Stephen Bland - New HYP Portfolio @ Stockopedia

[blobby]

I’m a big fan of Stephen’s HYP approach. I’ve listed the FTSE 100 in order of yield here:

https://www.sharecast.com/index/FTSE_10 ... yield/desc

Stephen is using his judgement as well as looking at yield but there are a limited number of choices if he is going to choose 15 FTSE 100 shares with 4% or more yield. (4% is the average so I’d be surprised if he drops below this)

[Arborbridge]

I’m a big fan of Stephen’s HYP approach. I’ve listed the FTSE 100 in order of yield here:

https://www.sharecast.com/index/FTSE_10 ... yield/desc

Stephen is using his judgement as well as looking at yield but there are a limited number of choices if he is going to choose 15 FTSE 100 shares with 4% or more yield. (4% is the average so I’d be surprised if he drops below this)

Where?

[Crazbe7]

Stephen is using his judgement as well as looking at yield but there are a limited number of choices if he is going to choose 15 FTSE 100 shares with 4% or more yield. (4% is the average so I’d be surprised if he drops below this)

37 shares from your list!!

Crazbe7

(edited 23/3. As per mod box. Raptor.)

[Dod101]

I’m a big fan of Stephen’s HYP approach. I’ve listed the FTSE 100 in order of yield here:

https://www.sharecast.com/index/FTSE_10 ... yield/desc

Stephen is using his judgement as well as looking at yield but there are a limited number of choices if he is going to choose 15 FTSE 100 shares with 4% or more yield. (4% is the average so I’d be surprised if he drops below this)

Are you sure that the FTSE100 average yield is as little as 4%? Is he using his judgement or simply picking the highest yielders?

Dod

[IanTHughes]

Is he using his judgement or simply picking the highest yielders?

Well, as he has not picked the highest possible yields, I would say that he is most likely using some criteria other than yield. In fact, I would not mind betting that he is using his HYP Selection criteria, what do you think?


Ian

[Dod101]

Is he using his judgement or simply picking the highest yielders?

Well, as he has not picked the highest possible yields, I would say that he is most likely using some criteria other than yield. In fact, I would not mind betting that he is using his HYP Selection criteria, what do you think?

And I wonder what that might be? Certainly it is different from mine, but that is probably not surprising.

Dod

[EssDeeAitch]

I am new to the HYP concept but TBH this thread is shedding more heat than light.

[Dod101]

I am new to the HYP concept but TBH this thread is shedding more heat than light.

I understand that, EDA.

The HYP concept, as per this Board is I think quite well set out in the guidelines and my opinion/experience is that using a pure HYP strategy to generate an income is a good one for the inexperienced investor. As you gain experience however, its flaws become evident. LTBH come what may, the highest income consistent with safety, spreading holdings widely between sectors and so on are all fine in theory and are good guidelines but as you gain experience, they can with benefit be modified to suit the individual and his 'comfort zone' and style.

Some are dedicated to the pyad philosophy and that applies to most of the diehards on this Board, but there are other legitimate methods. That is what is generating the heat, if it can be termed that.

Please do not be put off though because anyone new to the concept can learn a lot from the posts here.

Dod

[IanTHughes]

Some are dedicated to the pyad philosophy and that applies to most of the diehards on this Board, but there are other legitimate methods.

Of course there are other methods! You could for example have holdings of Investment Trusts, or maybe you could ignore diversification. You could maybe bar the highest yields for no other reason than that the yield is higher than some arbitrary figure, or maybe just bar whole Business Sectors.

As I understand it, your strategy applies all of the above and therefore has nothing whatsoever to do with the High Yield Portfolio (HYP) strategy that I thought, obviously mistakenly, this board was set up to discuss.


Ian

Moderator Message:
Have split this thread so as to allow discussion of other "strategies" than PYADs on stockopedia on the Strategies board. Please discuss on that thread. Thank you. Raptor.

[Gengulphus]

SLA does not have a five year record in this form- so he is taking Gengulphus's definition of continuity.

Sorry, I don't remember defining continuity (*) - so if I have done so, please remind me, and if I haven't, please tell me what you're talking about!

Sorry Gengulphus if I have taken you out of context, or misquoted.
Actually, on a quick look back at various threads, I cannot even find the conversation! However, what I thought you wrote was in a discussion about whether SLA could be regarded as a continuity of either Standard Life or Aberdeen. You mentioned deciding this by using the company's registered number. Leading on from this, I posited that perhaps PYAD was treating SLA's history not as a new entity (which would therefore have too short a dividend record) but as a continuation of one of its previous company names - in which case the dividend record could be said to be greater than five years.

