Provident Financial

It's been a quiet week from my perspective - no trading and only one dividend. Provident Financial paid their final dividend today and the cash is already in my ISA.

I chose Provident Financial for my High Yield Portfolio for a number of reasons. One, obviously the yield! It's well over 7% but covered thinly by earnings (barely more than 1x earnings). Bt this cover should increase over time as the level of dividend payments are partly the legacy from the demerger of International Personal Finance last year.

Secondly they operate a good quality sub-prime lending operation. Door to door lending leaves an aftertaste in many peoples mouths, but people will always need cash even when the banks won't lend to them. They have a good screening process which helps keep bad debts manageable and I can only see demand for their services increasing in the years to come.

The cash received stays on the cash balance for now. I'm a fair way off having the £1000 in this ISA to make another purchase, but am not far off in my second ISA to purchase that tranche of GKN shares I still have my eye on.....

But if the share price rises before I can buy I have a back up candidate - HSBC Infrastructure Company. But more of that next time...... :-)