Remove ads

Introducing the LemonFools Personal Finance Calculators

Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

Practical discussions about equity High-Yield Portfolios (HYP) for income
Forum rules
Tight HYP discussions only please - OT please discuss in strategies
MDW1954
Lemon Slice
Posts: 387
Joined: November 4th, 2016, 8:46 pm
Has thanked: 69 times
Been thanked: 45 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166313

Postby MDW1954 » September 14th, 2018, 1:14 pm

IanTHughes wrote:
Ian
(Not a holder of ULVR - Yield has never been high enough)


I think the trick with ULVR is all about timing. I am a holder, but I have bought carefully. Back in 2011, for instance, The Fool's late-lamented Todd Wenning recommended ULVR for his Dividend Edge service at a price of £19.54, noting that ULVR's yield of 3.7% at that point was "well above " (his words) the market average of 3.0%, and also well above ULVR's own five-year median dividend yield of 3.2%.

A yield of 25% or so above the market average yield would surely tempt you today, so either you weren't in the market then, or something else put you off, although what that might be I have no idea.

Today's yield is a reflection of the fact that ULVR's 6.7% pa dividend compound growth rate in recent years simply hasn't kept pace with the stellar capital growth of the share.

But that is not the same as saying that ULVR's yield has never been HYP-relevant, or of interest.

MDW1954 (a holder)

Gengulphus
Lemon Quarter
Posts: 2263
Joined: November 4th, 2016, 1:17 am
Been thanked: 1026 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166324

Postby Gengulphus » September 14th, 2018, 1:38 pm

scrumpyjack wrote:I shall vote against this, as the Dutch have not scrapped the withholding tax and seem unlikely to do so as there is a very large majority against scrapping it.

https://www.reuters.com/article/us-unil ... SKCN1LR1Q0

The fall back mechanism for avoiding extra tax on UK holders looks very dodgy and unreliable. It may even mean that every 'dividend' we receive will be treated as a partial CGT disposal and not a dividend as it will be structured as a capital payment. The Dutch will then probably close that 'loophole'

If the Dutch abolition of dividend withholding tax goes ahead and is not reversed (which that Reuters article does seem to say is at least somewhat questionable), they won't care whether foreign investors' payments are structured as dividends or as 'dividend substitution payments', which is what the full scheme circular (available from https://www.unilever.com/investor-relat ... ification/ after agreeing to a disclaimer) calls them. That's because those foreign investors won't be taxed by the Dutch either way. They might close the 'loophole' as far as Dutch income tax is concerned, but that can only affect investors who are subject to Dutch income tax, and I suspect the majority of them wouldn't pay any less tax as a result of electing for 'dividend substitution payments': what they would gain on not paying dividend withholding tax they would lose on paying more income tax.

If the Dutch abolition of dividend withholding tax doesn't go ahead, or if it is later reversed, then yes, they might well close the resulting 'loophole'. But basically, I think the worry here is about whether the Dutch abolition of dividend withholding tax goes ahead and is not reversed - and the Reuters article you link to does bring that considerably more into question for me. I.e. I'm only saying that Dutch 'loophole' closing does not strike me as a significant extra concern beyond that one.

There is also the issue of possible UK 'loophole' closing, but that too seems unlikely to me. The reason for that is that I think this involves a bit of 'loophole' closing that the UK taxman has already done, namely the one done a few years back that brought the increasing use of 'B share schemes' (and similarly-named schemes) by companies wishing to return cash to their shareholders to an end. Those schemes involved giving the shareholders a choice about whether they wanted to receive the cash as a dividend payment or as a capital payment (*), and the tax law change was that if shareholders were given such a choice, the payment would be treated for UK tax purposes as dividend income regardless of what choice the shareholder made. This basically left it still possible for companies to run such schemes, but they would be totally ineffective at their intended purpose compared with simply paying a dividend, and since they were considerably more expensive to run than a dividend payment, companies abandoned their use.

