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TJH Portfolio adjustment

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tjh290633
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TJH Portfolio adjustment

#341678

Postby tjh290633 » September 21st, 2020, 11:22 am

Last Monday, William Hill (WMH) went zooming past my weight limit of 150% of the median holding vale and stayed there. As I was on holiday, I could not trim it back as is my custom until this morning. Accordingly I have sold 25% of my holding at 213.5p and the proceeds, plus accumulated dividends, have allowed me to add to my holdings of GSK, +16% at 1497p, PHP, +18.7% at 149p, and TSCO, 18.9% at 221p. All of course are paying dividends, whereas WMH has paused theirs, but is buoyed by its activities in the USA.

My top-up table now looks like this:

Top-up          Income                     Cost                
Rank EPIC Rank EPIC % Income Rank Epic % Cost
1 IMB* 1 LGEN 6.44% 1 PSON 4.41%
2 BP.*+ 2 BATS 5.91% 2 BP. 4.40%
3 VOD* 3 BP. 5.71% 3 RDSB 4.39%
4 LGEN* 4 IMB 5.23% 4 LLOY 4.35%
5 RDSB+ 5 RIO 5.03% 5 MARS 4.31%
6 BATS* 6 SSE 4.94% 6 AV. 4.20%
7 BLND- 7 ADM 4.71% 7 GSK 4.19%
8 AV. 8 VOD 4.66% 8 BT.A 4.15%
9 SSE* 9 GSK 4.56% 9 MKS 3.97%
10 MKS- 10 NG. 4.54% 10 S32 3.67%
11 IMI 11 BHP 3.89% 11 TSCO 3.62%
12 NG.* 12 AV. 3.70% 12 BLND 3.59%

As always, I disqualify shares which would, if topped up by 20%, provide more than 5% of dividend income (*) or contribute more than 5 of portfolio cost (+). The first category now extends down to NG., although this is influenced by the number of companies which have paused dividends. The disqualified shares are marked on the above table.

I also avoid companies currently pausing dividends, which currently rules out BLND and MKS (-). However Aviva just avoids this by virtue of falling share of portfolio cost, so becomes the next share qualifying for top-up, followed by IMI. Lower down the table are UU. and TATE.

My portfolio now looks like this:

Value                           
Rank EPIC Weight % Median
1 KGF 3.86% 134.1%
2 AZN 3.56% 123.6%
3 ADM 3.53% 122.5%
4 ULVR 3.48% 120.8%
5 BHP 3.43% 119.1%
6 GSK 3.35% 116.2%
7 RIO 3.32% 115.2%
8 WMH 3.29% 114.1%
9 DGE 3.23% 112.2%
10 TSCO 3.21% 111.3%
11 BA. 3.20% 111.2%
12 NG. 3.11% 107.8%
13 SGRO 3.08% 106.8%
14 RB. 3.04% 105.5%
15 PHP 2.97% 103.2%
16 SSE 2.94% 102.0%
17 BATS 2.94% 102.0%
18 UU. 2.88% 100.0%
19 S32 2.88% 100.0%
20 TATE 2.86% 99.3%
21 LGEN 2.77% 96.1%
22 AV. 2.74% 94.9%
23 PSON 2.71% 94.1%
24 BP. 2.69% 93.3%
25 IMI 2.62% 90.8%
26 VOD 2.50% 86.6%
27 SMDS 2.48% 86.0%
28 BLND 2.37% 82.2%
29 RDSB 2.23% 77.5%
30 CPG 2.10% 73.0%
31 IMB 2.06% 71.4%
32 TW. 2.05% 71.1%
33 BT.A 2.05% 71.1%
34 MARS 1.62% 56.1%
35 LLOY 1.44% 50.0%
36 MKS 1.42% 49.4%

WMH has fallen to 8th position, GSK has risen to 6th, TSCO to 10th and PHP to 15th.

I look like having another top-up at the end of the month.

