BBLSP1's HYP

[BBLSP1]

As someone who declared themselves an SL2 (only makes changes to their HYP as a result of corporate actions ) on another thread here. And as someone who gains a great deal of useful information here – idp, arbo, tjh, even the doubting voice of Dod101, plus many others – but due to the constraints of work contributes little, I thought it was time to post my own ‘HYP’.

I have been building it for just over eight years now, and I have never sold a share that was voluntarily purchased. Shares that came my way from corporate actions, e.g. Verizon, Indivior, I have sold, but I view these as corporate action events, not as voluntary sales, as I never wanted these shares in the first place.

There are 24 shares in the portfolio now that Carillion has been removed from it. As the portfolio was built in stages, and is still work in progress, the purchase amounts are not equally weighted, as shown in the table.

So far the HYP is not too distorted, so for now, no changes. However, were it to become like ‘HYP 1’, very heavily dependent on a few shares for income, then I would not rule out some adjustments – in fact it is likely. This has not happened after eight years so far, but of course I have been building, it has not been bought all at once, and to some extent I have probably subconsciously balanced in my purchasing along the way, as noted by the purchase price weighting. It may be that I never move to equally balance the shares in terms of purchase price.

In parallel, I have an IT portfolio, skewed towards income again, but with some that I am happy to sell - this will happen up until I start to receive the state pension; this to avoid an income jump at that point.

I am in the fortunate position that each portfolio alone satisfies my ‘basic’ income needs, plus I have cash reserves good for say a year. However, I have nothing else except for the state pension later on - so these two portfolios are all that I have for retirement.
I am currently still working, mid 50s, but could retire now on this. However, although like all jobs it has its moments, and Monday mornings are never easy, I mostly enjoy the work that I do, so am sticking with it for now.

- The ‘trailing yield’ that I use includes announced future dividends, which, when announced, overwrite the equivalent historic dividend of the year before.

- Apologies for only giving TIDMs, but most shares I would expect are well known here and Google can cover the rest.

Any thoughts appreciated.

[idpickering]

Moderator Message:
Have edited post to remove quoted post. Long quoted posts cause problems on tablets and phones. Raptor.

That is a nice looking HYP you have there imho, and thanks for putting it up here for all to see. I’m honoured to be named in your post. May I suggest you only purchase higher yielding shares going forward, as you have a number of lower yielding ones? Having said that, I see that those shares are not overly weighty in the HYP, so no problem I guess.

Ian.

[monabri]

Sorry, not quite sure what you mean by "purchase value weight"?

[Arborbridge]

Sorry, not quite sure what you mean by "purchase value weight"?

That puzzled me too! 3x, 4x, 5x - what?


Arb.

[moorfield]

Sorry, not quite sure what you mean by "purchase value weight"?

Yes it's a mystery.... I'm stumped I had thought that might mean value * book cost, but realise that can't work for the likes of VOD, BATS over the last eight years BBLSP1 has been investing. Then I see they add up to 91, so nothing obvious there either.

[BBLSP1]

By way of explanation - I buy in slugs of £x. So the total spent on say TSCO is £5x, whereas on IRV it is £2x. I.e. the value on purchase of all my TSCO holdings is 2.5 times greater than the value on purchase of all my IRV holdings.

Therefore the portfolio is not equally weighted in terms of amount spent on each holding. This is due to historical reasons, the table contents are listed in sequence of first purchase. So I went in fully on TSCO well before the problems started, whereas I was just building up on IRV when it all went wrong for them.

[Dod101]

Thanks BBLSP. Personally I think it all looks very good with the two obvious problems of Tesco and Interserve. You will never get any portfolio perfectly balanced or keep it that way so that is not a problem. In an attempt to protect against Corbyn I have sold SSE, but also because of its own shaky finances and if the yield is now around 8.29% I cannot be the only one with concerns. I still hold Vodafone with a similar yield mind you.

