New Addition or Top Up?

[Makems]

I have been building my HYP since 2003 and now have a significant portfolio which should provide enough income to keep me in reasonable comfort (though not luxury).
My portfolio is shown below. Some of the constituents (MKS, SVT, UU) are below median because I needed to release some cash a year ago to buy some development land.
For the last few years I have focussed mainly on topping up the existing constituents. The last shares I added were L&G last year, Marstons the year before.
I currently have cash from some asset sales equivalent to approximately 10% of the total portfolio value. So are there any obvious shares missing from my portfolio that I should add or should I continue with my strategy of topping up?
Thanks in advance from a long-term lurker.

[richfool]

Maybe Unilever.

[spiderbill]

Only ones that really come to mind are BAE, Rio Tinto, and Taylor Wimpy. Otherwise it looks pretty solid.

[ADrunkenMarcus]

Maybe Unilever.

Agreed. It has unrivalled emerging markets exposure and offers good growth IMHO. It would also bring in some fast moving consumer goods exposure with all of its attractive characteristics of good cashflow, good returns on capital and a degree of pricing power.

Its dividend yield is currently higher than it has been for a while. The dividend is probably one of the safest around and it would provide some ballast in the future - for example, if Lloyds has to cut its dividend during the next recession.

Best wishes

Mark.

[moorfield]

Maybe Unilever.

Agreed. It has unrivalled emerging markets exposure and offers good growth IMHO. It would also bring in some fast moving consumer goods exposure with all of its attractive characteristics of good cashflow, good returns on capital and a degree of pricing power.

Its dividend yield is currently higher than it has been for a while. The dividend is probably one of the safest around and it would provide some ballast in the future - for example, if Lloyds has to cut its dividend during the next recession.

Best wishes

Mark.

Disagreed! This is the HYP board after all, and you can buy 1% more yield on your hard-earned from an IT such as CIty of London for starters. So why buy lower than that?

Looking at your table, I'd say you certainly have room for some more Vodafone without unbalancing your existing weightings too much.

[Walrus]

personally I'd top up the water companies, I'd maybe leave vod alone for the moment.

[CommissarJones]

Another vote for VOD. Mobile communication seems to me to be a definite investment theme in today's smartphone world, and VOD is an attractive way to play it, with an enticing dividend yield and a nice geographic spread of markets in Europe, the Middle East, Africa and Asia. Cash flow might have been a concern for me as recently as a couple of years ago, but things seem in much better shape there now that Project Spring has ended.

[ADrunkenMarcus]

you can buy 1% more yield on your hard-earned from an IT such as CIty of London for starters. So why buy lower than that?

I think the poster was looking for individual shares. A higher dividend is all well and good, but it needs to be sustainable - a relatively high and rising income. The banks and insurers won't necessarily deliver that given their history in the last downturn and the pharmas are all possible candidates for cutting their dividends.

What's the dividend yield (current or historic) on the portfolio overall?

Best wishes

Mark.

[westmoreland]

top up British Land. large, over 30% discount to net asset value, which could close should there be a change in sentiment. 4.6% yield that will rise going forwards. consolidation in the sector which could lead to further value creation (think hammerson, intu). they are buying back shares which generates significant value for remaining shareholders due to the large discount to NAV.

[Hypster]

I'd consider adding ITV: forecast yield of 5.5%, covered x 1.5, at least five year increase in dividends and forecasted to increase by at least 2%

[Gengulphus]

Maybe Unilever.

Agreed. It has unrivalled emerging markets exposure and offers good growth IMHO. ...

Disagreed! This is the HYP board after all, and you can buy 1% more yield on your hard-earned from an IT such as CIty of London for starters. ...

A rather strange reminder - this board's guidance is just as much against ITs as it is against non-high-yield shares, if not more so...

Gengulphus

[idpickering]

Hi, nice looking HYP. In your shoes I'd top up Vodafone, Severn Trent and British Land, and maybe bring Admiral Group on board.

Ian.

[TUK020]

Light on Defence, Aerospace, Engineerign & Mining.

Perhaps add BAe & Rio?

[Davidsb]

I think RIO is a good call, and maybe BLT from the same sector.

I am a fan of GNK, but I know that others have concerns around the general economy. Still, if you are happy with MARS, then perhaps you don't share these concerns. Both companies have significant debt levels, but the debt is mainly secured against their respective retail estates.