TJH

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Re: TJH Portfolio adjustment

#341683

Postby Arborbridge » September 21st, 2020, 11:43 am

As regards Aviva, what yield are you using? Are you not disqualifying due to the non-payment in June and the reduction in the interim?

Maybe you have information which I haven't seen.


PS I'm still wrestling with my AZN shares being 2.1x median but not sure whether to sell in view of their Covid investment.


Arb.

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Re: TJH Portfolio adjustment

#341694

Postby idpickering » September 21st, 2020, 12:43 pm

Arborbridge wrote:As regards Aviva, what yield are you using? Are you not disqualifying due to the non-payment in June and the reduction in the interim?

Maybe you have information which I haven't seen.


PS I'm still wrestling with my AZN shares being 2.1x median but not sure whether to sell in view of their Covid investment.


Arb.


If I may chip in here. I’ve more than doubled my investment on AZN, including dividends received, and I’m happy to just let them be. But each to their own.

Similarly to the top up %age to Terry, tomorrow I will be bringing my values of my BP. and RDSB share holdings up by 15%. Ish...

Ian.

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Re: TJH Portfolio adjustment

#341699

Postby Arborbridge » September 21st, 2020, 1:04 pm

Well, an interesting question to anyone using HYPTUSS: what are forecast yield are you plugging in for Aviva?

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Re: TJH Portfolio adjustment

#341744

Postby tjh290633 » September 21st, 2020, 3:48 pm

Arborbridge wrote:As regards Aviva, what yield are you using? Are you not disqualifying due to the non-payment in June and the reduction in the interim?

Maybe you have information which I haven't seen.


PS I'm still wrestling with my AZN shares being 2.1x median but not sure whether to sell in view of their Covid investment.


Arb.

I'm working on their interims paid in the last 12 months, of 9.5p and 6p. Looks like there will be no interim for YE 2020 but a likely final. It was the 2019 final that was replaced with a second interim for 2019. Since we will not know what they plan to pay out until they announce their 2020 final, probably better to be cautious on them until then, which will be during Q4, see https://www.investegate.co.uk/aviva-plc ... 00072935V/

TJH

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Re: TJH Portfolio adjustment

#341750

Postby Arborbridge » September 21st, 2020, 4:34 pm

tjh290633 wrote:I'm working on their interims paid in the last 12 months, of 9.5p and 6p. Looks like there will be no interim for YE 2020 but a likely final. It was the 2019 final that was replaced with a second interim for 2019. Since we will not know what they plan to pay out until they announce their 2020 final, probably better to be cautious on them until then, which will be during Q4, see https://www.investegate.co.uk/aviva-plc ... 00072935V/

TJH


Reading this together with your first post, I think the meaning is that Aviva could be a valid share for a topup provided the announcement in Q4 is good.

Arb.

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Re: TJH Portfolio adjustment

#341759

Postby dealtn » September 21st, 2020, 4:57 pm

Arborbridge wrote:Well, an interesting question to anyone using HYPTUSS: what are forecast yield are you plugging in for Aviva?


For which financial period are you asking?

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Re: TJH Portfolio adjustment

#341805

Postby Arborbridge » September 21st, 2020, 8:05 pm

dealtn wrote:
Arborbridge wrote:Well, an interesting question to anyone using HYPTUSS: what are forecast yield are you plugging in for Aviva?


For which financial period are you asking?


HYPTUSS takes the consensus forecast (from sharecast I believe) for the next 12 months - exactly how this is done, I know not.

Arb.

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Re: TJH Portfolio adjustment

#341815

Postby dealtn » September 21st, 2020, 8:28 pm

Arborbridge wrote:
dealtn wrote:
Arborbridge wrote:Well, an interesting question to anyone using HYPTUSS: what are forecast yield are you plugging in for Aviva?


For which financial period are you asking?


