Crest Nicholson Holdings Current Yield - 8.51%

[moorfield]

Crest Nicholson currently at a very high yield, highest in its history. https://www.dividenddata.co.uk/dividend ... ?epic=CRST

Crest Nicholson Holdings Dividend Yield - 8.51%

I stopped reading after that. Not for me.

[monabri]

589p in October 17 to 389p today. The share price has taken a right old battering and corresponding increase in yield. Is it overdone? Will CRST be able to continue to pay the dividend? Current cover is 2.0 and forecast cover (fwiw) is also 2.0. A buying opportunity or a falling knife with a divi cut?
Place yer bets!

[idpickering]

8.51% yield is way into the danger zone for me, so I wouldn't consider this share on that basis. The adage "if it looks to good to be true....etc" comes to mind here I think. Good luck to those that think otherwise though.

Ian.

[Dod101]

Obviously the market thinks the dividend is in great danger. I know nothing of Crest Nicholson but would not touch it with a barge pole. After all that has happened over the last two or three years people are still chasing high yields?

Good luck to those venturing into this sort of share. This would not be investing though.

Dod

[moorfield]

It is the HY board, big yields come with the territory!

For me a "big yield" is anything above but not more than double the City of London IT (CTY) yield, so between 4.0% - 8.0% currently. The only exceptions I make buying above that are preference shares, of which there are few to choose from anyway. I hold REA Holdings (RE.B), coincidentally yielding about 8.5% currently.

[IanTHughes]

It is the HY board, big yields come with the territory!

Balance sheet shows positive NTAV, and quite manageable debt levels.

Yes, it does look interesting, I shall have to investigate further.

Don't be put off by the other contributors, most would think a dividend at the current BoE base rate was too much of a risk


Ian

[monabri]

Any thoughts on Persimmon then....current yield 9.35%? Any holders out there ?

[Dod101]

Certainly do not be put off by my comments, but Mr Market often knows more than I do and I tend to respect that. Apart from a general slow down in central London everything looks OK but then why would the market assign such a high yield?

I tend not to go much above the FTSE100 plus 50% which would I suppose be around 6%, although I make an exception from time to time. But 8.51%? No, I will happily pass on that without even investigating.

Dod

[monabri]

Interesting to note that Taylor Wimp and Barratt Developments both pay a "moderate" yield ( 2.5% & ,5% respectively) but pay specials which inflate the yield to 8%+.

Perhaps Crest and Persimmon will move to this scheme and maybe with a gradual reduction in the special element over a number of years.

( Anyone buy RDSB when the yield was 10%+ in early 2016?).

[pyad]

Yes, it does look interesting, I shall have to investigate further.

Don't be put off by the other contributors, most would think a dividend at the current BoE base rate was too much of a risk


Ian

Without commenting on the merits of this particular share, I disagree with the view that a potential HYP holding should be ignored on the sole ground, without any further investigation, that it has a very high yield.

( Anyone buy RDSB when the yield was 10%+ in early 2016?).

Quite.

[kempiejon]

Interesting to note that Taylor Wimp and Barratt Developments both pay a "moderate" yield ( 2.5% & ,5% respectively) but pay specials which inflate the yield to 8%+.

Perhaps Crest and Persimmon will move to this scheme and maybe with a gradual reduction in the special element over a number of years.

( Anyone buy RDSB when the yield was 10%+ in early 2016?).

I added to Shell either side of the 10% yield at 8%ish. I also bought barratt but not for my HYP, not enough income history.

[Alaric]

Interesting to note that Taylor Wimp and Barratt Developments both pay a "moderate" yield ( 2.5% & ,5% respectively) but pay specials which inflate the yield to 8%+.

The Taylor Wimpey share price is around the same as a year ago, whilst Crest Nicholson has dropped quite a bit. So it's not just a sector issue with housebuilders.

As always when an increase in dividend yield is caused by a drop in the share price, is it just noise in the price, or somewhere the fundamentals sustaining the dividend don't work? I suppose a risk with housebuilders is that their capital gets tied up in land and buildings they cannot sell, or not at a profit.

I'm not sure which were the nasty developers who devised the ground rents near scam, but with that outlawed, some but not all will be losing a profit stream.

[Dod101]

( Anyone buy RDSB when the yield was 10%+ in early 2016?).

Quite.

I did not buy Shell when it was yielding 10% as I had quite enough anyway, but I held on because although there was a risk to the dividend I thought, correctly it would seem, that Shell would not cut its dividend if it could possibly avoid it. It would be very unwise, however, to have bought Shell with a yield of around 10% without accepting that there was a higher than normal risk of a cut. In fact, given the continuing very low interest rates it still surprises me that so many big companies have yields in excess of 4% or so.

Dod

[Pendrainllwyn]

For those who haven't read their interim presentation, Crest Nicholson
- are exiting Central London (Zone 1)
- are finding land prices in outer zones "increasingly stretched"
- are finding houses with a 1M+ price price point challenging and
- have stated that "market pricing has impacted margins"
So signs of pressure in a cyclical industry. I doubt Brexit is helping sentiment and they could trade lower from here. On the dividend they state "50% of profits after tax distributed with potential to increase when new divisions reach scale" so the dividend could well be cut if profits fall.

