another May topup

[Arborbridge]

I've already had one topup this month - that of National Grid. I find there's a fair bit of cash in a second broker account, which creates it's own difficulty, in that there were only a few shares to choose from. However, I'm quite to have chosen to buy some more Chesnara although it was ninth in my rankings. Forward yield 5.2% and a reliable payer, although since my initial purchase in 2017 I'm underwater by a small amount. CSN has now dropped to 19th place and won't surface for a while.

Here's the top eleven places (of 37 shares) in my top-up rankings after this purchase:-



The next top up won't be for a couple of months, so much can change. However, BT is in line, but I rather fancy BATs which has taken a dive and is available as an uncharacteristic yield - the highest since 2009 I believe.

Arb.

[idpickering]

Morning Arb, funnily enough I've just set my account to buy more British American Tobacco next month. I'll confirm that nearer the time though.

Ian.

[Arborbridge]

Morning Arb, funnily enough I've just set my account to buy more British American Tobacco next month. I'll confirm that nearer the time though.

Ian.

Yes, I'm not surprised - it's a snip at this price. I'm on holiday soon, but I might just set a buy to trigger while I am away - or the alternative is to buy now at full price dealing costs. It's swings and roundabout - cheap days trading off against a price spike.

Arb.

[idpickering]

Morning Arb, funnily enough I've just set my account to buy more British American Tobacco next month. I'll confirm that nearer the time though.

Ian.

Yes, I'm not surprised - it's a snip at this price. I'm on holiday soon, but I might just set a buy to trigger while I am away - or the alternative is to buy now at full price dealing costs. It's swings and roundabout - cheap days trading off against a price spike.

Arb.

Agreed Arb. I’m happy to be patient and wait, using the cheaper fees, with Halifax monthly saving deal. Have a great holiday. A massive cruise liner just went by our house up here in Orkney. One last night had 5000 tourists on it!

Ian.

[Dod101]

Chesnara is a good choice I think. It pays a nice fat dividend today I am pleased to say.

I uncharacteristically have some spare cash at the moment and BAT might be my choice today I think. I'll take a look later.

I'm glad the topic is not the other May.

Dod

[Arborbridge]

Chesnara is a good choice I think. It pays a nice fat dividend today I am pleased to say.

I uncharacteristically have some spare cash at the moment and BAT might be my choice today I think. I'll take a look later.

I'm glad the topic is not the other May.

Dod

I thought you would approve of my top-up, Dod

[Bouleversee]

I've already had one topup this month - that of National Grid. I find there's a fair bit of cash in a second broker account, which creates it's own difficulty, in that there were only a few shares to choose from. However, I'm quite to have chosen to buy some more Chesnara although it was ninth in my rankings. Forward yield 5.2% and a reliable payer, although since my initial purchase in 2017 I'm underwater by a small amount. CSN has now dropped to 19th place and won't surface for a while.

Here's the top eleven places (of 37 shares) in my top-up rankings after this purchase:-



The next top up won't be for a couple of months, so much can change. However, BT is in line, but I rather fancy BATs which has taken a dive and is available as an uncharacteristic yield - the highest since 2009 I believe.

Arb.

Where do you get your yield figures, Arb? I hold PSN and hadn't realised that the yield was quite as high as that and thought I'd check it out on my brokers' websites. Interactive Investor says their yield is 0%; IWeb says it's 4.4%, with a cover of 2.07, a bit odd as I think Morningstar supplies them both. I see Dividend Data says it's 8.35% which is even higher than yours. Which is the most accurate source? I presume it should relate to the current share price so does it vary daily or are they historic yields which are quoted?

[Arborbridge]

Where do you get your yield figures, Arb? I hold PSN and hadn't realised that the yield was quite as high as that and thought I'd check it out on my brokers' websites. Interactive Investor says their yield is 0%; IWeb says it's 4.4%, with a cover of 2.07, a bit odd as I think Morningstar supplies them both. I see Dividend Data says it's 8.35% which is even higher than yours. Which is the most accurate source? I presume it should relate to the current share price so does it vary daily or are they historic yields which are quoted?

The short answer is Digital Look, and they are forward yields. They come from running the HYPTUSS - I do nothing more than press the button.

I believe PSN is a funny one which may explain the variation. I've only bought the share recently and others will no doubt be along to explain more accurately than I. However, I believe the payouts may be returns of excess cash, so some sites might not account for them as dividends whereas others do.


Arb.

[IanTHughes]

Where do you get your yield figures, Arb? I hold PSN and hadn't realised that the yield was quite as high as that and thought I'd check it out on my brokers' websites. Interactive Investor says their yield is 0%; IWeb says it's 4.4%, with a cover of 2.07, a bit odd as I think Morningstar supplies them both. I see Dividend Data says it's 8.35% which is even higher than yours. Which is the most accurate source? I presume it should relate to the current share price so does it vary daily or are they historic yields which are quoted?

From the horse's mouth

https://www.persimmonhomes.com/corporat ... eturn-plan

I have not read up about the "plan" in details but it looks as if they have returned 235p per share over the last year and intend to continue with the same amount going forward, until 2021 when it will be 110p

At a share price of 1,800.00p that is a current and forward yield of 8.39%

What happens in 2021 and beyond will no doubt depend on another "plan"



Ian

[Gengulphus]

A rather late reply, but better late than never...