HYPTUSS takes the consensus forecast (from sharecast I believe) for the next 12 months - exactly how this is done, I know not.

Arb.


Maybe I am misunderstanding the question in that case.

I suspect the dividends in the next 12 months will be 6p interim, and 12p final. 18p on current share price of 282p gives a forecast yield for the next year of 6.4%.

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Re: TJH Portfolio adjustment

#341851

Postby Arborbridge » September 22nd, 2020, 7:24 am

dealtn wrote:
Arborbridge wrote:
dealtn wrote:
For which financial period are you asking?


HYPTUSS takes the consensus forecast (from sharecast I believe) for the next 12 months - exactly how this is done, I know not.

Arb.


Maybe I am misunderstanding the question in that case.

I suspect the dividends in the next 12 months will be 6p interim, and 12p final. 18p on current share price of 282p gives a forecast yield for the next year of 6.4%.


Thanks - that answer will do nicely until firmer news arrives. Up until now, I reset Aviva to "0%" in the absence of any other knowledge. What's the information which gives you the idea of 12p final: I don't know that Aviva have posted anything. Just a guesstimate?

Arb.

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Re: TJH Portfolio adjustment

#341860

Postby dealtn » September 22nd, 2020, 8:37 am

Arborbridge wrote:
dealtn wrote:
Arborbridge wrote:
HYPTUSS takes the consensus forecast (from sharecast I believe) for the next 12 months - exactly how this is done, I know not.

Arb.


Maybe I am misunderstanding the question in that case.

I suspect the dividends in the next 12 months will be 6p interim, and 12p final. 18p on current share price of 282p gives a forecast yield for the next year of 6.4%.


Thanks - that answer will do nicely until firmer news arrives. Up until now, I reset Aviva to "0%" in the absence of any other knowledge. What's the information which gives you the idea of 12p final: I don't know that Aviva have posted anything. Just a guesstimate?

Arb.


I strongly suspect the Board won't know the appropriate dividend, not just now, but in the relatively short period up until that decision requires making. As such it will be "human" reasoning that determine it. They won't want to set too high, as there will be a potential to cut "again" but more important psychologically, less room to "grow".

My suspicion will be a reversion to a considered norm of a final being double the interim will serve, especially as that result provides a "hearty" yield to satisfy certain investor types anyway. That yield will be determined in due course by the share price applicable, and should that move significantly I suspect that will be as the result of additional information on the underlying business, with the dividend moving accordingly.

As you say with little "new" information to go on, and with finance companies generally having difficult balance sheets and cash flows to analyse, it might even be a stretch to consider my reasoning educated guesswork. I don't have access to any paid analysts estimates anymore (so I may be in line with them or wildly out) so do my own. This particular company isn't one I follow, or come onto any of my screenings, so my research is admittedly "thin".

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Re: TJH Portfolio adjustment

#341911

Postby tjh290633 » September 22nd, 2020, 11:13 am

Arborbridge wrote:
tjh290633 wrote:I'm working on their interims paid in the last 12 months, of 9.5p and 6p. Looks like there will be no interim for YE 2020 but a likely final. It was the 2019 final that was replaced with a second interim for 2019. Since we will not know what they plan to pay out until they announce their 2020 final, probably better to be cautious on them until then, which will be during Q4, see https://www.investegate.co.uk/aviva-plc ... 00072935V/

TJH


Reading this together with your first post, I think the meaning is that Aviva could be a valid share for a topup provided the announcement in Q4 is good.

Arb.

Correct. They say: https://www.investegate.co.uk/aviva-plc ... 00072935V/

While the Board continues to monitor the impact of COVID-19 and the economic outlook carefully and with appropriate prudence, we have decided to take the opportunity to review our longer term dividend policy, in light of our strategic priorities and the future shape of the group, with the objective of a sustainable pay-out and lower leverage. We will update shareholders on all dividend matters, including the 2019 final dividend in the fourth quarter.