Probably like most, you have a lot in the financials sector but that is such a broad definition it surely does not matter and otherwise it is surely a well diversified portfolio. At a different stage on the investment road, I see things slightly differently, and over the last couple of years have moved away from instant high income in favour of longer term sustainable growth in income (I hope!) That is probably due to a combination of changed circumstances in my personal life and thus a less urgent need for income and a move to a more conservative stance with Corbyn, Brexit and so on swirling around.

For instance, a couple of weeks ago I was determined to sell my last utility National Grid but so far I still hold it. I do not much like the threats from the regulator nor the Corbyn threat, although neither may ever happen!

Dod

[Arborbridge]

By way of explanation - I buy in slugs of £x. So the total spent on say TSCO is £5x, whereas on IRV it is £2x. I.e. the value on purchase of all my TSCO holdings is 2.5 times greater than the value on purchase of all my IRV holdings.

Therefore the portfolio is not equally weighted in terms of amount spent on each holding. This is due to historical reasons, the table contents are listed in sequence of first purchase. So I went in fully on TSCO well before the problems started, whereas I was just building up on IRV when it all went wrong for them.

I see the logic of doing that for "internal" purposes. For presentation to the wider world, might it be les confusing to display the percent weight of total capital invested if you want to show that - then we would be looking at something easier to view and compare with current value and capital invested both in percentage terms.

Just an idea.

Arb.

[BBLSP1]

Thanks Dod.

TSCO has resumed a small dividend and hopefully will come back on track before another currently performing share hits stormy seas. The present portfolio would pay adequately for my needs, hence as long as the constituent shares hit these stormy waters in rotation it will be alright.

Worries would be a drop in dividends across the board, or multiple complete failures such as CLLN. My other worry, which you mention in your post, is sustainability of income growth. I will need the overall income from the portfolio to keep pace with inflation. Judging the ability of the portfolio to do this is not an easy thing. However, as mentioned above, I have in reserve a parallel income IT portfolio which is more internationally focussed.

I will hold on to IRV regardless – its value is so low now that selling is pointless. I would hope that STAN could make a comeback, and I would certainly like more of ULVR and RB but they remain elusive.

As for utilities, I have posted previously my thoughts on these a while back. I have UU, CNA, SSE and NG and they are certainly highlighted on my spreadsheet and watched carefully – I may sell some or all yet. However, it is not clear to me that a Corbyn Government with a good majority will actually come to pass, and even then if they would really want to nationalise (election rhetoric not withstanding) and even if they wanted to, would the markets or the law let them? A lot of hurdles to jump there. As I am still in work, and generating new money for investment each month, I will watch and wait for the likely outcome of the next election (and BREXIT) before either retiring or realising I need to plod on to recoup my loses.

Your thoughts on what to do once you have reached the completion of building up core investments are interesting. I can see how, on the one hand, you can now begin to look at low yielding, but safe and sustainable investments. However, with basic needs taken care of, there is the alternative argument for more speculative higher yield investing. It comes down to personality I guess.

[BBLSP1]

I see the logic of doing that for "internal" purposes. For presentation to the wider world, might it be les confusing to display the percent weight of total capital invested if you want to show that - then we would be looking at something easier to view and compare with current value and capital invested both in percentage terms.

Just an idea.

Arb.

Agreed, however, I do not have those figures directly at hand so quoted a ballpark multiple figure, really just to indicate that the portfolio is not equally weighted by purchase value. (I also might not want to explicitly see the difference between purchase cost and current value!! It's all about the income )

[idpickering]

Your thoughts on what to do once you have reached the completion of building up core investments are interesting. I can see how, on the one hand, you can now begin to look at low yielding, but safe and sustainable investments. However, with basic needs taken care of, there is the alternative argument for more speculative higher yield investing. It comes down to personality I guess.

If I may interject, at 32 holdings in my HYP, I'm well enough diversified. Among the holdings are some more recent additions such as Unilever and Diageo, both of whom are lower yielding, but I consider them to be stalwarts of my HYP, providing hopefully, a secure base to it.

Ian.