Good luck with whatever you choose.

[moorfield]

Agreed. It has unrivalled emerging markets exposure and offers good growth IMHO. ...

Disagreed! This is the HYP board after all, and you can buy 1% more yield on your hard-earned from an IT such as CIty of London for starters. ...

A rather strange reminder - this board's guidance is just as much against ITs as it is against non-high-yield shares, if not more so...

Gengulphus

The point of my name-checking CTY (which I do regularly here on LF) is missed again I think. Of ITs, this is the closest proxy I have found(*) - in terms of yield, portfolio holdings and income growth - to the minimum performance that we should expect from the HYP strategy, ie. a FTSE100 yield on capital and an income that keeps up with inflation.

So on my measure, Unilever is not a HYP candidate for buying or topping up currently. Those who already hold and who are finding that their overall HYP income is not beating inflation should obviously ask themselves why they continue to do so.


(*) please volunteer any others that spring to mind

[tjh290633]

RIO is the obvious addition to me. You don't have a miner, so it fills a gap. A bit of judicious topping up as well.

TJH

[Walrus]

Disagreed! This is the HYP board after all, and you can buy 1% more yield on your hard-earned from an IT such as CIty of London for starters. ...

A rather strange reminder - this board's guidance is just as much against ITs as it is against non-high-yield shares, if not more so...

Gengulphus

The point of my name-checking CTY (which I do regularly here on LF) is missed again I think. Of ITs, this is the closest proxy I have found(*) - in terms of yield, portfolio holdings and income growth - to the minimum performance that we should expect from the HYP strategy, ie. a FTSE100 yield on capital and an income that keeps up with inflation.

So on my measure, Unilever is not a HYP candidate for buying or topping up currently. Those who already hold and who are finding that their overall HYP income is not beating inflation should obviously ask themselves why they continue to do so.


(*) please volunteer any others that spring to mind

On a strictly HYP basis I'd agree that Unilever does not meet the hurdle dividend to be added. That being said it would provide diversification and a decent growing yield all be it not high.

Personally I don't thinkn adding City really benefits a HYP as it is not really adding anything other as the majority of holdings are replicated and you are just paying both an up front premium and a management fee for what you have already done yourself. If you could pick up City on a discount I think their would be a stronger argument for it.

[88V8]

Is this % value, or income?

So you can add a further two holdings?

Yesterday I added RIO, that would indeed seem a good candidate.

BAE has a big pension overhang, I'll be selling them off next week for CGT.
BT also has a huge pension legacy.
I wouldn't give house room to Aviva, they have been a serial cutter.
I'm a seller of GSK due to overholding and the uncovered divi.

I'm also dubious of the utilities, although I do hold the usual suspects.

Legal & General a definite top-up, and VOD even though they are a bit of a leap in the dark.

In a different size category, the zombie life companies Chesnara (CSN, yield 5%) and Phoenix (PHNX, 6%) would be a good addition.

V8

[Makems]

Thanks for all the replies - all very helpful.
Bae used to be in my HYP until I disposed of it as part of my cash raising last year and is one I have considered bringing back on board.
The reason it was Bae and chunks of MKS etc that got the chop rather than others was simply convenience - they were in an ISA and easily sold for cash rather than the shares that are in my SIPP.
I have never had a miner on board and did think about Rio a long time ago but if I remember they cut their divi in 2009 which made me feel justified in ignoring them although their recent divi history appears to be pretty good.
Didn't BLT cut its divi in 2016? That puts me off them.
Re Admiral, I already have 2 insurers so I would prefer shares in new sectors.
Unilever is an impressive company, but at its current share price there are better yields on offer.
I will cogitate over the weekend, but my current thinking is to bring Bae and Rio on board and use the rest of the cash to top up the utilities.
Thanks again for all the input - it sometimes helps to have independent help to see the wood for the trees.

[tjh290633]

I have never had a miner on board and did think about Rio a long time ago but if I remember they cut their divi in 2009 which made me feel justified in ignoring them although their recent divi history appears to be pretty good.

Didn't BLT cut its divi in 2016? That puts me off them.

2009 is a long time ago. Yes, BLT did cut by 74% in 2016 and have increased it by 200% in 2017, with a further increase in the interim this year.

However RIO has the higher yield, and I would go for them in preference.

TJH