They did announce the 2nd Interim for 2019 in an announcement on 6th August, but we await the further details about "dividend matters" later this year.

TJH

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Re: TJH Portfolio adjustment

#342134

Postby absolutezero » September 23rd, 2020, 9:20 am

tjh290633 wrote:
Arborbridge wrote:
tjh290633 wrote:I'm working on their interims paid in the last 12 months, of 9.5p and 6p. Looks like there will be no interim for YE 2020 but a likely final. It was the 2019 final that was replaced with a second interim for 2019. Since we will not know what they plan to pay out until they announce their 2020 final, probably better to be cautious on them until then, which will be during Q4, see https://www.investegate.co.uk/aviva-plc ... 00072935V/

TJH


Reading this together with your first post, I think the meaning is that Aviva could be a valid share for a topup provided the announcement in Q4 is good.

Arb.

Correct. They say: https://www.investegate.co.uk/aviva-plc ... 00072935V/

While the Board continues to monitor the impact of COVID-19 and the economic outlook carefully and with appropriate prudence, we have decided to take the opportunity to review our longer term dividend policy, in light of our strategic priorities and the future shape of the group, with the objective of a sustainable pay-out and lower leverage. We will update shareholders on all dividend matters, including the 2019 final dividend in the fourth quarter.


They did announce the 2nd Interim for 2019 in an announcement on 6th August, but we await the further details about "dividend matters" later this year.

TJH

That sounds like 'prepare yourself for a "rebasing" of the dividend' to me.
I'm holding off on topping up Aviva - and may even sell - depending on what they say.

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Re: TJH Portfolio adjustment

#342275

Postby tjh290633 » September 23rd, 2020, 3:42 pm

absolutezero wrote:That sounds like 'prepare yourself for a "rebasing" of the dividend' to me.
I'm holding off on topping up Aviva - and may even sell - depending on what they say.

They have done already, I think. That's why I am assuming 15.5p instead of the previous 30p for 2018.

TJH

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Re: TJH Portfolio adjustment

#342443

Postby absolutezero » September 24th, 2020, 10:02 am

tjh290633 wrote:
absolutezero wrote:That sounds like 'prepare yourself for a "rebasing" of the dividend' to me.
I'm holding off on topping up Aviva - and may even sell - depending on what they say.

They have done already, I think. That's why I am assuming 15.5p instead of the previous 30p for 2018.

TJH

I'm a bit twitchy about this new chief executive who has 'visions' for the business.
They might have re-based once but what if the 'vision' is to do the same again? Kitchen sinking and all that.

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Re: TJH Portfolio adjustment

#342445

Postby tjh290633 » September 24th, 2020, 10:07 am

As it happens, Kingfisher went past my weight limit last night and I was all set to do another trimming this morning. However they are down below the limit again as a result of a fall in price today, so that has been put off for now. Had I done so, Aviva and United Utilities would have been topped up. With further accumulated dividends in the next few days, IMI would be with them, but AV. looks likely to be topped up anyway next week, regardless.

absolutezero wrote:I'm a bit twitchy about this new chief executive who has 'visions' for the business.
They might have re-based once but what if the 'vision' is to do the same again? Kitchen sinking and all that.


I think that the Kitchen Sink has already been included.

TJH

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Re: TJH Portfolio adjustment

#342496

Postby Arborbridge » September 24th, 2020, 12:25 pm

I have occasionally - as now - had UU. bubbling under on my radar and might well be in the mix this month. However, I've always been put off by the cash flow: does that not come into your reckoning, Terry?

If the numbers below are correcthe dividend hasn't been covered by free cash at all recently. This cannot go on for ever, or these numbers are misleading in a big way. Much cash is being spent on CAPEX, but whether that will lead to a big return to compensate, or is just an occupational hazard (money down the drain!) in keeping the pipes going, is a moot point

I would like some insight into this, because we are often told that free cash is critical. It's a similar story for SSE.



