VOD to hold dividend...

[tjh290633]

It happens a lot when a share goes out of favour. Look at BT.A or PSON for a couple of examples.

Like you say, a CEO who says one thing then does the opposite is likely to fall on his sword

TJH

[Itsallaguess]

A question for the more experienced HYPers here, did these type of conversations occur when RDSB was discussed a couple of years ago when the share price was in the doldrums?

For a CEO to state the plan is to maintain an increasing dividend and then cull it will be a career limiting move.

It might be worth remembering Royal Bank of Scotland....

OK, we can talk about a catastrophic set of issues that the banking industry had to deal with in general, but RBS raised their dividend right into the crisis, in both August 2007 and February 2008.

Have a look at this dividend history -

https://www.dividenddata.co.uk/dividend ... y?epic=RBS

Now let's look at the share-price chart around the time of the issues -

https://tinyurl.com/ybuh69nr

Now, taking careful note of the share-price action in the above chart after January 2007, let's also take note of the RNS releases from Royal Bank of Scotland following that date -

3rd August 2007 (Interim results) - Interim dividend up 25% to 10.1p (https://tinyurl.com/y7t6u9oz)

28th February 2008 (Final results) - Total dividend up 10% to 33.2p (https://tinyurl.com/ycxtg36p)

18th April 2008 (Announcement) - The Royal Bank of Scotland Group plc ('RBS') notes recent speculation about a possible rights issue. RBS confirms that its Interim Management Statement covering trading performance and capital will be made next week. (https://tinyurl.com/y75t4yjq)

21st April 2008 (Announcement) - Following its statement on Friday 18 April 2008 and recent speculation The Royal Bank of Scotland Group plc confirms that it is considering a Rights Issue. A further announcement will be made in due course. (https://tinyurl.com/ybtpalo3)

So we've got RNS statements from Royal Bank of Scotland regarding rising dividends during a period of really quite calamitous share-price action on the downside, and then finally, disaster struck, both with the share-price and the dividend.

I'm not for one minute trying to suggest that Vodafone is likely to follow a similar fate, and if I did think that then I wouldn't be continuing to hold my investment in the company that I have in my HYP (I have a around a 2% weighting of Vodafone), but I did want to counter the RDSB example, where we might agree that a company might be seen to work it's way out of trouble, with one where the soundings coming from the company were very bullish right up to the point where they, erm, weren't.....

It scares the bejeesus out of me whenever I hear anyone using the phrase 'even if the dividend halved, it would still be yielding x%', as it's the sort of emotional story we tend to tell ourselves when we're about to do something that we should perhaps consider a little further....

To be clear though - I'm not suggesting that Vodafone will be an RBS and not an RDSB - it's just that we should remember that these types of stories don't always have a good ending....

Cheers,

Itsallaguess (holds Vodafone...)

[moorfield]

I started that P is for Portfolio thread to encourage people to think about their own bigger picture (ie. overall portfolio income) before knee-jerk selling the likes of VOD and SSE now. Certainly I'm not buying more currently (I now have a check that yield <= 2* benchmark) but am happy to continue holding. My advice is this: compute your overall portfolio income assuming VOD had cut this year's income by 50%, and ask if you couldn't have lived with that change this year?

[IanTHughes]

Certainly I'm not buying more currently (I now have a check that yield <= 2* benchmark)

Why? What evidence do you have that that will improve your overall income progression?

My advice is this: compute your overall portfolio income assuming VOD had cut this year's income by 50%, and ask if you couldn't have lived with that change this year?

My advice is to go down the pub!


Ian

[Itsallaguess]

Certainly I'm not buying more currently (I now have a check that yield <= 2* benchmark)

Why? What evidence do you have that that will improve your overall income progression?

I'd be interested to hear if you've got any evidence that it won't...

Cheers,

Itsallaguess

[IanTHughes]

Certainly I'm not buying more currently (I now have a check that yield <= 2* benchmark)

Why? What evidence do you have that that will improve your overall income progression?

