain, no gain column to The Independent, with unresponsive telephone and broadband. The initial reaction from my supplier, BT, was far from satisfactory. Mobile attempts to reach the telecom behemoth produced computerised voices which offered no joy at all. Once we made contact, via a BT line, the group appeared to swing into action. In two days the fault, that seemed to hit others in my vicinity, was fixed. So, after a rather frustrating intervention, our lives were back to normal.
What, I wondered, would the departed Fleet Street stalwart have made of the BT response. Despite the computer blockage, I think he would have been satisfied. After all, what I suspect was a fairly serious outside fault was fixed quite quickly and I doubt if he would have felt it necessary to blackball BT as an investment.
In these days the old hack's somewhat simplistic investment approach would produce hollow laughter. Indeed, public facing groups with lamentable records of consumer satisfaction are not punished in the City. Very often they are accorded fancy share ratings. It could be the result of today's allegedly more sophisticated approach. Many love to indulge in complicated calculations and, of course, the internet, with its many wondrous aspects, has transformed the supply of sound (and indifferent) information.
There is no doubt that investors, big and small, now have much more detailed knowledge than was available in past years. But is the nitty-gritty of front line investigation too often ignored? I realise analysts often embark on so-called site visits and attend conferences. But they can be carefully orchestrated. I once knew a brewery analyst whose knowledge of some companies – and people – in the industry was astonishingly detailed. He could never have obtained such information studying yearly reports, or attending site visits. I suspect he "endured" more than the occasional pub crawl in his thirst for knowledge.
Whereas brewing is still a relatively simple industry, the advent of sophisticated computerised shenanigans could have made on-the-ground research more complicated and difficult. Still it should not be ignored.
Back to BT. I have been a (very) small shareholder since privatisation in 1984. It has not been an outstanding investment. Indeed at one time BT was forced into a rights issue. Still over the years dividends have been fairly consistent and, allowing for the hiving off and subsequent takeover of the mobile phone side, I am in the money. Of course, I would have been far happier if I had sold during the dotty.com madness when the shares were around 1,500p against, as I write, 195p.
At one time I contemplated adding BT to the portfolio, largely because the shares appeared underpriced and the dividend yield was more than 5 per cent. But I have since abandoned any such thoughts. Today, the shares are near their two-year high and the yield is around 3.6 per cent.
Still, there is evidence that after some rather rocky adventures, BT is again in good shape. Last year adjusted pre-tax profits rose 20 per cent to £2.1bn with the "true" figure 71 per cent higher at £1.7bn. And the year's dividend is up by 7 per cent.
I doubt if in my lifetime BT shares will recapture the exhilarating levels achieved during the dotcom madness, even if recent activity indicates the stock market could experience another possibly farcical internet surge. Yet for long-term investors, who like the comfort of dividend payments and hope for steady capital appreciation, the telecom group has undoubted attractions.
Compare with the Independent: See how much you could save by switching credit cards. Compare now
- 1 Bad cattitude: Family call police after crazed and 'hostile cat with a history of violence' attacks baby before attempting to 'flee custody'
- 2 Family forced to flee home after discovering 'terrifying' nest of spiders in bananas
- 3 First Kiss: Filmmaker gets 20 strangers to make out on YouTube with awkward results
- 4 Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
- 5 Bob Crow death: 'Admired by his members, feared by employers' - Tributes pour in for RMT union leader and 'working class hero' Bob Crow
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Exclusive: Impact of immigrants on British workers ‘negligible’
Katie Hopkins continues campaign to become Britain's most hated talking head with poorly timed Bob Crow tweet
Ukraine crisis: Russia pledges to 'retaliate against sanctions' as Ukrainian president says Crimea vote will not be recognised
The quiet diplomat: Catherine Ashton - recognised and admired in all the world’s troubled countries, yet ridiculed at home
Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
iJobs Money & Business
£1000 per month: Inspiring Interns: The company works with Tier 1 FTSE 100 Ban...
£35000 - £60000 per annum + Bonus + Benefits: Pro-Recruitment Group: You must ...
£60000 - £80000 per annum + BONUS + BENEFITS: Harrington Starr: A top, City ba...
VOLUNTARY ONLY - EXPENSES REIMBURSED : Reach Volunteering: Fantastic opportuni...
Day In a Page
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square
A charming four-bedroom house overlooking Burleigh Square Park, close to Thorpe Bay
A three-bedroom farmhouse with a large inglenook fireplace and exposed beams
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill