Top-up candidates VOD/NG

[MaraMan]

I am in the process of reducing the number of holdings I have in my HYP ISA (I am retired and use the income rather than reinvest). The two candidates that stick out like sore thumbs for good and bad reasons are Vodafone and National Grid, my holdings are relatively small and they pay a good divi but the share price has tanked, I am well in the red on both but am not selling for the forseeable future. My question is are these good top up candidates? Might they recover? Is the risk of Corbyn madness enough to negatively effect NG in the long term? I also hold Lloyd's, WPP & SSE, all SP's looking woeful but still paying good dividends so am happy to be paid to hold long term (with the poss exception of SSE, see Corbyn comment above). I have larger holdings in these so not currently top-up candidates.
So would would m'learned LF colleagues buy either of these two at the moment?
I could play safer and top-up RDSB and/or BP (don't invest in tobacco at the moment as feel its in terminal decline, like many of its customers), but already have larger holdings in these (2xVOD/NG)

Sorry for the rambling set of questions, any general observations welcomed.

MM

PS - hope this in on the right forum, apols if not. No doubt I will find out if it is

Moderator Message:
Moving to HYP Practical from Strategy. You do not see that often. Raptor.

[tjh290633]

Logic suggests that it is the shares which are currently depressed, which are the best candidates for topping up. They come into fashion and go out of fashion, which is when buying opportunities occur.

Both VOD and NG. are high on my top-up rankings, and it makes sense to me to take advantage of the enhanced yield. Situations change, and a sudden change in market sentiment can alter the attractiveness of a share. I see that I topped up NG. in August, so it has dropped in the rankings compared with Vodafone. Marston's and Lloyds are likely to get topped up soon, but SSE is on hold until after the split.

TJH

[idpickering]

I am in the process of reducing the number of holdings I have in my HYP ISA (I am retired and use the income rather than reinvest). The two candidates that stick out like sore thumbs for good and bad reasons are Vodafone and National Grid, my holdings are relatively small and they pay a good divi but the share price has tanked, I am well in the red on both but am not selling for the forseeable future. My question is are these good top up candidates? Might they recover? Is the risk of Corbyn madness enough to negatively effect NG in the long term? I also hold Lloyd's, WPP & SSE, all SP's looking woeful but still paying good dividends so am happy to be paid to hold long term (with the poss exception of SSE, see Corbyn comment above). I have larger holdings in these so not currently top-up candidates.
So would would m'learned LF colleagues buy either of these two at the moment?
I could play safer and top-up RDSB and/or BP (don't invest in tobacco at the moment as feel its in terminal decline, like many of its customers), but already have larger holdings in these (2xVOD/NG)

Sorry for the rambling set of questions, any general observations welcomed.

MM

PS - hope this in on the right forum, apols if not. No doubt I will find out if it is

Moderator Message:
Moving to HYP Practical from Strategy. You do not see that often. Raptor.

Hello MaraMan, as regards to whether NG. or VOD are good top up candidates I offer the following; For me National Grid are the top dog from the utility sector, IMHO the safest too, notwithstanding the Corbyn factor. I hold NG. and have no issue topping them up. For me, Vodafone is a very confusing share, I never get where they're going to be honest. The divi is not covered, although I get they're a bit of a cash cow. I have a 'full' holding of VOD, but even if I didn't, I think I'd still be a bit shy of buying more of them. So, in short, of the two, it'd be National Grid for me.

Ian.

[MaraMan]

Thanks Ian and TJH, that's reassuring. I am too am more inclined toward to NG than VOD, seems a safer bet.

Sorry Raptor for getting the wrong forum.

MM

[idpickering]

Thanks Ian and TJH, that's reassuring. I am too am more inclined toward to NG than VOD, seems a safer bet.

Sorry Raptor for getting the wrong forum.

MM

You're welcome. Now you know where we are, I hope we see more of you hereabouts.

Ian.

[Arborbridge]

I found Labour's re-iteration of their thoughtless policy this morning a bit chilling. Re-nationalising rail, water and energy suppliers potentially without compensation to shareholders. This is barking mad and stricts me as being real banana republic stuff. When thistype of event happens in other countries - Iran, Russia or Egypt for example - our government would point out how safe assets are in Britain.

Shameful, if it comes to pass.

[absolutezero]

I found Labour's re-iteration of their thoughtless policy this morning a bit chilling. Re-nationalising rail, water and energy suppliers potentially without compensation to shareholders. This is barking mad and stricts me as being real banana republic stuff. When thistype of event happens in other countries - Iran, Russia or Egypt for example - our government would point out how safe assets are in Britain.

Shameful, if it comes to pass.

They have been VERY clear on this for a couple of years notw.
I've said all along that they will NOT pay you for your shares.
Anyone holding shares in any of these industries is very foolish.
They've told you well in advance what they intend to do. Don't be crying on here when they seize your assets to redistribute to the feckless.

[TUK020]

I am in the process of reducing the number of holdings I have in my HYP ISA (I am retired and use the income rather than reinvest). The two candidates that stick out like sore thumbs for good and bad reasons are Vodafone and National Grid, my holdings are relatively small and they pay a good divi but the share price has tanked, I am well in the red on both but am not selling for the forseeable future. My question is are these good top up candidates? Might they recover? Is the risk of Corbyn madness enough to negatively effect NG in the long term? I also hold Lloyd's, WPP & SSE, all SP's looking woeful but still paying good dividends so am happy to be paid to hold long term (with the poss exception of SSE, see Corbyn comment above). I have larger holdings in these so not currently top-up candidates.
So would would m'learned LF colleagues buy either of these two at the moment?
I could play safer and top-up RDSB and/or BP (don't invest in tobacco at the moment as feel its in terminal decline, like many of its customers), but already have larger holdings in these (2xVOD/NG)

Sorry for the rambling set of questions, any general observations welcomed.

MM

Some of my major top ups in the last 2-3 months (I have been doing some portfolio rebalancing) have been NG, VOD, BATS & IMB.
You don't touch tobacco, so the case for the other two:

NG I see as a solid performer, and has formed a heavyweight pillar of my portfolio since the start. I top sliced a chunk when the sp hit 1100, and then topped up when it went down to 800. I perceive it as safer than SSE for two reasons. In political terms, I think that retail energy supply is a much easier target for Corbyn et al, in terms of being able to show political win in people's fuel bills, than are core transmission operations. SSE are much more exposed than NG to retail (although they are showing masterful political manoevring to hive off that section). NG also have half their operations in the USA, which makes them much more of a difficult political target.
The second reason is that I feel that NG's divi feels more secure than SSE. Nothing other than looking at their earnings graph, versus their divi graph. SSE having been raising their divi too aggressively - sound good to shareholders, but not backed by the right earnigns story.

VOD is a much more difficult beast to understand where their earnings and capex are going, and what this will mean to their divi sustainability. I was just watching the SP decline steadily with dismay, until a few days ago. The when the SP hit 165, there was a notice that 8 directors had bought shares worth about £1.5m between them. If there are a whole bunch of them sticking serious amounts of their own money into it, then they reckon it is undervalued, and I suspect that they are in as good a position to judge how things lie as anyone. I have topped up, albeit nervously.

By contrast, the two oilies, BP & RDSB, are also key pillars of my portfolio, and both are heavyweight positions already. I have been eyeing the share price, and wondering at what point I should top-slice, and lock in some gains. I feel that they are currently priced for good oil demand/price story, and am nervous that Trump & the Chinese will royally screw up their brinkmanship, with horrible effects on the world economy - feeding through most immediately into raw materials demand.
tuk020

[Arborbridge]

They have been VERY clear on this for a couple of years notw.
I've said all along that they will NOT pay you for your shares.
Anyone holding shares in any of these industries is very foolish.
They've told you well in advance what they intend to do. Don't be crying on here when they seize your assets to redistribute to the feckless.

I don't believe that's entirely true. Originally, they talked about buying out the shares at a price to be determined, and that caused the downward lurch in utilities. Now they are saying the shares would not be paid for at all. There's been a lot of speculation about what they intend to do and how far they will go - or in fact how far they will be able to go. What they talk about and what they can do in practice could be two different things entirely - or at least, that is what both commentators and the market itself is suggesting. If what they spouted on about was completely certain, the market price would fall to near zero - whereas it has been remarlably robust for a scenario in which the value might fall to zero in a couple in few years.
Perversely, in view of the "certainty" that shareholders will not receive fair value, the Centrica price has rallied this year.


