UAC is what they termed as an old horse counter. As the premier cement board manufacturer, it has seen dwindling fortunes the last few years. As its performance and profits is contingent on the construction industry, its fortune rises and ebbs with the ups and downs of the construction sector.
Let us look at the revenue of UAC for the last few years from 2006 to 2010.
The revenue numbers shows an up and down trend with the best year being 2010. 2006 and 2008 also showed good revenue yield.
For profit before tax, UAC had the best year in 2006 and the worst year in 2008.
For after tax figures, UAC did best in 2006.
Let us now focus on dividend yield.
The best year for dividends was 2008 when UAC gave out a gross of 26 sen plus a non tax 6 sen. Dividend for 2007 was a good 30 sen.
For 2010, it gave out 24 sen gross,a fair dividend given the more challenging construction industry.
So, can we say that UAC is a good dividend counter to invest in?
In effective rate, UAC paid net dividend of 25.5 sen net in 2006;22.5 sen in 2007;16.5 sen in 2008,19,5 sen in 2009 and finally 18 sen in 2010.
On an average basis, if you are holding UAC shares from 2006, you would have secured an average dividend income of 20.4%. This works out to a return of 6.8% per RM1,000 investment.
This is definitely better than putting money into fixed deposits. Then there is that good possibility for capital gains too.
A word of caution, though.
UAC is strictly investor grade and you may not be able to quickly dispose of it in the market as there are very few speculative buyers.