Anyway, the point here is that Unilever's 'dividend substitution payments' involve just such a choice by its shareholders: the circular is quite clear that most shareholders (**) in Unilever plc (the current UK company) will by default get dividend substitution payments and all (I think) shareholders in Unilever NV (the current Dutch company) will by default get dividends, but either can elect to be paid by the other mechanism. So on the face of it, as far as UK tax law is concerned, the tax law change I have described above would seem to apply, with the result that either dividends or dividend substitution payments will be treated as dividend income for UK tax purposes, even though the mechanism underlying the dividend substitution payments is a capital one.

The shareholder circular also says that "Any such dividend substitution payments received by a New NV Shareholder or New NV ADS Holder resident in the UK for tax purposes should be treated as income distributions for UK tax purposes with the same UK tax consequences as a regular dividend, as described above." There's no explanation of why they will be treated as dividend income, so I can't say that it supports my argument above - but it does support the argument's conclusion.

Finally, something I'll point out is that the Reuters article is a bit misleading when it says that "The Dutch tax does not apply to shareholders in the Netherlands. Other investors, such as Americans, are able to deduct dividend tax paid in the Netherlands from their U.S. taxes under a bilateral treaty." As I've indicated above, the Dutch withholding tax may not apply to shareholders in the Netherlands, but Dutch income tax does, so if a dividend from Unilever is going to a shareholder in the Netherlands, the only difference between withholding tax applying and being deducted from their income tax bill and it not applying and nothing being deducted from their income tax bill is the timing of payments. And shareholders in the UK basically have the same ability under a tax treaty to deduct Dutch withholding tax paid from their UK tax on the dividend...

But UK taxpayers would be more exposed to Dutch dividend withholding tax than taxpayers in many other countries (though the article's "uniquely exposed" is almost certainly over the top!) for the simple reason that they can only deduct it from the UK income tax payable on that dividend, not on any other source (which I suspect is also true in other countries) and they often have very low rates of UK tax on dividends (i.e. 0% on dividends paid by shareholdings is ISAs or covered by personal or dividend allowances, 7.5% on any remaining dividends in the basic-rate hand). Being able to deduct none or only half of a 15% dividend withholding tax is nothing like as good as being able to deduct all of it!

Anyway, what I've seen of this, including the doubts raised by the Reuters article, reinforces my belief that I don't regard this unification of Unilever as being in my interest, so I too will be voting against it. If it passes (which I strongly suspect it will), I will then have to consider whether I wish to retain my shareholding in the company, which is a harder choice as far as I am concerned... However, the expected timetable in the circular says that the shareholder meetings to vote on the scheme are expected on October 26th and the scheme (if passed) not expected to take effect until December 21st. So there should be about a couple of months to make that decision, in the light of more information about whether it's going to happen at all and probably from my brokers to confirm exactly what will be happening to each of my shareholdings, so that decision can wait!

(*) Note that the phrase "B share scheme" does only strictly speaking mean a scheme that involves using a class of shares that the company calls B shares, and occasionally companies do use a scheme involving B shares and call it a "B share scheme" without it involving the tax 'loophole' that was closed. I.e. one will still occasionally see a "B share scheme" being used - but one needs to look at the details of the scheme to see whether it's actually of the type I'm talking about.

(**) There are some exceptions for particular methods of holding the shares, which I won't try to go into in this already-long post, especially as I haven't yet absorbed everything that applies to those.

Gengulphus

monabri
Lemon Quarter
Posts: 1791
Joined: January 7th, 2017, 9:56 am
Has thanked: 141 times
Been thanked: 406 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166326

Postby monabri » September 14th, 2018, 1:47 pm

ULVR has never come into the " attractive" HYP zone for me. I like the compound annual growth rates in dividend ...can they be be maintained? In addition, the current yield ( 3% - ish) is " helped" by the current exchange rate.

Somewhat controversially ( provocative, maybe ?), I'd contend that the only thing that seems to have put a rocket up their derriere was the involvement of Heinz. They've taken on quite a bit of debt since then ( defensively?) to bide time until they could make the move to Holland.

I've got mixed feelings about Unilever.

ayshfm1
Lemon Pip
Posts: 86
Joined: November 5th, 2016, 9:43 am
Been thanked: 23 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166329

Postby ayshfm1 » September 14th, 2018, 2:00 pm

Ordinarily I'd agree with PYAD I'm wasting my time worrying, sell out or be Doris.

However I think 75% is a pretty high bar. Anyway the above is in my HFX share account I'd say we're going to vote on this and my small - 20K holding going to be no.

UNILEVER PLC - Important Information

Scheme of Arrangement

1 New ordinary share of New Unilever N.V. for each Existing Unilever Plc share held.
Important Information & Other Key Dates:
On 11th September 2018, the Boards of both Unilever Plc and Unilever N.V. announced a decision to simplify and modernise the structure of the businesses by combining Unilever Plc and Unilever N.V. into one legal entity. As part of the decision to modernise their structure, the Boards have further concluded that New Unilever N.V. should be incorporated in the Netherlands to reflect the fact that the Groups Dutch company is larger than the UK company.

The Boards believe that the combination, which is to be effected by way of a Scheme of Arrangement, will create value, drive performance for the long term and position Unilever for future success.

The Scheme is subject to shareholder approval at Extraordinary General Meetings, to be held on 25th October 2018 for Unilever N.V. shareholders and 26th October 2018 for Unilever Plc shareholders. The Boards recommend that shareholders vote in favour of the proposal.

The Scheme is also subject to approval at a Court Meeting on 26th October 2018, for Unilever Plc.

It is not yet known when the Scheme is expected to become effective, but is expected to be completed by the end of 2018. Once effective, the New Unilever shares will trade on the London Stock Exchange, where the Company will seek a premium listing and trade in British Pounds.

Should you retain your holding of Unilever Plc, we will notify you upon receipt of further information from the company.

For more information about the Scheme, please visit the Unilever website, https://www.unilever.com/investor-relations/

Gengulphus
Lemon Quarter
Posts: 2263
Joined: November 4th, 2016, 1:17 am
Been thanked: 1026 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166336

Postby Gengulphus » September 14th, 2018, 2:20 pm

MDW1954 wrote:
IanTHughes wrote:(Not a holder of ULVR - Yield has never been high enough)

I think the trick with ULVR is all about timing. I am a holder, but I have bought carefully. Back in 2011, for instance, The Fool's late-lamented Todd Wenning recommended ULVR for his Dividend Edge service at a price of £19.54, noting that ULVR's yield of 3.7% at that point was "well above " (his words) the market average of 3.0%, and also well above ULVR's own five-year median dividend yield of 3.2%.
...
But that is not the same as saying that ULVR's yield has never been HYP-relevant, or of interest.

I think that when someone says "Yield has never been high enough" in the context of whether they are themselves a holder, one really has to take it as being followed by an implicit "compared with other candidates, at a time that I was buying"! Certainly that's true of my own HYP's holding, which I mainly bought in October 2013. A quick look at its purchase and some FT charts says that its rolling historical yield at the time of purchase was about 3.7% and the FTSE 100 yield at the time was about 3.6%, so I think it did just meet this board's criteria on a yield I can calculate now (and it was probably a bit better on forecast yield), though that's a bit accidental - use of the FTSE 100 yield as a hard cut-off wasn't in my HYP strategy at the time. But my HYP had been going since 2003, so I'd clearly missed the better chance Todd / you have pointed out there! And I'm pretty certain the reason can only have been that I had something else I wanted to buy more at the relevant times in 2011.