Thanks, I now recognise it from that description - it was viewtopic.php?f=15&t=16727#p207426 (edit: I see that others found this during the long, interrupted period during which I wrote this post - the board software presumably tried to alert me to those posts, but it alerts one to new posts on both previews and submissions, and when a new post is alerted on a preview, it's very non-obvious!).

But what I said there was that for most purposes, the answer depends on the HYPer. I.e. if there's any "Gengulphus's definition" that comes out of it, it's that it's the continuation of whichever of the two companies one feels appropriate - but I'd think of that more as a non-definition! And indeed, that it implies that a definition (or at least a widely useful definition) is impossible...

The bit about using which company it is legally (which can be determined by the company number) is only important for a few limited purposes. I identified one of them in that previous post - it determines whether share certificates remain valid. But I did say that it was a technicality and only relevant to a minority of shareholders (specifically those who hold their shares as certificates) - it only seemed worth mentioning at all because I know some HYPers here have said they do have certificated holdings.

I have however realised as a result of the point coming up in this thread that there is a more widely-relevant practical purpose for which that technicality matters after mergers: at least by default, it tells you which original company the merged company will use in its annual report for comparatives, five-year histories, etc. E.g. if you look at Standard Life Aberdeen's 2017 annual report, it says the dividend was 21.30p, up 7.5% from Standard Life's 2016 dividend of 19.82p. And that's an accurate assessment from the point of view of a HYPer who originally owned Standard Life - and the company's 5-year dividend history for 2013-2017 is 15.80p, 17.03p, 18.36p, 19.82p, 21.30p, and 2018 has since added 21.60p to that, but that's been announced recently enough that either the 2013-2017 history or the 2014-2018 history might have been used by someone who looked at the company's 5-year record recently. A nice increasing record in either case.

On the other hand, from the point of view of a HYPer who originally owned Aberdeen Asset Management, there was an effective 1-becomes-0.757 share consolidation involved in the merger, so each SLA share they have now results from 1/0.757 = about 1.321 ADN shares before the merger. Multiplying by that factor of about 1.321 and rounding, Aberdeen Asset Management's 16.0p, 18.0p, 19.5p, 19.5p dividend record for 2013-2016 becomes 21.14p, 23.78p, 25.76p, 25.76p, making 21.30p for 2017 and 21.60p for 2018 a distinct cut to their dividend income (*).

Both of those viewpoints are basically "How has this holding performed for me in the past?" ones - whereas for purchases (certainly of new holdings, and IMHO also top-up purchases) the question that matters is "What clues can I get about what this holding will do for me in the future?". That to my mind is the only way that dividend records are relevant to HYP purchase decisions - and IMHO they only give some fairly mild clues, but that's offset by the fact that just about all clues about what shares will do for one in the future (especially the long-term future, which is where the bulk of the value of a HYP lies) are mild ones. At best, one can only shade the odds in one's favour. And just what one should make of Standard Life Aberdeen's dividend record from that perspective? - well, people will have to make their own minds up about that without significant help from me, because I don't feel I can supply any!

(*) Though it has to be said that the 17.3% reduction between 2016 and 2017 is very much at the low end of real dividend cuts, and there's also a messy complication: Aberdeen Asset Management's financial year ended on September 30th, while Standard Life (Aberdeen)'s ended and still ends on December 31st. So for those HYPers who originally owned Aberdeen Asset Management, they essentially went through a 15-month 'financial year' from 30 September 2016 to 31 December 2017. And the terms of the merger ended up with them receiving three dividends for that 15-month period: an ADN interim of 7.5p on 15/06/17, an SLA interim of 7.0p on 18/10/17, and an SLA final of 14.3p on 30/05/18. Together, those were worth about 1.321 * 7.5p + 7.0p + 14.3p = about 31.21p for that 15-month period, which annualises to 24.97p per year. On that basis, the 25.76p to 24.97p reduction from 2016 to 2017 is only -3.1% - but of course that only shifts the bulk of the reduction to 2018, when 24.97p to 21.60p is a 13.5% cut. And for those who measure dividend income in other ways, yet other results are possible - e.g. if you do it as dividends received during calendar years, 2017 will have seen a nice rise, from about 1.321 * (12.0p + 7.5p) = about 25.76p in 2016 to about 1.321 * (12.0p + 7.5p) + 7.0p = about 32.76p in 2016 (a 27.2% rise), but that's followed by a fall to 14.3p + 7.3p = 21.6p in 2018 (a 34.1% fall).

