The Bloodbath HYP

[NeilW]

Given there is blood on the streets in the market, and hamburgers are on sale again, I thought I'd run the usual 15 share HYP filter and see what it came up with.

But this time running the selections with as much safety margin as possible. Keep to the FTSE100, above the market yield, good dividend cover, Earnings, yield and gearing safe, etc.

Turns out that at the moment that's rather difficult and I had to loosen the selection criteria quite a bit to get 15 shares in 15 sectors.

What I came up with (in the selected order) was:

* Taylor Wimpey (TW.)
* Aviva (AV.)
* British American Tobacco (BATS)
* BT Group (BT.A)
* HSBC (HSBA)
* United Utilities (UU.)
* LandSec (LAND)
* BP (BP.)
* BAE Systems (BA.)
* DS Smith (SMDS)
* GlaxoSmithKline (GSK)
* Direct Line (DLG)
* Rio Tinto (RIO)
* William Hill (WMH)
* MicroFocus (MCRO)

As you can see it is a Motley bunch of the usual suspects, including a remarkable number of EPIC symbols with full stops in them (is this a secret selection criteria I wonder ).

What do you think of this list, and what would your preferred selection be at the moment?

[Bouleversee]

"None of the above" springs to mind, although having just had a tiny HP cartridge delivered in a cardboard box at least one foot square, with the space filled with packaging, maybe DS Smith might be the one to go for and to hell with the environment.

[Gengulphus]

As you can see it is a Motley bunch of the usual suspects, including a remarkable number of EPIC symbols with full stops in them (is this a secret selection criteria I wonder ).

Hmm... I've wondered the same about 4-character EPIC symbols at times - and it seems just as good confirmation of that theory! And if both theories are true, BT must be the ultimate HYP share... ;-)

Gengulphus

[tjh290633]

Looking at that list, there are four shares which I do not hold: HSBA, LAND, DLG and MCRO.

My alternatives are LLOY for HSBA, BLND or SGRO for LAND, ADM or LGEN for DLG, and no equivalent for MCRO. I stuck with LLOY through the lean years and chose BLND over LAND. I don't think DLG were on the radar when I picked ADM.

It is inevitable that selections made at different times will come up with different results. My portfolio grew in stages, before the HYP principles had been put forward, so similarities have to be coincidental. Also with 35 holdings, I am able to indulge in duplication of sectors. If I lose a share, I usually try to replace it from the same sector, but not always.

TJH

[ZipserSir]

This might seem counter-intuitive on a HYP board, but if the blood really is going to flow in the streets, is now the right time to be investing solely in above average yielding shares?

If one was suggesting to someone else that a 'HYP' is the right approach to take, might one be more flexible on the high yield in order to improve the other metrics?

Perhaps consider reducing the yield target from its current 4.38% to say 3-3.5% - this would bring in AZN (3.8%) doubling up pharma, but adding to the blue chip; Unilever 3.3%; and Prudential 3.1%, to name but three.

PS I don't think you should have had BA. in your selection - the yield is currently 3.9% (below average!).

Moderator Message:
This is the HYP Practical board. This post is therefore not relevant for tnis board. Please keep to board guidelines. Use Srrategy if you wish to question the quidelines. Thanks. Raptor

[Arborbridge]

This might seem counter-intuitive on a HYP board, but if the blood really is going to flow in the streets, is now the right time to be investing solely in above average yielding shares?

If one was suggesting to someone else that a 'HYP' is the right approach to take, might one be more flexible on the high yield in order to improve the other metrics?

Perhaps consider reducing the yield target from its current 4.38% to say 3-3.5% - this would bring in AZN (3.8%) doubling up pharma, but adding to the blue chip; Unilever 3.3%; and Prudential 3.1%, to name but three.

PS I don't think you should have had BA. in your selection - the yield is currently 3.9% (below average!).