Arb.

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Re: TJH Portfolio adjustment

#342561

Postby tjh290633 » September 24th, 2020, 4:19 pm

Arborbridge wrote:I have occasionally - as now - had UU. bubbling under on my radar and might well be in the mix this month. However, I've always been put off by the cash flow: does that not come into your reckoning, Terry?

If the numbers below are correcthe dividend hasn't been covered by free cash at all recently. This cannot go on for ever, or these numbers are misleading in a big way. Much cash is being spent on CAPEX, but whether that will lead to a big return to compensate, or is just an occupational hazard (money down the drain!) in keeping the pipes going, is a moot point

I would like some insight into this, because we are often told that free cash is critical. It's a similar story for SSE.



Arb.

I'm puzzled by your figures, Arb. https://www.investegate.co.uk/united-ut ... 00086888N/ shows that for the year to 31 Mar 2020 the Net cash flow was £810m and the cost of dividends was £284m. The previous year the Net Cash Flow was £832m, and the cost of Dividends was £274m.

That looks covered to me.

TJH

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Re: TJH Portfolio adjustment

#342574

Postby Wizard » September 24th, 2020, 5:08 pm

tjh290633 wrote:
Arborbridge wrote:I have occasionally - as now - had UU. bubbling under on my radar and might well be in the mix this month. However, I've always been put off by the cash flow: does that not come into your reckoning, Terry?

If the numbers below are correcthe dividend hasn't been covered by free cash at all recently. This cannot go on for ever, or these numbers are misleading in a big way. Much cash is being spent on CAPEX, but whether that will lead to a big return to compensate, or is just an occupational hazard (money down the drain!) in keeping the pipes going, is a moot point

I would like some insight into this, because we are often told that free cash is critical. It's a similar story for SSE.



Arb.

I'm puzzled by your figures, Arb. https://www.investegate.co.uk/united-ut ... 00086888N/ shows that for the year to 31 Mar 2020 the Net cash flow was £810m and the cost of dividends was £284m. The previous year the Net Cash Flow was £832m, and the cost of Dividends was £274m.

That looks covered to me.

TJH


You are confusing cash generated from operations with net cash flow, I suggest you re-read your link...

Net cash generated from continuing operating activities for the year ended 31 March 2019 was £810 million, and therefore broadly consistent with £832 million in the previous year. The group's net capital expenditure was £645 million, principally in the regulated water and wastewater investment programmes. This excludes infrastructure renewals expenditure which is treated as an operating cost under IFRS. Cash flow capex differs from regulatory capex, since regulatory capex includes infrastructure renewals expenditure and is based on capital work done in the period, rather than actual cash spent.

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Re: TJH Portfolio adjustment

#342575

Postby Arborbridge » September 24th, 2020, 5:08 pm

tjh290633 wrote:
Arborbridge wrote:I have occasionally - as now - had UU. bubbling under on my radar and might well be in the mix this month. However, I've always been put off by the cash flow: does that not come into your reckoning, Terry?

If the numbers below are correcthe dividend hasn't been covered by free cash at all recently. This cannot go on for ever, or these numbers are misleading in a big way. Much cash is being spent on CAPEX, but whether that will lead to a big return to compensate, or is just an occupational hazard (money down the drain!) in keeping the pipes going, is a moot point

I would like some insight into this, because we are often told that free cash is critical. It's a similar story for SSE.



Arb.

I'm puzzled by your figures, Arb. https://www.investegate.co.uk/united-ut ... 00086888N/ shows that for the year to 31 Mar 2020 the Net cash flow was £810m and the cost of dividends was £284m. The previous year the Net Cash Flow was £832m, and the cost of Dividends was £274m.

That looks covered to me.

TJH


I will recheck - the figures came from morningstar. I don't think net cash is the same as free cash. From the net, wouldn't one need to subtract the CAPEX? Depends how they are defining "net".


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