I’m always keen to see which company directors are buying their own shares. For many, it’s given as part of their overall compensation package. Some choose to buy more themselves. Yet given that they have a relative freedom to buy and sell as they desire, it gives me a good indication of how an insider views the business prospects. This is especially true if I’m thinking of buying an income stock. If an insider is buying, then it gives me some confidence that the future dividends should be safe, if the company has a good financial year.
An income stock with a double-digit yield
Late in December, Ferrexpo (LSE:FXPO) chief executive James North bought company shares. More specifically, he picked up shares totalling a value of £181,174.78.
The trading and mining company has struggled over the past year, in part due to the volatile movements in the iron ore price. As a result, the share price has fallen 48.5% over this period. This has helped to push the dividend yield significantly higher to 13.34%.
I’m cautious about this high-dividend-yield stock, as the falling share price could indicate the business will cut the dividend per share in the future. However, with the CEO buying the stock, I’m tempted to invest a small amount of money.
An active investment manager
Another late December purchase came from Anne Wade, a non-exec director at Man Group (LSE:EMG). She purchased 15,000 shares in the business, worth £31,610.00.
The dividend yield for this income share is 5.27%, well above the FTSE 250 average. The share price is basically flat over the past year, which if anything was a pretty good performance for 2022.
Despite incurring some recent outflows of client funds, the latest trading report emphasised that “investment performance continues to be a key differentiator”. If returns continue to be good, I don’t see why future dividends from profits won’t keep going. This is a stock I’m thinking about buying in January.
Money in mining
In the final week of Christmas trading, Stuart Chambers of Anglo American (LSE:AAL) picked up 509 shares worth £15,824.81.
The mining company did well in the first half of last year with the volatility in commodity prices. However, it has been revising lower production guidance, with the update in December indicating that the 2023 earnings per share will likely fall.
I feel this is another case of a dividend stock with a high yield (6.13%) that I need to be careful with. If global economic activity slows down as some expect this year, demand for metals should drop. Although I think it’ll be very unlikely for Anglo American not to post a profit in 2023, I think it could slim down the dividend per share.
Therefore, I’m considering investing a small amount of money here given the yield, but only as part of a diversified dividend portfolio.
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Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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