Arb.

[Pendrainllwyn]

Will Labour stop at re-nationalising? If they are successful with that, is there anything stopping them nationalising other companies? Why nationalise rail but not road, air or sea? What if they nationalise all housing? Why nationalise the water and energy that goes to the house when you could nationalise the house itself? That would do a lot for wealth re-distribution.

I hold NG. It's been a bad investment. I am stubbornly (foolishly) holding.

Pendrainllwyn

[kempiejon]

...I hold NG. It's been a bad investment. I am stubbornly (foolishly) holding.
Pendrainllwyn

I've held NG for a couple of years, they offer a high yield of 6% forecast, my income has increased a few percent and they have committed to increasing dividend in at least in line with inflation. A HYP strategy is to hold for the long term. There's nothing stubborn nor foolish about keeping the shares.

[MaraMan]

I tend to think that if they nationalised the utilities etc at zero cost to the govt then it would undermine the fundamentals of the economy to such an extent that they would have to take a very long time doing it. There was a Labour rep on the Today prog saying they didn't know how they would do it as they didn't have access to market sensitive data, but that it was an aspiration. I tend, perhaps optimistically, to think that it will remain a very long term aspiration, hopefully beyond the political lifetimes of JC, JM and DA. For that reason I think NG is a sensible hold and poss top up candidate.

MM

[Arborbridge]

I tend to think that if they nationalised the utilities etc at zero cost to the govt then it would undermine the fundamentals of the economy to such an extent that they would have to take a very long time doing it. There was a Labour rep on the Today prog saying they didn't know how they would do it as they didn't have access to market sensitive data, but that it was an aspiration. I tend, perhaps optimistically, to think that it will remain a very long term aspiration, hopefully beyond the political lifetimes of JC, JM and DA. For that reason I think NG is a sensible hold and poss top up candidate.

MM

That's probably the concensus of the market. There's a big difference between what a government hopes to do, and real politik. As they say, a week is a long time in politics and much can happen. I also wonder about what there might be in the way of legal challenge, not from the likes of us, but from the big guns in the institutions. We're talking of billions upon billions of pounds of worth lost to some fairly ordinary people through their pension schemes.

Unfortunately, hitting "rich" shareholders has a popular ring to the mob, rather like hitting "wealthy" landlords through BTL.
Many of us will resent people like Nick Robinson on the Today program flippantly commenting that cash is going to make shareholders "rich". Some are, of course, but many will be in a loss making situation and it isn't fair to tar all with the same brush.

[Gengulphus]

Something else to remember is the international dimension. Many UK companies have substantial numbers of foreign investors or are even entirely owned by a foreign company: nationalising them without fair compensation is likely to incense the foreign governments. Also, many UK companies have substantial foreign assets, giving the foreign governments ample opportunity to retaliate - and not necessarily on a same-company basis: a foreign government could decide to seize the assets of one UK company operating in their country to compensate their investors in a different UK company who had had it nationalised from under them. It would be unjust, but the foreign government would have a reasonable argument that the UK government had unjustly deprived the foreign country's investors of their assets. They were merely doing the same in reverse to compensate their own people, and deprived owners of the assets they had seized should look to the UK government for compensation, not them.

Such developments would doubtless provoke massive legal cases, both under national legal systems and under international law. But neither of those can ultimately prevail against a sufficiently determined government whose own citizens feel that it's protecting their interests: it can change its own national law, and it can ignore other legal systems.

By the way, I wouldn't expect any of that to be overtly played out even if Labour does get into power with its present policies still in place: it would probably be deterred from more than comparatively mild nationalisation measures by the advice it would get from the Civil Service, and if that didn't work, by diplomatic communications it would get from other countries. That's less applicable to National Grid than Vodafone, as National Grid is more UK-centric, but according to the segmental analysis note in National Grid's last annual report, it gets about 60% of its revenues and getting on for 50% of its operating profits from its US operations... I haven't found any analysis of shareholders by which country they live in, and any such analysis would have to be rough anyway (nominees and the like mean that the company doesn't necessarily know the nationalities of the real shareholders), but the annual report does list "BlackRock, Inc." and "The Capital Group Companies, Inc." as the two biggest shareholders, with over 10% of the shares between them, so I think one can also assume that National Grid has a very significant body of US shareholders. So a proposal to substantially nationalise National Grid without adequate compensation seems quite likely to attract significant US government attention (and I very much doubt that the present US government in particular would be at all reticent about making its feelings plain to the UK government that proposed it!).

