I got my Christmas present! I just added 100 shares of Enagas SA to my dividend growth portfolio. It was a bit of a surprise to me, because I didn’t include the stock on my watchlist.

This is where I really appreciate the community, because one of you brought the company to my attention again. I didn’t look into it for more than a year and I was surprised to see that it had such a steep decline in share price. This resulted in a very high dividend yield right which is now at almost 9% (8.93%).

So I did my due diligence 2 weeks ago and as fortune had it: the stock dropped another 10% after 2 downgrades from Barclays and JP Morgan. You gotta love the pumping and dumping of analysts, because they so often give us additional opportunities to buy attractively valued shares! 😉

Why did they downgrade the stock? Well simply said: the Spanish regulators are making it harder for Enagas SA to grow. There is increased price pressure by stricter requirements and more focus on a sustainable way of operations and energy.

This is no problem for me, because I consider myself a combination of a Dividend Growth Investor and a Value Investor. Off course, an almost 10% yield is a typical red flag for any investor and it requires extra caution to invest, but it doesn’t mean that we should automatically ignore it. It just means extra caution to understand what’s going on.

This is what I’ve done over the last two weeks. I’ve studied the last few years of annual reports and investor presentations to figure out their strategy and their commitment to the dividend. I’ve also done a fair value estimate using 3 different scenario’s. All of this to get a really good feeling for the company and to know for sure that I would feel comfortable with owning shares in this company.

As mentioned before, it led me to initiate a position and purchase 100 shares of Enagas SA. I’m very happy with this purchase and it should allow me to mix up a bit my portfolio.

But I’m not done yet with my story. I’m also experimenting a bit with YouTube again, so if you’re interested in my observations and analysis of this company then have a look at my video below.

It includes the following segments:

• Business Background – how does it earn their money?
• Stock Analysis – what’s their dividend history and how do their metrics look like (i.e. ROIC > WACC, Chowder Rule, P / FFO)
• Fair Value Estimate – using discounted cash flow analysis based on 3 scenario’s (using template from Sven Carlin)

Having said that, let me know what you think about it 👍

PS: may I also ask you to subscribe to the channel in case you are going to watch the video? 🙏 I’m trying to start publishing more regularly and my goal is to grow to 1000 subscribers in 2021.

What do you think about this recent purchase? Do you own it as well or are you considering to initiate a position? Or do you think that it’s a value trap?

Let me know what you think in the comment section below 👇

Enjoy the remainder of the holiday break 🌲✨

Yours Truly,

European Dividend Growth Investor