ADrunkenMarcus wrote:If it pays a special dividend (minimum 50p a share) every couple of years, it would send the dividend yield for those years well above 5%; ...
But it doesn't pay such a dividend every couple of years, does it? According to the ADVFN financials page, it's only paid two such specials since 1999, in February 2011 and February 2015, and for 2007 onwards, that's confirmed from the horse's mouth by the company itself in
http://www.victrexplc.com/dividend-performance. Also, we've essentially just had it confirmed by the final results that the next one
won't be paid in February 2017, two years after the last one.
Furthermore, for a long term income-seeker, what matters is the long-term average income, not the peaks and troughs produced by the idiosyncrasies of a company's dividend policy. A company that is paying (in very round number terms) an ordinary dividend of 45p per year and a special of 50p every other year is paying a total of 140p per two years, which the HYPer can take at 70p/year by sticking 95p/share in a 'buffer' bank account in the special-dividend years, 45p/share in the account in the non-special-dividend years, and withdrawing a steady 70p/share each year.
In the light of those two points combined, a somewhat optimistic assessment of Victrex's special dividends is that it's paying a special of 50p every 3-4 years, which are worth an average of 12.5-16.7p extra per year. At the current share price of 1758p, that's worth about 0.7-0.95 percentage points extra effective yield, taking it to about 3.3-3.6%. That's an improvement on the raw yield, and with good foreseeable dividend growth, I would definitely be interested. But as things stand, with short-term foreseeable dividend growth essentially non-existent and medium-to-longer-term dividend growth more a hope than anything clearly foreseeable, no, it's still not a HYP share for me.
ADrunkenMarcus wrote:... however I am sure the HYP focus would be on the regular dividend and not special dividend payments which, as the clue is in the name, are 'special' and can't be routinely counted upon.
Well, some 'special' dividends are predictable enough that they can arguably be counted on almost as much as the ordinary dividends - Admiral's are an example. I've taken to calling them 'not-so-specials', for obvious reasons, and certainly some HYPers do count them in assessing their reasonably reliable income. I would however generally want evidence that they really can be counted upon, both in terms of what the company has done in practice and what its stated policy is: Victrex is fine on the latter but with only two payments so far, a bit lacking on the former - which is why I say "somewhat optimistically" above.
One specific point I will note is that one really needs to be consistent about which dividend measure one uses, specifically with regard to dividend yield and cover. Some years back, for example (I haven't bothered to check out recent figure, partly because I know that Admiral have complicated matters further with a return-of-capital element to their dividend), Admiral had a very high yield and a cover a bit above 1 if calculated on their ordinary plus 'not-so-special' dividends, or a cover in the region of 2 and a roughly-market average yield if calculated on the ordinary dividends alone. The problem was that it wasn't all that difficult to pick up the combination of a cover in the region of 2 and a very high yield from various data sources if one wasn't careful - and relying on that combination was definitely a case of wanting to have one's cake and eat it!
Gengulphus