Vodafone is even less subject to nationalisation by the UK government. Partly that's because they have less of a political argument for doing so, since it wouldn't be renationalisation, but probably more importantly, their UK-based revenues, profits and assets are only about 10-15% of their worldwide totals.

The net result is that I'm not totally unconcerned about Labour's nationalisation threats to my HYP holdings: they are a concern to me, but the serious concern is only about carefully limited and executed nationalisations of specific holdings that it will take quite a long time to get past all the opposition, not about wholesale nationalisations of the type some contributors to this thread seem to be worried about. The net result for my HYP might well be a significant setback, but not a disaster...

Gengulphus

[absolutezero]

They have been VERY clear on this for a couple of years notw.
I've said all along that they will NOT pay you for your shares.
Anyone holding shares in any of these industries is very foolish.
They've told you well in advance what they intend to do. Don't be crying on here when they seize your assets to redistribute to the feckless.

I don't believe that's entirely true. Originally, they talked about buying out the shares at a price to be determined, and that caused the downward lurch in utilities. Now they are saying the shares would not be paid for at all. There's been a lot of speculation about what they intend to do and how far they will go - or in fact how far they will be able to go. What they talk about and what they can do in practice could be two different things entirely - or at least, that is what both commentators and the market itself is suggesting. If what they spouted on about was completely certain, the market price would fall to near zero - whereas it has been remarlably robust for a scenario in which the value might fall to zero in a couple in few years.
Perversely, in view of the "certainty" that shareholders will not receive fair value, the Centrica price has rallied this year.


Arb.

You make the major mistake of thinking the Momentum government would behave rationally and/or respect the law.
I have massive doubts they would be either rational or stick to the law.
Expect them to steal your shares and ruin property rights.
"That couldn't happen here"? Think again.

[absolutezero]

Will Labour stop at re-nationalising? If they are successful with that, is there anything stopping them nationalising other companies? Why nationalise rail but not road, air or sea? What if they nationalise all housing? Why nationalise the water and energy that goes to the house when you could nationalise the house itself? That would do a lot for wealth re-distribution.

I hold NG. It's been a bad investment. I am stubbornly (foolishly) holding.

Pendrainllwyn

You might be being facetious, but I'd not be surprised if they went that way.
These are communists you're dealing with.

[Arborbridge]

You make the major mistake of thinking the Momentum government would behave rationally and/or respect the law.
I have massive doubts they would be either rational or stick to the law.
Expect them to steal your shares and ruin property rights.
"That couldn't happen here"? Think again.

You are reading a lot into the situation. Nearly all governments of whatever colour give their constituency whatever they need to hear to get elected, but the reality may be quite different for a whole raft of practical and economic reasons. True, they might ruin an economy in the meantime, but whether a Labour government would go that far is open to debate. You clearly think so: I don't. They will make attacks on people who have saved hard, invested and who own property - that much is true (and that can also be paid at the Tories' door BTW) - we need that like a hole in the head, but one cannot do much about it except sell up and move abroad. People said they would do that when Tony Blair took over, but it was all a puff of wind in the end - most people stayed put and prospered.

It'll be interesting to watch the noises coming from the respective conferences. Both parties are split and in confusion - neither are an enticing election prospect, maybe as never before.

I'm with Gen: concerned but, "The net result for my HYP might well be a significant setback, but not a disaster..."


Arb.

[Raptor]

Moderator Message:
This is becoming more a thread for PD. Please keep to OPs post on what to top up. Thanks. Raptor

[MaraMan]

Thanks all for the comments. Political risk was part of question as it has a potentially big impact on my choice, but I don't want to criticise the mod. The variety of views has been expressed and taken on board, I have now topped up NG for better or worse.

Cheers

MM