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Friday, July 26, 2013

Recent Buy: CHL

Jul 26, 2013: Bought 47 shares of CHL at $53.27 per share.

China Mobile Limited (CHL) is an investment holding company. The company and its subsidiaries provide mobile telecommunications services to about 700 million customers in China and Hong Kong.

Last month I completed a stock analysis of CHL when it was trading at $51.28 per share. At the time, I didn't have enough cash to purchase shares of CHL. But with a recent bonus deposit and CHL reappearing on my dashboard of top dividend growth candidates, I'm ready to invest in CHL. 

Analysis Update

At my purchase price of $53.27, CHL's annual dividend of $2.18 yields 4.09%. Over the past 10 years, CHL has outperformed the markets with a return of 461% compared to 76% for both the S&P 500 and the Dow Jones.

CHL has a 5-year dividend growth rate of 14.16%. Fair value estimates are $58.90 (Graham Number method) and $60.00 (MorningStar). My purchase price represents a discount of about 10%  to the average of these estimates ($59.45).

The following table provides some key statistics for CHL, with highlighted values relating to my selection criteria:
In addition to the above-mentioned, CHL passes these selection criteria:
  • Sum of dividend yield (4.09%) and 5-yr dividend CAGR (14.16%) is 18.25% (Chowder Dividend Rule)
  • EPS% Payout ratio is 42.04% (below 65%)
  • Debt to Equity ratio is 0% (below 50%)
  • 7-year weighted average dividend growth rate is 13.35% (at least 7%)
  • 5-yr total payback percentage is 22.01% (at least 16%)
My confidence in CHL's ability to continue with dividend increases is moderate. Except for this point, CHL passes all my selection criteria and earns 7 stars: (*******)

Other ratings for CHL

(see Recent Buy: CVX for details on these ratings)
S&P Capital IQ's Stock Report(*****)Hold 
MorningStar Rating(*****)
The Motley Fool's CAPS Rating(*****)

Final Remarks

47 shares of CHL represents $102.35 of expected annual dividend income. Forward 12-month projected dividend income is $1,248.52For the 2013 calendar year, this purchase adds about $44.65 of expected dividend income, for a total of $1030.87 for 2013.

I now own shares in 11 different companies in DivGro.

Full Disclosure: Long CHL

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