I'd be interested to hear if you've got any evidence that it won't...

Of course not. But I do not use "2 times benchmark yield" as a selection criteria. Moorfield does apparently use it as a rejection criteria. The point is that on occasions that would mean Moorfield "rejecting" a high yield. Personally, I would only do that if there was evidence that that would improve my overall income. Of course, some people just do it because it makes them feel better.


Ian

[Itsallaguess]

Personally, I would only do that [reject a high-yield] if there was evidence that that would improve my overall income.

Of course, some people just do it because it makes them feel better.

And if by feeling better they perhaps forgo a little income, compared to perhaps making an alternative investment decision that might do the opposite, then I think that's a very sensible approach, especially if we intend to stay the course over an investment lifetime of both seeking and compounding income....

After all, don't we often voluntarily give up cash to make ourselves feel better?

Why should that be any different when it comes to investment?

Cheers,

Itsallaguess

[moorfield]

Certainly I'm not buying more currently (I now have a check that yield <= 2* benchmark)

Why? What evidence do you have that that will improve your overall income progression?

My advice is this: compute your overall portfolio income assuming VOD had cut this year's income by 50%, and ask if you couldn't have lived with that change this year?

My advice is to go down the pub!

I freely admit that I don't have any, and have already commented on this elsewhere see viewtopic.php?p=176374#p176374

The closest (albeit coarse) measure of a yield trap I can come up with is 2* CTY (City of London IT) yield, so about 9.0% currently. Above which I'm not comfortable topping up any holdings (*). This is a lesson learnt and applied from CLLN in an effort to curb my yield-chasing peccadilloes in future. Both CNA and VOD have been flitting around that multiple for a while, so I'm leaving them alone. Whether 2* is a reasonable multiple, on the average, I don't know, but one has to start somewhere ...

It's a simple filter criteria I use. Do you have any opinion on what a reasonable such multiple might be, or are you too busy in the pub ?

[IanTHughes]

Personally, I would only do that [reject a high-yield] if there was evidence that that would improve my overall income.

Of course, some people just do it because it makes them feel better.

And if by feeling better they perhaps forgo a little income, compared to perhaps making an alternative investment decision that might do the opposite, then I think that's a very sensible approach, especially if we intend to stay the course over an investment lifetime of both seeking and compounding income....

Nothing wrong with that at all. But all I was pointing out was that Moorfield was prepared to reject High Yield, not because it was considered suspect but solely because it was High Yield. Not something I would do with my High Yield Portfolio (HYP), but it takes all sorts.

Ian

[IanTHughes]

It's a simple filter criteria I use. Do you have any opinion on what a reasonable such multiple might be, or are you too busy in the pub ?

Certainly not, I do not use such nonsense in my HYP selection


Ian

[moorfield]

It's a simple filter criteria I use. Do you have any opinion on what a reasonable such multiple might be, or are you too busy in the pub ?

Certainly not, I do not use such nonsense in my HYP selection

Fair enough. Such nonsense aside, are you willing to opine on whether VOD is a top-up or not, or a buy for a newbie, with evidence ?

[IanTHughes]

It's a simple filter criteria I use. Do you have any opinion on what a reasonable such multiple might be, or are you too busy in the pub ?

Certainly not, I do not use such nonsense in my HYP selection

Fair enough. Such nonsense aside, are you willing to opine on whether VOD is a top-up or not, or a buy for a newbie, with evidence ?

At last, a sensible question. I am a holder and see no reason to sell right now. I am investing some dividends plus new money tomorrow but have chosen another candidate. No rejection of Vodafone Plc (VOD), the selection is a higher yield, but if pressed about VOD I would probably await Wednesday's interim results before making a decision.


For what it is worth, I suspect that the dividend will be held but then again, what do I know?