Gengulphus

IanTHughes
2 Lemon pips
Posts: 153
Joined: May 2nd, 2018, 12:01 pm
Has thanked: 111 times
Been thanked: 76 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166341

Postby IanTHughes » September 14th, 2018, 2:41 pm

MDW1954 wrote:
IanTHughes wrote:(Not a holder of ULVR - Yield has never been high enough)

I think the trick with ULVR is all about timing. I am a holder, but I have bought carefully. Back in 2011, for instance, The Fool's late-lamented Todd Wenning recommended ULVR for his Dividend Edge service at a price of £19.54, noting that ULVR's yield of 3.7% at that point was "well above " (his words) the market average of 3.0%, and also well above ULVR's own five-year median dividend yield of 3.2%.

A yield of 25% or so above the market average yield would surely tempt you today, so either you weren't in the market then, or something else put you off, although what that might be I have no idea.

Today's yield is a reflection of the fact that ULVR's 6.7% pa dividend compound growth rate in recent years simply hasn't kept pace with the stellar capital growth of the share.

But that is not the same as saying that ULVR's yield has never been HYP-relevant, or of interest.

Oh I do not doubt that ULVR has been and is HYP-relevant. At times it may well be a selection candidate in a one-shot, 15 holding HYP. I started my HYP in early 2012 and the reason I have never selected ULVR is simply down to there always being a suitable higher yielder available, at the time of purchase.

By way of explanation I started by HYP in February 2012 with my first 4 HYP holdings, using up all my available funds to do so. The plan, which by and large came to fruition, was to purchase one further holding of similar size, every month, as funds came available, for the rest of the year. This would lead to the creation of a fully diversified HYP by Jan or Feb 2013. This was duly achieved and without a Tobacco holding or ULVR or indeed any of the other large income beasts that just never came up to scratch yield-wise.

Maybe, if I had started out by buying 15 or 16 holdings all in one go, one of the income beasts might have been included. But, by spacing out my purchases over a year, together with the volatility of the market making whole sectors or individual shares go in and out fashion, there always seemed to be something suitably diverse and higher yielding for my monthly purchase. The same is now the case with my monthly top-ups, there always seems to be a suitable candidate with a higher yield, sometimes much higher.

I did eventually get hold of Imperial Brands PLC (IMB) in April 2014, a full year into my top-up process. But even then I had to bend my rule about always taking the highest available yield in order to do so. And I did so because I thought that the yield was as good as I was going to get with IMB and my HYP needed one of those income beasts, even at a lower yield than was otherwise available.

So, maybe I will eventually do the same with ULVR, we shall see. But please do not think that I am against holding ULVR, it is a superb income provider, always has been and probably will continue to be so for the foreseeable at least.



Ian

tjh290633
Lemon Quarter
Posts: 2275
Joined: November 4th, 2016, 11:20 am
Has thanked: 133 times
Been thanked: 660 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166350

Postby tjh290633 » September 14th, 2018, 3:05 pm

ITH, your problem is that thou art nobbut a lad as far as HYP investing is concerned. As you comment above, ULVR has never been a candidate for you while you have been in the market for HYP shares. That is the statement you should use, rather than the simple "Never has been". You are not alone in this respect.

TJH

StepOne
Lemon Slice
Posts: 396
Joined: November 4th, 2016, 9:17 am
Has thanked: 57 times
Been thanked: 65 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166367

Postby StepOne » September 14th, 2018, 3:53 pm

Unilever was the last addition to my HYP which was formed around 2013-14, and the lowest yielding. But it's more than made up for it with dividend growth.

In 2015, it gave me the third lowest income in the portfolio (only Centrica and Sainsburys were lower as they both cut that year).

Fast forward three years to 2018 and Unilever has overtaken British Aerospace, British Land, BHP Billiton, Glaxo, Pearson, and BATS in terms of annual income. It's now one of the top payers, just 10% behind leader Vodafone, which it could probably catch in the next year or two.

Obviously exchange rates have played a part in that, but just a demonstration that apparent low-ish yielders can make good HYP components.