Crest has delivered good results since being re-listed in 2013 and England has a substantial housing shortage which I would have thought would help establish a floor. So unlike some others here, it looks interesting to me at these levels but I buy too early on occasion and am not sitting on too much spare cash so I will ponder a while longer.

Pendrainllwyn

[moorfield]

Without commenting on the merits of this particular share, I disagree with the view that a potential HYP holding should be ignored on the sole ground, without any further investigation, that it has a very high yield.

I hazard a guess I'm not the only one here to have been seduced and singed by high yielders in the past. Personally I think it's just good habit and discipline to apply some upper boundary simply and consistently without the need for time consuming investigation.

[IanTHughes]

Any thoughts on Persimmon then....current yield 9.35%? Any holders out there ?

I passed on Persimmon PLC (PSN) several years ago. I could not get my head around their long term strategy of a "return of excess cash" and particularly what one should expect when that plan has played out. The original plan was for irregular payments amounting to 620P between 2013 and 2021

A quick look this morning indicates that in early 2013, when I believe this strategy was outlined, a share could have been bought at a price of around 1,200p, maybe less. "Excess cash returns" over the last 5 years (including the 110p due on Monday) amount to 720p per share, or 60%. The current plan is for a further 580p to be paid out between now and July 2021, or a further 48% of the purchase price. So one would have received more than the original investment but I still ask, "what happens next"?

Is Crest Nicholson Holdings PLC (CRST) doing the same thing? They have not explicitly stated it that I can see. Of course, we all know that the House Building business is very cyclical so maybe one has to factor in a future dividend drop which might be quite large. I cannot see the dividend dropping this year though, based on my very quick look this morning

Anyway, I shall investigate further when I have more time so if any other Lemon has some information to share, please do.

But please, no more talk of unsubstantiated "danger zones" for a yield. Any yield level may prove to be unsustainable.



Ian

[IanTHughes]

Without commenting on the merits of this particular share, I disagree with the view that a potential HYP holding should be ignored on the sole ground, without any further investigation, that it has a very high yield.

I hazard a guess I'm not the only one here to have been seduced and singed by high yielders in the past.

If your "guess" is that you are not the only one to experience a dividend cutter in one's portfolio, I am sure you are right. I for one have had my share. But overall the portfolio income, when measured per unit, has continued increasing. At the end of the day surely that is what counts, not the occasional failure.

I am reminded of my first year as a lending banker way back when and my delight at the end of the year that I was reporting zero Debt Write-Offs and even no Bad and Doubtful Debts in my Branch results. My Area Manager was not at all impressed and he pointed out that I must have been lending too cautiously and therefore missing out on a number of good opportunities for further income. He was right too although in my defence it was my first role as a Branch Manager and I was initially somewhat overwhelmed by the responsibilities.


Ian

[Itsallaguess]

Without commenting on the merits of this particular share, I disagree with the view that a potential HYP holding should be ignored on the sole ground, without any further investigation, that it has a very high yield.

I hazard a guess I'm not the only one here to have been seduced and singed by high-yielders in the past.

Personally I think it's just good habit and discipline to apply some upper boundary simply and consistently without the need for time consuming investigation.

I totally agree with that moorfield, in at least I won't pursue new purchases that display what I consider to be 'likely-to-be-too-good-to-be-true' yields.

I will allow some lee-way with current-holdings, as I think the diversifying properties of a large-portfolio can minimise the risks if some of my current holdings start to display such high-yields, but I certainly won't add to that risk by the addition of new holdings with such yields.

I'd probably also partly agree with Pyad, in that some further investigation into such shares might eventually lead to some similarly high-yielding options found to be worth pursuing, but I think the work involved in doing so, accompanied by the risk that we might still miss something important in what are often complicated situations to get a good grip of, has led me to decide that it's simply not worth the hassle or the risk to chase ultra-high yields at all with my new HYP purchases.

Plucking RDSB out as an example where an ultra-high-yield purchase will have been a good decision at some past point in time is great, but then we should probably ask ourselves why such an example jumps out.....

I'd suggest that it's because it's not all that common for it to have been a good decision at all, and more recent news will back that up - this time last week Stagecoach had a forward-yield of 8.1%, that is of course until it slashed its dividend by 35% on Thursday...

https://tinyurl.com/yc7de3u4

Cheers,

Itsallaguess

[Itsallaguess]

I am reminded of my first year as a lending banker way back when and my delight at the end of the year that I was reporting zero Debt Write-Offs and even no Bad and Doubtful Debts in my Branch results.

My Area Manager was not at all impressed and he pointed out that I must have been lending too cautiously and therefore missing out on a number of good opportunities for further income.

He was right too although in my defence it was my first role as a Branch Manager and I was initially somewhat overwhelmed by the responsibilities.

Ah yes - the huge benefits of betting with other people's money....

Cheers,

Itsallaguess

[nmdhqbc]

I think anywhere above 7.5% is a danger zone yield. What do others think? Let's get into it!!