Today Alliance & Leicester, the mid cap mortgage bank announced they were in detailed takeover talks with Santander of Spain.The shares duly shot up over 45% (though are still massivley down on the highs achieved in 2007). I had been happy to continue holding A&L as they had issued no cash calls like many of the other UK banks, and the dividend looked as though it would be held.However, with an offer price agree at £3.18 (I think) I decided to sell at the higher market price of £3.28. Why? When looking at the bid in more detailed terms it became apparent the offer was for Santander shares (1 for every 3 A&L share held). I've already held Banco Santander shares following the takeover of Abbey National in 2004 and I sold them earlier this year - so I had no desire to hold a new batch that would incur Spanish witholding tax on my dividend income.I realised a small loss, but at least I have cash in my ISA right now, rather than waiting for shares in October. That assumes the deal is waved through on competition grounds, which cannot be taken for granted.I've already spent the cash - moving out of the UK over to the US to buy Pfizer - a strong dividend payer in the defensive drugs sector. I've also bought a tranche of shares inb HSBC Infrastructure Company, which are yielding over 5.5% and will provide a steady income stream from all these government PFI initiatives.So the cash released from A&L burned a hole on my cash balance for all of ten mimutes!The Dividend Seeker
I learnt a valuable lesson this week on the cyclicle nature of some businesses - and how they should not form a large part of any long term equity income portfolio. After Taylor Wimpey's confirmation that they will not pay an interim dividend this year, Barratt Developments (another one of the householders in the portfolio) confirmed they will not be paying a final dividend this year and are keeping future dividend payments under review. This does not mean they are cancelling the dividend per se - they still paid a 12.2p interim dividend, which by default will now be the total for the year. This will hit the income target for the portfolio not insignificently this year. Long term the housebuilders will recover. The shares hold recovery potential and they have fallen too far to sell anyway. But that is not the point - they should not be in an income oriented portfolio such as mine in this scenario. I will hold them for the eventual recovery - but this means more than ever the hunt is on to find companies less cyclical where both dividend growth and security of payment are key. This may mean looking outside the UK, but the need for secuirty is paramount. As an aside, a dividend payment from Marks and Spencer is due in the account today - which will provide another small step to having the funds for another purchase - and whatever that turns out to be it won't be a housebuilder! The Dividend Seeker
As discussed previously, building materials supplier Marshalls has caught my eye in the current market downturn.They have historically been good, reliable dividend payers, but the company shares have declined rapidly in the last few weeks along with the market.I decided to take advantage of my brokers no commission offer if I buy on a mobile phone before the end of the month, and bought a 'half-holding' of £500 worth. I bought at £1.3714 each and bought a total of 363 shares.At this price, the shares yield a whopping 10.1%. This is not always a good sign as it can signal dividend cuts around the corner. But Marshalls board last week reaffirmed their commitment to at least maintaining the dividend. I have faith in them as it is a highly cash generative business. Also, at this price, the shares are trading at book value - so I've bought the shares on an incredibly cheap 8.3 PE at a price not seen since 1999.I am happy to tuck this one away for the long term and is a welcome addition to my portfolio.The Dividend Seeker
This is the first monthly review of the capital performance for my dividend income portfolio. It hasn't got off to a great start, which is hardly surprising as I launched it just as the UK market slipped into bear market territory.The figures don't make for great reading, but I am not concerned about this at this stage. If I was, I shouldn't have invested in the first place!The porftolio is down by -9.4% in the first month, a drop of over £6000. Housebuilders Persimmon, Barratt Developments and Taylor Wimpey have had major impacts. On the plus side, I received a £71 dividend from Taylor this week, but this may be the last for a while as they have cancelled their interim dividend this year and have said they will review their future dividend policy at year end. When I look for new stocks I have made a note to ensure I take economic cycles into account more!A success has been shipbroker Clarkson which is in positive territory at £51 and GlaxoSmithKline at over £60 - showing the merits of defensive sectors during choppy times such as this.Despite the Taylor Wimpey dividend setback, income is starting to pick up, with oiver £110 received this week. I am now over the threshold of £1000 cash to buy a new stock, and am still looking at GKN which has now slipped below the £2 mark for the first time in over four years. But as my broker is offering five free trades at the moment, and there are so many bargains out there I am tempted to split the cash 50/50 between GKN (which yields above 7% on current forecasts) and building materials supplier Marshalls. Marshalls shares are at levels not seen since 1999 and yield over 10%, so much of the bad news must be already factored in to the price. The board also confirmed it's intention to maintain the dividend this week at it's present levels due to it's strong cash levels.I'll let you know what I finally decide.The Dividend Seeker