StepOne

Gengulphus
Lemon Quarter
Posts: 2263
Joined: November 4th, 2016, 1:17 am
Been thanked: 1026 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166369

Postby Gengulphus » September 14th, 2018, 3:55 pm

ayshfm1 wrote:However I think 75% is a pretty high bar. Anyway the above is in my HFX share account I'd say we're going to vote on this and my small - 20K holding going to be no.

Yes - but a recommendation to vote for the scheme by the directors of a company is also a pretty high bar, because a lot of funds and other large shareholders will pretty automatically vote with directors' recommendations. And actually, there may well be a 50% bar that is in practice higher than the 75% bar, because the Court Meeting requires "the approval of the UK Scheme by a majority in number of PLC Shareholders, present and voting, whether in person or by proxy, at the PLC Court Meeting or any adjournment thereof, representing not less than 75 per cent. in value of the PLC Shares (including PLC Shares represented by PLC ADSs) that are subject to the UK Scheme voted by such shareholders". If small shareholders were to vote mostly against the scheme and large shareholders mostly for it, it could end up that the "majority in number" part of that failed while the "not less than 75 per cent. in value" part succeeded!

More important: If you want to vote on the scheme (and assuming your broker account with Halifax is one of their normal nominee ones), do NOT expect them to send you a further notification telling you how to vote. In particular, how to vote is something Unilever has already told its registered shareholders, who include Halifax's nominee company and do not include you as the holder of a Halifax nominee account that contains the shares. Halifax will not receive any further information from the company about how to vote, so their statement that "Should you retain your holding of Unilever Plc, we will notify you upon receipt of further information from the company." does not apply! It is likely that if you do nothing other than await instructions on how to vote, the next thing you'll hear from Halifax about the matter will be along the lines of "The Scheme was passed at the meetings on October 26th and is expected to come into effect on December 21st".

This is not idle theorising on my part, by the way: I hold Unilever shares both in a CREST account (which makes me a registered shareholder with respect to those shares) and in various nominee accounts. I have received the company's voting instructions and forms with regard to the shares in the CREST account and an identical notification from Halifax, so I've seen both sides of the above. Furthermore, I've been in a similar position with regard to many previous corporate actions that have involved shareholder votes, and have never received a notification from Halifax to tell me how to vote my shares held with them. And this is typical of nominee broker accounts: nominee brokers are not obliged to notify their nominee account holders about shareholder votes, and except in the case of ISAs, not even obliged to make arrangements for them to vote if they actively ask to do so. (Some won't do that, some will, and those who will are entitled to charge a fee for the service.)

The upshot of that is that if you want to vote your shares held with Halifax, you need to ask Halifax whether they will arrange it. If they will and will do it for free, tell them to go ahead; if they will and want to charge a fee, you need to decide whether you want to vote badly enough to pay the see and if so, go ahead. If they won't do it at all, you still can vote them, but the only reasonably reliable way of doing so is to withdraw them as a certificate (which Halifax will charge a fee of £25 for) and get voting instructions and forms from Unilever - they're available from https://www.unilever.com/investor-relat ... ification/ after agreeing to a disclaimer. And you need to do those things soon - the 6 weeks before the meetings on October 26th may seem plenty of time, but both arranging for nominee account holders to vote and withdrawing shares as certificates are very frequently slow processes!

Also, if Halifax will arrange your voting for you, make certain they understand that you want to vote in both the Court Meeting and the Extraordinary General Meeting. Such details ought to be understood, but if they don't get understood and this is discovered after a few weeks, there may well not be enough time left to fix the problem...

Note I'm not saying that you or anyone else needs to want to vote their shares badly enough to justify paying fees or the hassle of having to do things quickly! Just that if you do want to vote them badly enough, that's what you'll need to do...