If blood is going to flow, then wait and buy those low yielders on a good yield

[moorfield]

Keep to the FTSE100,

* William Hill (WMH)

What do you think of this list, and what would your preferred selection be at the moment?

WMH isn't.

(According to my Sunday Times Top 200 Companies, its #176.)

[Gengulphus]

Keep to the FTSE100,

* William Hill (WMH)

What do you think of this list, and what would your preferred selection be at the moment?

WMH isn't.

(According to my Sunday Times Top 200 Companies, its #176.)

Not a reliable way of checking whether a company is in the FTSE100, because the index update rules allow a company to stay in the index until the next quarterly review unless something major happens such as it being taken over or going bust. Otherwise, it's only when the quarterly review happens that companies that have dropped to #111 or below get demoted automatically, and companies at #101-#110 might get demoted if needed to get the numbers right because of automatic promotions. So one needs to check an up-to-date source that's specifically about index membership to check a company's status.

But you're right that WMH isn't in the FTSE100. The way I normally check such matters is go to the London Stock Exchange page about the share - in this case https://www.londonstockexchange.com/exc ... ml?lang=en. It has a "FTSE index" entry just under "SECURITY INFORMATION" in the right hand column, which in the case of WMH is "FTSE 250,FTSE MID 250 (ex IT),FTSE 350,FTSE 350 High Yield,FTSE 350 (ex IT),FTSE All-Share,FTSE All-Share (ex IT),FTSE Euromid".

Gengulphus

[pyad]

If blood is going to flow, then wait and buy those low yielders on a good yield

I know you were taking the french but some perhaps may not have realised that.

So for HYPers the time to buy is always now. It was now yesterday, it will be now tomorrow and it's now now.

Nobody knows the future and those that think they know, know even less than those that don't. It's only by admitting that you don't know anything that you know something.

[TUK020]

But this time running the selections with as much safety margin as possible. Keep to the FTSE100, above the market yield, good dividend cover, Earnings, yield and gearing safe, etc.

If you add in pension deficits, do BT & BA still meet your safety margins?





I hold both, but fret about it.

[NeilW]

But you're right that WMH isn't in the FTSE100.

Correct. Hence

and I had to loosen the selection criteria quite a bit to get 15 shares in 15 sectors.

As I said the list is in selection order. I think I got about half way down before criteria had to be loosened.

[NeilW]

If you add in pension deficits, do BT & BA still meet your safety margins?

Pensions are really just senior debt, like bond issues, so you need to know what the 'interest payment' is and whether the cash flow can handle it. The assets of a pension scheme are invested in non-bond assets, but the liabilities are discounted as though everything is invested in a bond. If you valued your HYP like that you'd have a 'pension deficit' as well - there would be nowhere near enough capital in the HYP to buy the bonds necessary to get the income you are getting from HYP.

There's never a good way to value a pension that works for all, and actuaries and the like are always fiddling the figures to make them look good for the corporate sponsor.

Looking at the actual payments into the pension schemes that the trustees have negotiated at what is essentially the lowest return environment in years, they still look affordable to the companies.

Ultimately that is what the 'dividend cover' safety factor is there to deal with.

[idpickering]

If blood is going to flow, then wait and buy those low yielders on a good yield

I know you were taking the french but some perhaps may not have realised that.

So for HYPers the time to buy is always now. It was now yesterday, it will be now tomorrow and it's now now.

Nobody knows the future and those that think they know, know even less than those that don't. It's only by admitting that you don't know anything that you know something.

Classic PYAD! Well said Stephen, and a great reminder.

Ian.

[moorfield]

This might seem counter-intuitive on a HYP board, but if the blood really is going to flow in the streets, is now the right time to be investing solely in above average yielding shares?

If one was suggesting to someone else that a 'HYP' is the right approach to take, might one be more flexible on the high yield in order to improve the other metrics?

Perhaps consider reducing the yield target from its current 4.38% to say 3-3.5% - this would bring in AZN (3.8%) doubling up pharma, but adding to the blue chip; Unilever 3.3%; and Prudential 3.1%, to name but three.

