Recent Buy – TKM

I have recently shared a watchlist for September, even though I thought that I was not going to purchase anything in September. Well, that has changed and I managed to do one buy last week! I bought some shares of Tallina Kaubamaja Grupp (TKM), an Estonian company from my local Baltics market.

I am pretty sure that not many of you have heard about this company, so this is a brief description about Tallina Kaubamaja Grupp:

Operators that form Tallinna Kaubamaja Group mostly pursue their business in the sphere of retail and wholesale trade. The Group companies contribute more than one tenth of retail trade in Estonia in general and employ more than 3,500 people.

The Group owns well-known brands like Kaubamaja, Selver, Selveri Köök, Tartu Kaubamaja Centre, Viking Motors, KIA, ABC King, SHU, I.L.U., Viking Security. The loyalty programme of the Group, Partner Card, extends to 585,000 loyal customers and is the largest in Estonia.

These are some key indicators of the stock at their current price:

  • Buying price: €9.04/share
  • P/E Ratio (TTM): 12.22
  • Annualized dividends (last year): €0.69/share
  • Current yield (if dividends wouldn’t change): 7.6%
  • Payout ratio (Last year): 94%
  • Raising dividends since: 2014 (4 years)
  • Debt/Equity: 0.23

Two things stand out from the above indicators. Firstly, the dividend yield is quite high (7.6%), especially compared to other companies in my portfolio. Of course, it comes with a cost, as the payout ratio over the last few years was close to 100%. Usually I wouldn’t buy a company with such a high payout ratio, as a dividend cut is likely. However, even if they would miss one year of dividend payments and resume it with the same ratio next year, the yield would still be higher than that of other stocks in my portfolio. I also will only need to pay 15% on their dividends, compared to 30% from companies in the U.S. (specifics of my investment account).

I thoroughly read their report for the first 6 months of 2018 and I liked what I saw:

  • Sales revenue grew by 6.1% compared to first 6 months of previous year;
  • Net profit grew by 7.9%
  • Quick ratio (Current assets / Current liabilities) grew from 0.93 to 1.02.

Anyway, the price of TKM was declining recently without any apparent reason to me:

It could be that I am missing something but I decided to initiate a position in this company. Last week I purchased 77 shares of TKM @€9.04/share for a total of €698.08 (including commissions). We will see if this was a mistake or not after some time 🙂 If the company maintains their dividend next year, this purchase would bring me €45,16 in dividends (after 15% tax).


What do you think about this purchase? Do you have it in your portfolios? What was your last purchase? I would be happy to ready your comments!

4 thoughts on “Recent Buy – TKM

  1. I think this is a good buy 🙂 Best investments in Baltics from my side, but dividend cut is very likely in unfortunate event. So this is the cost of risk/reword 🙂

    1. Hi P2035,
      Thanks, I definitely hope that it was a good buy 🙂 You are right about a possibility of a dividend cut but I decided to take the risk 🙂

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