Gengulphus

scrumpyjack
2 Lemon pips
Posts: 234
Joined: November 4th, 2016, 10:15 am
Has thanked: 11 times
Been thanked: 61 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166389

Postby scrumpyjack » September 14th, 2018, 4:47 pm

Thanks Gengulphus

My wife and I both hold Unilever shares via Hargreaves Lansdown and I have asked them whether they are enabling shareholders to vote in both meetings.

scrumpyjack
2 Lemon pips
Posts: 234
Joined: November 4th, 2016, 10:15 am
Has thanked: 11 times
Been thanked: 61 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166392

Postby scrumpyjack » September 14th, 2018, 5:00 pm

HL have replied to me

"We will be writing out to clients more formally with instructions on how to vote on the above in the coming weeks."

I presume this will be on the mechanics of voting rather than which way to vote!

IanTHughes
2 Lemon pips
Posts: 153
Joined: May 2nd, 2018, 12:01 pm
Has thanked: 111 times
Been thanked: 76 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166401

Postby IanTHughes » September 14th, 2018, 5:26 pm

StepOne wrote:Unilever was the last addition to my HYP which was formed around 2013-14, and the lowest yielding. But it's more than made up for it with dividend growth.

In 2015, it gave me the third lowest income in the portfolio (only Centrica and Sainsburys were lower as they both cut that year).

Fast forward three years to 2018 and Unilever has overtaken British Aerospace, British Land, BHP Billiton, Glaxo, Pearson, and BATS in terms of annual income. It's now one of the top payers, just 10% behind leader Vodafone, which it could probably catch in the next year or two.

Obviously exchange rates have played a part in that, but just a demonstration that apparent low-ish yielders can make good HYP components.

I cannot know the exact composition of your HYP but I am certain that the annual dividend amount from a low yielding share, albeit with a high annual dividend growth rate, nonetheless will take a long time to overtake that of a higher yielding share, even one with 0% dividend growth year on year.

viewtopic.php?f=15&t=13104&p=158660#p158660

IanTHughes wrote:Investor A purchases a share yielding 2.5% which increases its dividend by 10% each year
Investor B purchases a share yielding 5.0% which never increases its dividend

It will be 9 years before Investor A enjoys a higher annual dividend than Investor B
It will be 15 years before Investor A's accumulated dividend overtakes that of Investor B

And that is assuming that Investor A's selection never stumbles and Investor B's never picks up

Do the maths yourself if you do not believe me


Ian

Dod101
Lemon Quarter
Posts: 1612
Joined: October 10th, 2017, 11:33 am
Has thanked: 295 times
Been thanked: 573 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166407

Postby Dod101 » September 14th, 2018, 5:54 pm

This thread is in danger of becoming a discussion once again on the suitability of Unilever for a HYP which is quite irrelevant for the topic under discussion and indeed, some might suggest it is totally off topic.

Pyad as usual is being cavalier in his comments, presumably for the sake of effect. All shareholders should be using their vote otherwise there is not a lot of point in complaining about lack of shareholder democracy, and ownerless corporations.

I think the bar is quite high for both of the PLC meetings (the NV meetings seem to only require a 50% majority) so PLC shareholders have got a real chance to influence this business, and so we should, as the PLC company is a very important equal in the partnership, irrespective of what the Dutch say.

We should not allow a Dutch takeaway. I wonder how the Leverhulme Trust is going to vote? This is being sold as a 'Simplification' but it is in fact incorporating a total takeover by the Dutch of a very long established and successful British company. It should be possible to have a Royal Dutch Shell solution, with incorporation in one country and executive control in the other. If small shareholders are unhappy then they should vote against the proposals. Nil Desperandum because 'Mony a mickle maks a Muckle' as we say in Scotland. At least it should be possible to give them something to think about and if a few institutions vote against, you never know.

Dod

MDW1954
Lemon Slice
Posts: 387
Joined: November 4th, 2016, 8:46 pm
Has thanked: 69 times
Been thanked: 45 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166419

Postby MDW1954 » September 14th, 2018, 6:36 pm

Thank you, Dod, for bringing us back on-topic. Mea culpa, and all that.

