Stephen Bland - New HYP Portfolio @ Stockopedia

[Arborbridge]

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.

How many do you want, then? Using Step-ones spread sheet I see about 37 with dividend yields of 4.6% or more - isn't that enough to be going on with? That's historic yields, or about 45 using forecast yields.

Arb.

(Edited 23/3 to correct quotes. Raptor)

[blobby]

How many do you want, then? Using Step-ones spread sheet I see about 37 with dividend yields of 4.6% or more - isn't that enough to be going on with? That's historic yields, or about 45 using forecast yields.

Hi Arb,

I think I've missed "Step-ones spread sheet". I've checked back and can't find a link. Can you help please?

[monabri]

Link to stepone's spreadsheet.

http://lemonfoolfinancialsoftware.weebl ... se350.html

[Raptor]

Moderator Message:
discussions on other HYP strategies should be discussed on Strategies board not here. Therefore I am splitting off the posts so discussions can continue rather than lock this thread. I have also gone through thread and deleted or edited posts that are inappropriate for this board/thread as I feel this is a genuinely good topic for this board. Discussions on PYADs strategy for this "new" portfolio is welcome but you may wish to use the thread on Strategy so as to keep this on topic. Raptor.

[PinkDalek]

... the split topic over at High Yield Shares & Strategies - general being here:

viewtopic.php?f=31&t=16895

(Edited 23/3. Raptor)

[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%.

... Does anyone have an explanation ?

Thanks - your reminder of that special and wondering where ShareCast are getting their numbers from has suggested an explanation to me. I can't prove my explanation is correct, but based on what I've seen about forecast dividends and yields in the past, I think it quite likely - it is:

I know that data providers generally give consensus forecasts - i.e. some sort of average they've formed from the forecasts made by individual analysts' forecasts. Which forecasts they use may vary between data providers - for instance, they might have different lists of brokers/analysts that they pay attention to, and they might ignore a forecast for being out of date if too long has elapsed since it was produced (e.g. ShareCast's list of brokers they take into account for their broker view statistics for BHP might not be exactly the same as they use for forecast figures, but it's probably at least similar). And what sort of averaging they use may also vary - for instance, they might use the normal average (= arithmetic mean in mathematical terms), or they might use the median to try to avoid the figure being influenced unduly by an outlier forecast produced by an analyst who is much more optimistic (or much more pessimistic) than the rest about the company's prospects, or they might use other techniques to achieve the same aim - e.g. one I saw described in detail many years ago was IIRC "if there are three or more forecasts, discard the highest and the lowest, otherwise keep them all; then take the arithmetic mean of the forecasts that have been kept".

Such averaging systems are basically always capable of producing a 'consensus' figure that no individual forecaster remotely agrees with. As an extreme example, if a company looks as though it's in trouble and exactly half the forecasters think it will bite the bullet and cancel its dividend entirely, while the other half think it will tough it out and maintain its dividend for at least one more year, then all three of the systems I've described will reckon the 'consensus' is that it will cut its dividend by 50% - when not a single forecaster is forecasting anything of the sort! And both differences in the forecasts used and in the averaging method can make quite significant differences to the figure obtained - for instances, if there are ten forecasts and seven forecast cancellation while three forecast toughing it out, then the normal average gives a 70% cut, the median a 100% cut and the discard-highest-and-lowest-then-average method a 75% cut, but another provider who reckons that five of the cancellation forecasts and none of the toughing-out forecasts are out of date gets 'consensus' forecasts of 40%, 0% or 33% cuts respectively...

What I suspect might well be going on here is that some of the forecasters are counting the special and so getting a dividend of about 170p for the current financial year, while others are not and so getting a dividend of about 90p for the current financial year. As long as there are significant numbers of forecasters in both of those categories, the same sort of effect as I've described would end up producing 'consensus' figures between the two, such as ShareCast's 143.5p or pyad's data provider's 158.8p and it would make the fact that they differ markedly very understandable if they're different data providers.

I don't recall seeing a commitment to hugely increased payouts from the company although I might easily have missed something. ...
...
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 !

That describes my position as well.

Gengulphus

[Gengulphus]

With my clarification:

... I think he [Stephen Bland] 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?

Yes, his first HYP, that he selected a week after first describing his HYP strategy and later named HYP1, went down into the FTSE 250 - see an archived copy of his article about its selection, and especially "To obtain a little more choice, I went marginally outside the FTSE 100 index and set £1.5b as my minimum capitalisation filter."