Where do you get your yield figures, Arb? I hold PSN and hadn't realised that the yield was quite as high as that and thought I'd check it out on my brokers' websites. Interactive Investor says their yield is 0%; IWeb says it's 4.4%, with a cover of 2.07, a bit odd as I think Morningstar supplies them both. I see Dividend Data says it's 8.35% which is even higher than yours. Which is the most accurate source? I presume it should relate to the current share price so does it vary daily or are they historic yields which are quoted?

The short answer is Digital Look, and they are forward yields. They come from running the HYPTUSS - I do nothing more than press the button.

I believe PSN is a funny one which may explain the variation. I've only bought the share recently and others will no doubt be along to explain more accurately than I. However, I believe the payouts may be returns of excess cash, so some sites might not account for them as dividends whereas others do.

Well, dividends are just like any other cash distributions to shareholders in being "returns of excess cash" - one might argue about whether it's really excess cash in cases where the company is going into debt (or further into debt) to pay them, but that's also true of any other cash distributions to shareholders. So it's not a case of sites viewing "returns of excess cash" and "dividends" as alternatives, with one to be counted and the other not. Rather, dividends are one among a number of mechanisms by which "returns of excess cash" can be done.

But yes, it's a question of sites having different views of the payments. The differences are basically about whether the company can reasonably be expected to repeat the payment regularly in the future, and how much effort the site puts into trying to decide that. If a payment is a genuine one-off, never-expected-to-be-repeated payment, it's basically just a discount on the share price. E.g. suppose you buy shares priced at 500p on which 100p is due to be paid out in a month's time (and it's still before the shares have gone 'ex' that payment, though obviously probably only just before they do that). The situation is little different from paying 400p per share: there are differences in the amounts you pay out and receive over the next month, but the only real difference in outcome after that is that either you can only afford to buy 80% as many shares as you could if the price were 400p and no payment were due to take place or you have to borrow the extra 100p per share needed to buy just as many shares as you would if the price were 400p and pay a month's interest on the loan before you can pay it back. That interest will increase the effective price of the shares by a bit, but really very little as long as you take care not to borrow at an exorbitant rate. (If you do want to work out how much, you need either to go into the exact details of how you borrow the money or to produce an approximation by 'discounting' the 100p payment for being a month in the future. At the sort of discount rates normally used for such calculations, that will reduce the 100p by less than a penny, and thus increase the 500p-100p = 400p effective price by less than a penny.)

A similar payment that is expected to be repeated indefinitely into the future is much more valuable, since clearly a large number of 100p/share payments are much more valuable than just one, even if most of them will take years to materialise. E.g. if that same 500p share with an imminent 100p special dividend also has a regular 20p dividend that it's expected to continue paying, its straightforwardly-calculated yield is 20p/500p = 4% but it would be reasonable to adjust that to 20p/400p = 5% for the fact that its effective price is 400p. (And indeed, the market can be expected to do that adjustment for you when the special goes ex-dividend and the share price drops about 100p to reflect the fact that the right to receive the special is no longer included in the sale.) So in yield terms, a fair assessment is that the 20p regular payment is worth four times as much as the 100p one-off payment.

Or another way of looking at it is that if the 100p payment were regular rather than one-off, the company would have a yield of (20p+100p)/500p = 24%, 20 percentage points higher than the straightforwardly-calculated yield of 4% rather than just 1 percentage point higher. A big difference!

Sites vary in how much effort they put into taking account of that. The simplest, least-effort technique is to include everything the company pays as a dividend and exclude everything else when calculating the yield. The biggest flaw with doing that is that when a company pays a large one-off special dividend, you get ridiculous yields like that 24%. Which leads to the second-simplest technique, which is only a bit more effort: do the same, except that you exclude everything the company describes as a special dividend. That solves the problem for large one-off special dividends, but creates a problem for companies such as Admiral that make a habit of designating part of their regular dividends as 'special': you're not including part of the payments that the company can reasonably be expected to make regularly into the future, and so you get a yield figure that is lower than it reasonably should be. Solving that basically requires a judgement call about whether each payment should be counted as one-off or part of a regular pattern, which solves both of those problems and some others (e.g. Rolls-Royce, whose regular payments to shareholders are not dividends for technical company tax reasons, and therefore has a yield of 0% on either of the two previous techniques). But that's a lot more expensive and still has the problem that there will be borderline cases where it is hard to come to a firm opinion either way on the one-off vs regular question...

Anyway, what Persimmon has said about its intended payments to shareholders is in the link https://www.persimmonhomes.com/corporat ... eturn-plan IanTHughes gave above: an originally-9-year planned sequence of payments (with about 3 years remaining), but nothing about what they might pay after that - not even an anticipated future dividend policy, at least that I know of. Trying to decide on the one-off vs regular question for that is particularly hard, especially as it's been adjusted a number of times since originally published, making any regularities one might discern in it about future intentions difficult to have much faith in. (The adjustments have been good for shareholders, by the way - increasing the amounts being paid and bringing them forward - so that's not saying they're bad, just that they make it more difficult to see where things might be going after 2021.)

The result of that is that the question of how a 'fair' yield figure might be calculated for Persimmon is particularly difficult, and so it's not surprising that various sources differ markedly on the question...

Gengulphus

[MaraMan]

I bit contraversial perhaps but Investors Chronicle this week rated SSE as a buy.
MM