What follows may be seen as unwelcome or overtly political by some, but is meant objectively: Theresa May's hand in all this should not be forgotten.

When the Kraft Heinz offer appeared, she was heavily focused on being the Prime Minister looking after the so-called "JAMs", and refused to meet with Polman. This was despite Unilever's position as a major employer, tax-payer, and net contributor to the UK economy.

I shall probably vote for the proposal, simply to avoid seeing yet another fine business sucked into a giant American conglomerate with as much respect for tradition and rights as a certain current US president. Vide Cadbury, if anyone needs a reminder. (Remember the factory that they promised to keep open?)

Neither option is palatable, but I like to think that I know which one Lord Leverhulme would have preferred.

MDW1954

OZYU
2 Lemon pips
Posts: 155
Joined: December 31st, 2016, 3:52 pm
Has thanked: 31 times
Been thanked: 102 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166430

Postby OZYU » September 14th, 2018, 7:06 pm

IanTHughes wrote:
StepOne wrote:Unilever was the last addition to my HYP which was formed around 2013-14, and the lowest yielding. But it's more than made up for it with dividend growth.

In 2015, it gave me the third lowest income in the portfolio (only Centrica and Sainsburys were lower as they both cut that year).

Fast forward three years to 2018 and Unilever has overtaken British Aerospace, British Land, BHP Billiton, Glaxo, Pearson, and BATS in terms of annual income. It's now one of the top payers, just 10% behind leader Vodafone, which it could probably catch in the next year or two.

Obviously exchange rates have played a part in that, but just a demonstration that apparent low-ish yielders can make good HYP components.

I cannot know the exact composition of your HYP but I am certain that the annual dividend amount from a low yielding share, albeit with a high annual dividend growth rate, nonetheless will take a long time to overtake that of a higher yielding share, even one with 0% dividend growth year on year.

viewtopic.php?f=15&t=13104&p=158660#p158660

IanTHughes wrote:Investor A purchases a share yielding 2.5% which increases its dividend by 10% each year
Investor B purchases a share yielding 5.0% which never increases its dividend

It will be 9 years before Investor A enjoys a higher annual dividend than Investor B
It will be 15 years before Investor A's accumulated dividend overtakes that of Investor B

And that is assuming that Investor A's selection never stumbles and Investor B's never picks up

Do the maths yourself if you do not believe me


Ian



Moderator Message:
Unnecessarily impolite part removed. Chris


If you only model the divis, sure, but put in your model a sensible assumption on the relative share price movements of both, over say 10-30 years, then realise the excess capital, for parity, into income, which any re balancer would do anyway, and see! That is the proper comparison that a young pot builder can do, and should. If he can find enough As, he should hold a few of them, his portfolio won't suffer a bit. The retiree taking income has often other priorities.


Ozyu

IanTHughes
2 Lemon pips
Posts: 153
Joined: May 2nd, 2018, 12:01 pm
Has thanked: 111 times
Been thanked: 76 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166435

Postby IanTHughes » September 14th, 2018, 7:27 pm

OYZU wrote:
IanTHughes wrote:Investor A purchases a share yielding 2.5% which increases its dividend by 10% each year
Investor B purchases a share yielding 5.0% which never increases its dividend

It will be 9 years before Investor A enjoys a higher annual dividend than Investor B
It will be 15 years before Investor A's accumulated dividend overtakes that of Investor B

And that is assuming that Investor A's selection never stumbles and Investor B's never picks up

Do the maths yourself if you do not believe me

OYZU wrote:If you only model the divis, sure, but put in your model a sensible assumption on the relative share price movements of both, over say 10-30 years, then realise the excess capital, for parity, into income, which any re balancer would do anyway, and see! That is the proper comparison that a young pot builder can do, and should. If he can find enough As, he should hold a few of them, his portfolio won't suffer a bit. The retiree taking income has often other priorities.