Ian

[moorfield]

At last, a sensible question. I am a holder and see no reason to sell right now. I am investing some dividends plus new money tomorrow but have chosen another candidate. No rejection of Vodafone Plc (VOD), the selection is a higher yield, but if pressed about VOD I would probably await Wednesday's interim results before making a decision.


For what it is worth, I suspect that the dividend will be held but then again, what do I know?

Looking forward to reading your analysis of VOD's interims here.

[monabri]

I'd be interested to see your portfolio Ian..not values but % holdings.

[moorfield]

Looking forward to reading your analysis of VOD's interims here.

Well, you will be disappointed. I only analyse in detail those shares that are possible purchases. Even then, I rarely post on here, other that to say a purchase was made.

Other readers of our conversation might be, but I won't, for reasons of my discounting a VOD top-up already posted above.

[monabri]

I'd be interested to see your portfolio Ian..not values but % holdings.

Ah, it's ok , I've found it.

viewtopic.php?f=15&t=11577#p137393

[moorfield]

I'd be interested to see your portfolio Ian..not values but % holdings.

Ah, it's ok , I've found it.

viewtopic.php?f=15&t=11577#p137393

Per my suggestion above, my quick calculation is a 50% VOD dividend cut would dip IanT's overall income by about 1.9%. I can't speculate if his overall income plan can tolerate that, or indeed if there is one, because it's not discussed on that thread.

[Itsallaguess]

Well yes, if I see nonsense being expressed, I do like to point it out.

That does seem to be the case - but in this particular situation, you've agreed that you've no evidence at all that using such a risk-metric is detrimental to a long-term income-investment strategy (https://www.lemonfool.co.uk/viewtopic.php?f=15&t=14683&start=20#p179562).

Isn't using the word 'nonsense' unwarranted then, in this example?

You might not agree with it, but surely it's possible to disagree with it without the use of that sort of language?

Cheers,

Itsallaguess

[idpickering]

Someone said earlier that the results are on Wednesday, it's actually tomorrow. See http://www.lse.co.uk/financial-diary.as ... 3-NOV-2018

Ian.

[TUK020]

Data from Hargreaves Lansdowne.
Bunch of directors bought two months ago around £1.65
Amounts are not chump change (to me anyway).
This would seem to imply that the board believe they can pull through this without having to cut dividend.

RECENT DEALS
Date Director name Director's position Deal type Number of
shares dealt Price Value of trade Director's shares
remaining
18 Sep 2018 Demare, Michael Director Regular purchase transaction 50,000.00 £1.68 £83,900.55 n/a
07 Sep 2018 Read, Nicholas Simon Executive Director Regular purchase transaction 150,151.00 £1.65 £248,259.66 2,825,214.00
07 Sep 2018 Della Valle, Margherita Director Regular purchase transaction 180,182.00 £1.65 £297,912.92 n/a
07 Sep 2018 Badrinath, Vivek CEO (division/unit/region) Regular purchase transaction 99,100.00 £1.65 £163,851.94 n/a
07 Sep 2018 Humphries, Brian Executive Committee Regular purchase transaction 180,182.00 £1.65 £297,912.92 n/a
07 Sep 2018 Reiter, Joakim Group Director Regular purchase transaction 18,017.00 £1.65 £29,789.31 273,235.00
07 Sep 2018 Timuray, Serpil Chief Strategy Officer Regular purchase transaction 156,158.00 £1.65 £258,191.64 3,232,990.00
05 Sep 2018 Kleisterlee, Gerard Chairman of the Board Regular purchase transaction 112,922.00 £1.64 £185,564.72 220,000.00
03 Sep 2018 Furse, Clara Non-Executive Director Regular purchase transaction 50,000.00 £1.66 £82,813.70 75,000.00
09 Aug 2018 Jeffery, Nicholas CEO (division/unit/region) Regular sell transaction (market) 566,382.00 £1.85 £1,050,257.80 1,001,020.00