Basically, it's an unavoidable complication that things can get messy around corporate actions, with how one sees the sequence of events depending quite a lot on how one looks at them. About all that's common to the above three ways of looking at the Standard Life Aberdeen merger is that overall, there was a reduction of about 16% between 2016 and 2018 - whether one sees it as a moderate reduction followed by a small increase, a small reduction followed by a very moderate reduction or as a substantial increase followed by a very substantial reduction is more a question of viewpoint than of fact. And there are probably other reasonable viewpoints besides those three...

Gengulphus

[Breelander]

Are you sure that the FTSE100 average yield is as little as 4%?

Currently the FT has it at 4.39% https://markets.ft.com/data/indices/tea ... =UKX.D:FSI

[Alaric]

the question that matters is "What clues can I get about what this holding will do for me in the future?".

With Standard Life's assurance and annuity business hived off to Phoenix, what's left is a merger of Aberdeen's fund management business with that of Standard Life.

So how well can it do and how much profit can it make by being both a retail and institutional fund manager? It hasn't started well by losing Lloyds Bank/Scottish Widows as a client, even if their move away has to be deferred.

[Gengulphus]

... the High Yield Portfolio (HYP) strategy that I thought, obviously mistakenly, this board was set up to discuss.

While I thought, possibly mistakenly, that it was set up to discuss running HYP strategies in practice. The important differences being that it's plural "HYP strategies" - any strategy that matches the board guidance is OK - and that not every aspect of them fits the "running ... in practice" part. In particular, questions such as whether they're a good choice of strategy or what type of strategy one might choose instead cannot be fairly discussed in an environment in which other types of strategy are off-topic. It would help discussion flow if people who want to make points about such questions stopped beating their heads against that brick wall by posting them here, and instead posted them on High Yield Shares & Strategies or Investment Strategies where they can be fairly discussed.

Gengulphus

[Raptor]

Fourth pick is BHP (BHP Group Ltd). Not in my HYP, my choice was RIO a long time ago and they have been a major part of mine( mine ) and thus have not really looked at buying into BHP. Seems forward yield of 8.9% (according to PYAD).

Raptor.

[Arborbridge]

Fourth pick is BHP (BHP Group Ltd). Not in my HYP, my choice was RIO a long time ago and they have been a major part of mine( mine ) and thus have not really looked at buying into BHP. Seems forward yield of 8.9% (according to PYAD).

Raptor.

RIO had a choppy divi record, but you probably made the right choice. I'm only belatedly wondering whether to pair my BHB with a RIO holding to hedge my bets.

[Dod101]

[Would you sell a company because it was on a big yield - following the logical thrust of what you are saying?

It does not happen very often but I recently sold Vodafone as I think I reported at the time, so yes, but it all depends; it is not automatic. I think where you have a big yield thrust upon you then you need to take stock. Certainly, I think the dividend of SLA is much less secure than it was in Standard Life, which is actually what the IC article is also saying. Someone in your position should surely be considering Phoenix Holdings which would be nearer to your original choice than sticking with SLA, which is an altogether different beast.

Dod

[Gengulphus]

Fourth pick is BHP (BHP Group Ltd). Not in my HYP, my choice was RIO a long time ago and they have been a major part of mine( mine ) and thus have not really looked at buying into BHP. Seems forward yield of 8.9% (according to PYAD).

Pyad says in the linked-to Stockopedia articles comments "... Aussie company BHP Group (BHP). At 1,779p and a div forecast for the year to 30 June 2019 of US 208¢ worth 158.8p at the current FX rate it has a forward yield of 8.9%." I'd be inclined to think that he actually means the UK company BHP Group plc, not the Australian company BHP Group Limited - it's not entirely clear, but at least for a UK-based audience, it's what they'll get if they use the ticker BHP, and it will avoid potential tax complexities with receiving dividend income from an Australian company (*). The two companies' dividends and other financial aspects of their shares are equivalent up to very insignificant rounding as a result of them being tied together in a 'dual listed company' structure, but that doesn't make them entirely equivalent in taxmen's eyes.

According to ShareCast (**), the forecast dividend for the current year (ending 30/06/19) is 143.5p. That results in a noticeably lower forecast yield of 8.3%, even though the share price has dropped a bit from his 1779p. I don't know the reason for the difference between their 143.5p and his 158.8p - possibly different forecasters, possibly figures captured at different times, possibly some sort of website error about currency conversion, possibly a combination.