When building a pot, Investor B will simply invest the extra dividends received into more capital. I can assure you that there is nothing wrong with my maths.

However, you may not be aware, but HYP is an "Income" Strategy which is why I was discussing the relative "Income" results.



Ian
Last edited by tjh290633 on September 14th, 2018, 8:55 pm, edited 1 time in total.
Reason: Comment removed - TJH

Dod101
Lemon Quarter
Posts: 1612
Joined: October 10th, 2017, 11:33 am
Has thanked: 295 times
Been thanked: 573 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166479

Postby Dod101 » September 14th, 2018, 10:43 pm

Can I once again return to the topic of the thread. Before small shareholders (which I assume we all are) give up on voting against the proposals on the grounds that it will make no difference, can I just mention that in the FT on 12 September, one top 10 investor is reported as saying that they would be voting against the proposals, arguing that the Company had 'made no effort to engage with UK shareholders' and that they would be encouraging their peers to vote against them. Another shareholder, Columbia Threadneedle, said the proposals made sense but that the approach of Unilever discriminates against UK shareholders. Another top 30 shareholder said that for many investors 'if they vote for the proposals they are effectively voting for forced divestment of their holding' (because they will not be in the FTSE100)

So I think all is not lost by any means and I urge shareholders to vote against if they feel that way and not simply let matters slide.

Dod

ayshfm1
Lemon Pip
Posts: 86
Joined: November 5th, 2016, 9:43 am
Been thanked: 23 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166490

Postby ayshfm1 » September 15th, 2018, 12:29 am

As always wise words from big G above.

HFX will provide me a letter if I want to go in person - I don't. Or they will vote on my behalf provided I confirm the resolution I want them to vote against which I will. You can do it via the chat function.

I also wrote to Vanguard (I hold VUKE which is FTSE100 tracker) and enquired what they are going to do, along with with what I would like them to do :D Pointing out ULVR is a very big FTSE100 company and this madness gives them a headache they could do without, either flog it because it's not a FTSE 100 member or fudge the rules to keep it. Of course that bunch of smart cookies will be a long way ahead of me and likely have already figured out what the best action is. They are also the largest single holder ULVR stock.

OZYU
2 Lemon pips
Posts: 155
Joined: December 31st, 2016, 3:52 pm
Has thanked: 31 times
Been thanked: 102 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166503

Postby OZYU » September 15th, 2018, 7:45 am

Ian

I don't want to prolong this, and I am sure that your maths are up to the elementary problem you set, but by ignoring one of the parameters, your resulting conclusion is faulty. Instead of taking such an aggressive attitude, ponder on the capital prospects of your A and B stocks. B is basically a bond after all. I repeat for the retiree taking income not particularly bothered by capital, your conclusion will do, but the young pot builder with decades to go needs to consider the whole situation, and do the modelling correctly by feeding a view on share price action into the model. I stand by my own maths and conclusion. And I can assure you that I am profoundly aware of what HYP can and cannot do for investors.


Your own mention of not holding ULVR 'because the yield is not high enough' tells an interesting tale on your approach to investing. Balance and not pushing portfolio yield is best in the long run imho.


I'll leave it at that, too off topic, too old anyway

Ozyu

idpickering
Lemon Quarter
Posts: 3060
Joined: November 4th, 2016, 5:04 pm
Has thanked: 401 times
Been thanked: 733 times

Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166504

Postby idpickering » September 15th, 2018, 7:54 am

ayshfm1 wrote:As always wise words from big G above.


Is that Gengulphus’s new handle? Cool, next we’ll have some t-shirts made, a web site etc. :lol:

I do concede that he provides an invaluable service hereabouts though. Can I order a large size t-shirt please?

Ian.


Return to “High Yield Portfolios (HYP) - Practical”

Who is online

Users browsing this forum: No registered users and 3 guests