[Arborbridge]

At a different stage on the investment road, I see things slightly differently, and over the last couple of years have moved away from instant high income in favour of longer term sustainable growth in income (I hope!) That is probably due to a combination of changed circumstances in my personal life and thus a less urgent need for income and a move to a more conservative stance with Corbyn, Brexit and so on swirling around.

For instance, a couple of weeks ago I was determined to sell my last utility National Grid but so far I still hold it. I do not much like the threats from the regulator nor the Corbyn threat, although neither may ever happen!

Dod

As an aside (I hope not to distraction to the OP) could you put up some shares you would consider fulfill your "later life" criterion of reliable growing dividends. We can guess a few, but I just wondered what your latest list of worthies would be. Or maybe start a separate thread if too tangential to this one?

Arb.

[Dod101]

OK Arb

It will need to be later because I have a few things on at the moment. nothing very exciting I am afraid!

Dod

[Dod101]

Your thoughts on what to do once you have reached the completion of building up core investments are interesting. I can see how, on the one hand, you can now begin to look at low yielding, but safe and sustainable investments. However, with basic needs taken care of, there is the alternative argument for more speculative higher yield investing. It comes down to personality I guess.

It also comes down to your stage in life. I am now mid 70s so speculative investments are not something I am very interested in but I do think those younger and still working (like you!) ought to be interested in more speculative investments because you can mostly afford the risk.

In addition to HYP shares, I have a small portfolio of capital growth shares but the nearest to speculative investments I have is Scottish Mortgage.

And I agree with your comments about Corbyn; it may never happen.

Dod

[melonfool]

Your thoughts on what to do once you have reached the completion of building up core investments are interesting. I can see how, on the one hand, you can now begin to look at low yielding, but safe and sustainable investments. However, with basic needs taken care of, there is the alternative argument for more speculative higher yield investing. It comes down to personality I guess.

If I may interject, at 32 holdings in my HYP, I'm well enough diversified. Among the holdings are some more recent additions such as Unilever and Diageo, both of whom are lower yielding, but I consider them to be stalwarts of my HYP, providing hopefully, a secure base to it.

Ian.

How can they be 'stalwarts' if they are recent additions? And how can you be running a High Yield Portfolio if you are choosing low yielding stocks?

Don't get me wrong, I hold both and like them, and they do feel steady, but they could never be described as being part of an HYP on the basis this board talks about HYP.

Mel

[idpickering]

Your thoughts on what to do once you have reached the completion of building up core investments are interesting. I can see how, on the one hand, you can now begin to look at low yielding, but safe and sustainable investments. However, with basic needs taken care of, there is the alternative argument for more speculative higher yield investing. It comes down to personality I guess.

If I may interject, at 32 holdings in my HYP, I'm well enough diversified. Among the holdings are some more recent additions such as Unilever and Diageo, both of whom are lower yielding, but I consider them to be stalwarts of my HYP, providing hopefully, a secure base to it.

Ian.

How can they be 'stalwarts' if they are recent additions? And how can you be running a High Yield Portfolio if you are choosing low yielding stocks?

Don't get me wrong, I hold both and like them, and they do feel steady, but they could never be described as being part of an HYP on the basis this board talks about HYP.

Mel

Stalwarts in that I feel more comfortable with them being a more solid base to my HYP. I don't mind having lower yielding shares on board, and think more of the average overall yield of my HYP (about 5.5%). The bottom line is, each to their own.

Ian.

[melonfool]

I don't mind having lower yielding shares on board, and think more of the average overall yield of my HYP (about 5.5%). The bottom line is, each to their own.

Ian.

Well, in investing,yes. In HYP, not so much. You might be on the wrong board?

Mel

Moderator Message:
Mel may be referring to Ian's announcement that he had sold all his ULVR holding at the time of the recent (and subsequently abandoned) vote. That would make a subsequent re-purchase at below-HYP yields. With that acknowledged, I suggest we all get back to discussing BBLSP's original post, rather than Ian's apparent sale and re-purchase of ULVR. -- MDW1954