He didn't actually go below the FTSE 100 yield on that occasion - Shell's yield of 2.7% would be well below the FTSE 100 yield now, but at the time the 1999-2000 tech bubble had only partially deflated, so the FTSE 100 still contained a lot of no/low-yielders, as a result of which its yield was only about 2.2%. He did however go in for three sector duplicates - two banks, two insurers and two miners. The article does provide some sort of explanation that the first two of those pairs were sufficiently diversified - the banks were an international clearing bank and a UK mortgage bank, the insurers were a nonlife insurer and a life insurer (how valid those explanations are is a matter of opinion!). No such explanation was provided for the two miners.

What I think this does point out is that if he finds he has trouble selecting fifteen reasonably safe high-yielding FTSE 100 shares from fifteen different sectors, there are multiple possible compromises he can make, and he's made at least two of them in the past. (Quite possibly more - there are four other HYPs he has selected over the intervening years that I know of, and it's highly likely that I don't know of all of them.)

Gengulphus

[moorfield]

AV. joins the folio today. I'm quite enjoying this selection process it's like watching a series of Bake Off. Today's Star Payer and Pyadic Handshake goes to ....

[Arborbridge]

AV. joins the folio today. I'm quite enjoying this selection process it's like watching a series of Bake Off. Today's Star Payer and Pyadic Handshake goes to ....

Yes, it looks like fun. He's still backing Aviva then eh? It was one of my first HYP shares, again a Pyad selection way back in 2006-ish. Not that it's turned out all that well - it's been a bit in the dumps all the time TBH.

Still, perhaps the best is ahead of us

Just for info, my XIRR is a princely 1% since first tranche purchased in March 2007, isn't that good? It means in effect my dividend payments have been made by eroding my own capital. The divi dropped dramatically, as we know and only this year finally got back to where it was. Let's hope it stays there - or grows, preferably.

Still, one cannot win them all, and I'm smiling because it has stayed the course and not turned into one of my basket cases. Mind you - it's been a long wait for it to come right.

Ooh - I see it's crept up to number 6 in my topup list. So I might actually have to ask myself some questions....

Arb.

[Arborbridge]

The divi dropped dramatically, as we know and only this year finally got back to where it was.
Arb.

I thnik this could be wrong - it looks as though the divi is not yet back up to where it was in 2007. Still 10% below or thereabouts.

[Dod101]

In my book he is picking nothing very inspiring and a few duds. All very predictable.

Dod

[Arborbridge]

In my book he is picking nothing very inspiring and a few duds. All very predictable.

Dod

Translation: "he doesn't agree with my own choices" Very predictable.

Sleep tight, one and all.

Arb.

[IanTHughes]

Looks good so far ……

# | EPIC | SECTOR       | Price      | Yield
1 | SLA  | Fund Manager |   271.0000 | 8.00%
2 | VOD  | Telecom      |   148.0000 | 8.70%
3 | IMB  | Tobacco      | 2,624.0000 | 7.90%
4 | BHP  | Mining       | 1,779.0000 | 5.08%*
5 | AV   | Insurance    |   410.0000 | 8.00%

Ian

* - Using my yield for BHP

[Dod101]

Looks good so far ……

# | EPIC | SECTOR       | Price      | Yield
1 | SLA  | Fund Manager |   271.0000 | 8.00%
2 | VOD  | Telecom      |   148.0000 | 8.70%
3 | IMB  | Tobacco      | 2,624.0000 | 7.90%
4 | BHP  | Mining       | 1,779.0000 | 5.08%*
5 | AV   | Insurance    |   410.0000 | 8.00%

Your idea of what looks good is certainly different from mine. I might hold but I certainly would not buy SLA, Vodafone or Aviva currently, the first two because I think their dividend is suspect and the latter because of its, shall we say, chequered history. Anyway, pyad uses Strategic Ignorance, which is his excuse no doubt. I expect you are just being provocative.

Dod

[IanTHughes]

Looks good so far ……

# | EPIC | SECTOR       | Price      | Yield
1 | SLA  | Fund Manager |   271.0000 | 8.00%
2 | VOD  | Telecom      |   148.0000 | 8.70%
3 | IMB  | Tobacco      | 2,624.0000 | 7.90%
4 | BHP  | Mining       | 1,779.0000 | 5.08%*
5 | AV   | Insurance    |   410.0000 | 8.00%

Your idea of what looks good is certainly different from mine. I might hold but I certainly would not buy SLA, Vodafone or Aviva currently, the first two because I think their dividend is suspect and the latter because of its, shall we say, chequered history. Anyway, pyad uses Strategic Ignorance, which is his excuse no doubt. I expect you are just being provocative.