I did notice that the ShareCast forecast dividend tor the next year (ending 30/06/20) is 96.62p, i.e. lower by about a third. That's a pretty big reduction, and I would at least want to take a careful look to see whether the company has made any announcements about the dividend prospects...

(*) Not saying all UK-based investors will be significantly affected by those tax complications - just that some will.

(**) Which what was DigitalLook and then WebFG seems to have morphed into while I wasn't paying attention - which admittedly has probably been some months for that particular source.

Gengulphus

[scrumpyjack]

BHP have paid some very large special dividends over the last couple of years - the demerger of South32 was done as a dividend, and then recently a 79.5p special in respect of the sale of their US Shale business.

Also it should be noted that both Rio and BHP now have a policy on dividends that they will pay out in future a percentage of each years earnings. They will not necessarily attempt to maintain dividends at previous years levels throughout the cycle.

[Smautf]

Fourth pick is BHP (BHP Group Ltd). Not in my HYP, my choice was RIO a long time ago and they have been a major part of mine( mine ) and thus have not really looked at buying into BHP. Seems forward yield of 8.9% (according to PYAD).

Pyad says in the linked-to Stockopedia articles comments "... Aussie company BHP Group (BHP). At 1,779p and a div forecast for the year to 30 June 2019 of US 208¢ worth 158.8p at the current FX rate it has a forward yield of 8.9%." I'd be inclined to think that he actually means the UK company BHP Group plc, not the Australian company BHP Group Limited - it's not entirely clear, but at least for a UK-based audience, it's what they'll get if they use the ticker BHP, and it will avoid potential tax complexities with receiving dividend income from an Australian company (*). The two companies' dividends and other financial aspects of their shares are equivalent up to very insignificant rounding as a result of them being tied together in a 'dual listed company' structure, but that doesn't make them entirely equivalent in taxmen's eyes.

According to ShareCast (**), the forecast dividend for the current year (ending 30/06/19) is 143.5p. That results in a noticeably lower forecast yield of 8.3%, even though the share price has dropped a bit from his 1779p. I don't know the reason for the difference between their 143.5p and his 158.8p - possibly different forecasters, possibly figures captured at different times, possibly some sort of website error about currency conversion, possibly a combination.

I did notice that the ShareCast forecast dividend tor the next year (ending 30/06/20) is 96.62p, i.e. lower by about a third. That's a pretty big reduction, and I would at least want to take a careful look to see whether the company has made any announcements about the dividend prospects...

Gengulphus

I confess, various assessments of BHP's yield have been puzzling me lately.

BHP Group paid a special dividend of almost 80p at the end of January, arising from the sale of their US shale business. Last year's final dividend (paid 25.9.18) was 48.7p, and the current year's interim dividend (payable on 26.3.19) will be 42.25p.

That's a total of (roughly) £1.70 in the year to 30.6.19 and a yield of 9.67% on today's price of £17.58. Strip the special out and the yield is closer to 5.1%.

So I have no idea where either Pyad or ShareCast are getting their numbers from ! The same, by the way, goes for HYPTUSS which - the last time I ran it - suggested a forward yield of 8.1%.

I don't recall seeing a commitment to hugely increased payouts from the company although I might easily have missed something. Does anyone have an explanation ?

Chris

NB Next year, I assume there will be no special and that the payments will be closer to the 90p total of 2018 final and 2019 interim - which means ShareCast's forecast of 96p for the year to 30.6.20 feels more reliable than their forecast for the year we're actually in !

[blobby]

Are you sure that the FTSE100 average yield is as little as 4%?

Currently the FT has it at 4.39% https://markets.ft.com/data/indices/tea ... =UKX.D:FSI

Thanks for the corrections on this. If using my link there are only 32 shares above the average yield for Stephen Bland to choose from however things are a little more complicated for example.

* 2 of the shares on the list are Royal Dutch Shell (the 'A' share and the 'B' share)

* Having selected one share then it will rule out others. For example if Stephen selects Shell then BP will be ruled out as being in the same sector.

* There are other shares that may fall into the list when the figures are checked. For example BHP is not in the top 32 as most of its figures are listed as "n/a" by sharecast.

If Stephen completes his list as described then I will be surprised. I think he has chosen some shares from the FTSE 250 in the past(?). I'm also wondering if he will will select something with below the average FTSE 100 yield if it is necessary to find something in a missing sector?