PS I don't think you should have had BA. in your selection - the yield is currently 3.9% (below average!).

Moderator Message:
This is the HYP Practical board. This post is therefore not relevant for tnis board. Please keep to board guidelines. Use Srrategy if you wish to question the quidelines. Thanks. Raptor

ZipserSir, I understand your thinking and have commented similar on another thread recently - but note the proviso on my (unmoderated) post. If you are a sum-of-the-parts thinker it can be an eminently sensible approach IMO.

viewtopic.php?p=173028#p173028

Counterintuitive perhaps, but such times can also present opportunities to top up higher yielding lower yielders (those in the 3-4% range), the likes of our perennial favourite "stalwart" ULVR, and IMI, AZN etc.

Before I'm accused of peddling such a dangerous radical idea, I always qualify it here with the proviso that one's overall portfolio yield should remain high.

Moderator Message:
Must have missed that post. The taking of low(er) yield shares when your HYP has a high yield is not a HYP criteria, see guidelines, unless you are topping up of course and then your criteria may not just be on Yield. The overall yield of a HYP portfolio should have no relation to taking a lower yield share. I have moderated similar posts in the past and in future will edit/delete. Raptor.

[moorfield]

But you're right that WMH isn't in the FTSE100.

Correct. Hence

and I had to loosen the selection criteria quite a bit to get 15 shares in 15 sectors.

As I said the list is in selection order. I think I got about half way down before criteria had to be loosened.

Understood thanks. I'm not dissing the choice, actually I'm also mulling WMH as a replacement for low yielding WTB in my own portfolio.

[Arborbridge]

If blood is going to flow, then wait and buy those low yielders on a good yield

I know you were taking the french but some perhaps may not have realised that.

So for HYPers the time to buy is always now. It was now yesterday, it will be now tomorrow and it's now now.

Nobody knows the future and those that think they know, know even less than those that don't. It's only by admitting that you don't know anything that you know something.

Yes, it was tongue in cheek to "stimulate".
On the other hand, I've never been of the opinion that the time is always now. I agree that if the yield is suitable, then there's probably no harm in buying, but "always" now? I don't go along with that. In my view, the period 2006-2008 was a good example where caution wasn't a bad thing, particularly if one was just beginning to get established with one's HYP and finding one's feet. That opinion isn't hindsight: it's what I thought at the time and reacted accordingly by drip feeding into HYP as the market dropped. It wasn't just luck: I checked out the prospects looking at the charts, and they signalled caution. The occasion when I was persuaded to go in at full volume was Aviva. Big mistake, from which it took years to recover. Even now, buying near the top has resulted in a paultry return.

Arb.

[cshfool]

At 7000 pts, or 10% down from the ftse 100 peak this is not a bloodbath, it's hardly even a paper cut. A light shower starts at 5000 maybe , and decent bathing 3900 or less. Pif paf pof , let me know when there's enough to get both feet wet.

csh

[IanTHughes]

I would also buy Easyjet or Carnival

Really?

Easyjet (EZJ): Yield 3.45%
Carnival (CCL): Yield 3.3%

Is that what you call High Yield? [Deletion.]


Ian

Moderator Message:
Unnecessary personal remark removed. - Chris

[Arborbridge]

Carnival might one day become HYPable, but it will need to drop a massive amount first. Maybe some tragic event happening to a cruise liner might cause such a fall? The present (historic) yield is well under 3%, I believe, so hardly worth getting out of bed for.

Arb.

[tjh290633]

Carnival might one day become HYPable, but it will need to drop a massive amount first. Maybe some tragic event happening to a cruise liner might cause such a fall? The present (historic) yield is well under 3%, I believe, so hardly worth getting out of bed for.

Arb.

They had one, of course, when that MSC cruise liner hit the rocks.

What happened to the yield then?

TJH