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Chamberlin

  • BY: Andrew Hore |
  • POSTED: 07/07/2011 |

The Diverse Income Trust has invested £500,000 in castings maker Chamberlin at a premium to the share price.

The shares were placed at 135p each – an 8% premium over the close on the previous day. The Diverse Income Trust is managed by MAM Funds. Gervais Williams of MAM and the fund manager of the trust has always been a fan of companies that pay growing dividends. Chamberlin returned to profit in the year to March 2011 and announced a final dividend of 1p a share, which is covered nearly seven times by underlying earnings.

That was the first dividend announced by Chamberlin since an interim of 1.2p a share was paid at the end of 2008. FinnCap forecasts a 3p a share total payout for 2011-12, rising to 3.5p a share in 2012-13. That would still mean that the dividend will be covered 4.7 times in 2011-12, rising to 5.5 times in 2012-13. The business is highly cash generative and by March 2014, net debt would have been minimal even without the latest cash injection.

The cash will be used for organic and acquisitive growth. Chamberlin has a number of possible acquisitions.

At 134.5p a share, up 9.5p, Chamberlin is valued at £10m.

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