The Beginners’ Portfolio is a virtual portfolio, run as if based on real money with all costs, spreads and dividends accounted for. Transactions made for the portfolio are for educational purposes only and don’t constitute advice to buy or sell.

The past year has been tough for the Beginners’ Portfolio, with a few key shares losing out — BP shares are down 23% over 12 months thanks to falling oil prices, while Rio Tinto has dropped 22% as the commodities crunch has continued, and a surprise dividend cut has led to a 34% slump for Barclays (LSE: BARC) shares. But with oil and minerals starting to pick up, and the future for Barclays looking strong to me, I think we could be past the worst for all three.

In fact, a 17% recovery for Barclays, to 171p, has helped keep the portfolio to a 35.5% gain since our first purchase in May 2012, which really isn’t too bad. Here’s the current state of affairs, with prices at market close on 22 April:

Persimmon (LSE: PSN) has cemented its position not just as our biggest growth share so far, but also as a solid dividend provider. We added £53.90 in cash to the pot in May, which gives us an effective yield of 15% on our original purchase price in July 2012. And that, for me, illustrates one of the real lessons of investing for income — that today’s yields don’t count anywhere near as much as a progressive cash-handout policy, as the latter is what brings in the big money over the long term.

Persimmon is forecast to pay out the same again for this year and next, so two more years of effective 15% yields make Persimmon a very strong hold to me, especially as the shares are on forward P/E multiples of only around 10.

Engineering comeback

Shares in BAE Systems (LSE: BA) have had a flat 12 months, but they’ve been clawing their way upwards since late September 2015, and we’re now sitting on a very nice 41.5% gain since purchase in October 2012. But that is just the share price, and once we include dividends too, we’re looking at an overall 65% gain including all spread and costs.

Our dividends are, of course, being reinvested whenever there’s sufficient cash to make a purchase, and so far that’s been at times when a share has been sold to boost the cash pot. But with £335 in cash built up since the last purchase, it really won’t be too long before we have enough for dividends alone to make a new investment. I think it will most likely be a top-up, and with BAE shares on a forward P/E of only around 12 for 2017 and with growth likely to return, it’s in with a shout.

Too cheap

Another big top-up possibility is Barclays, whose share price fall over the past year has disappointed me — and I really didn’t see the dividend cut coming. But I’m greatly encouraged by the recent modest recovery, and with the shares now on a P/E that’s expected to drop as low as 7.6 based on 2017 forecasts (while the FTSE 100 long-term average stands at close to twice that), they could be one of the best bargains around.

Sure, the dividend will probably only yield around 2% by then, but at full-year results time the bank told us that it expects to get back to paying “a significant proportion of earnings in dividends to shareholders over time“, once the balance sheet is a bit tighter and legacy issues recede further.

I think there’s a very good chance of Barclays’ shares doubling in the next few years, and it would be madness for me not to keep hold of them now.

The post Beginners’ Portfolio: Persimmon plc, Barclays plc & BAE Systems plc help us to 35% gains appeared first on The Twelfth Magpie.

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Alan Oscroft owns shares of Aviva. The Motley Fool UK owns shares of Apple and GlaxoSmithKline. The Motley Fool UK has recommended ARM Holdings, Barclays, BP, and Rio Tinto. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.