In what way provocative? All of the selections are amongst the highest sustainable yields in the FTSE100, although it is true that I might well have gone for Rio Tinto PLC (RIO) - yield 5.50% - in place of BHP Billiton PLC (BHP), which I do not believe is yielding 8.90%, as quoted by PYAD. I also would probably have picked HSBA Group (HSBA) and one of the Oil Majors (BP) or (RDSB) within the first five selections, as they appear slightly higher yielding than BHP at least. But, all of the selections so far would make it into a one-off HYP if I was doing the selection. So I ask again, why provocative?


Ian

[Alaric]

So I ask again, why provocative?

Take a look at the five year share price charts for each of these. They are prime examples of shares that are high yield not because of ever increasing dividends, but because the share price has gone nowhere. At those sorts of dividend levels, comparisons to corporate bonds come into play. With corporate bonds at least you have a chance of redemption at a fixed price.

[tjh290633]

So I ask again, why provocative?

Take a look at the five year share price charts for each of these. They are prime examples of shares that are high yield not because of ever increasing dividends, but because the share price has gone nowhere. At those sorts of dividend levels, comparisons to corporate bonds come into play. With corporate bonds at least you have a chance of redemption at a fixed price.

Let's just look at Aviva's dividend record. It cut the dividend from 26p in the company year to 31 Dec 2011 to 19p in 2012 and 15p in 2013. Since that date it has been rising, to 18.1p in 2014, 20.8p in 2015, 23.3p in 2016, 27.4p in 2017 and 30p in 2018.

Share price was 358p when the 2011 Final was announced, rose to 564p when the 2014 Final was announced and 420p when the 2018 Final was announced, having been up and down in the intervening periods. The lowest figure I have is 310p when the 2012 Final was announced as reduced.

So we have 5 years of rising dividends after the cuts, now about 20% above the pre-cut level, and a share price which has varied (as has the market) up to 60% above my start point and about 20% down from its high point.

What is more important, a sharply rising dividend or a fluctuating share price?

TJH

[Alaric]

Let's just look at Aviva's dividend record. It cut the dividend from 26p in the company year to 31 Dec 2011 to 19p in 2012 and 15p in 2013. Since that date it has been rising, to 18.1p in 2014, 20.8p in 2015, 23.3p in 2016, 27.4p in 2017 and 30p in 2018.

What is more important, a sharply rising dividend or a fluctuating share price?

For anyone holding it in 2011 or earlier, the dividend record is unimpressive, 26p to 30p.

[IanTHughes]

So I ask again, why provocative?

Take a look at the five year share price charts for each of these. They are prime examples of shares that are high yield not because of ever increasing dividends, but because the share price has gone nowhere. At those sorts of dividend levels, comparisons to corporate bonds come into play. With corporate bonds at least you have a chance of redemption at a fixed price.

What has any "five year share price chart" got to do with HYP? HYP is a strategy that looks to pick up a high yield so the fact that such purchases may occur after a share price drop is hardly a revelation, not to me anyway

But in any case, Imperial Brands PLC (IMB) has increased its dividend by 10% per year for 20 straight years! Aviva PLC (AV) has increased its dividend for the last 5 years and BHP Billiton (BHP) for the last two years. The dividend paid out by Vodafone Group (VOD) has also increased year-on-year for more than a decade, but of course its record is somewhat confused as a result of the spinning off of Verizon Inc (VZN) in 2014, although the dividend has increased every year since then. Standard Life Aberdeen (SLA) is difficult to measure, thanks to the merger of Aberdeen Asset Management (ADN) with Standard Life (SL) and the divestment of all Insurance assets, but my portfolio has received an increased dividend since the purchase of ADN in January 2016.

Please do try to understand the HYP Strategy before criticising it and if you do want to criticise it, do so on the "High Yield Shares & Strategies - general" board.


Ian

[Arborbridge]

Looks good so far ……

# | EPIC | SECTOR       | Price      | Yield
1 | SLA  | Fund Manager |   271.0000 | 8.00%
2 | VOD  | Telecom      |   148.0000 | 8.70%
3 | IMB  | Tobacco      | 2,624.0000 | 7.90%
4 | BHP  | Mining       | 1,779.0000 | 5.08%*
5 | AV   | Insurance    |   410.0000 | 8.00%

Your idea of what looks good is certainly different from mine. I might hold but I certainly would not buy SLA, Vodafone or Aviva currently, the first two because I think their dividend is suspect and the latter because of its, shall we say, chequered history. Anyway, pyad uses Strategic Ignorance, which is his excuse no doubt. I expect you are just being provocative.

Dod

I think this highlights an interesting point: HYP is essentially a contrarian strategy and works against the market trend. It also has something in common with a value approach, but overall it can be seen as high risk because - assuming those contrarian punts work out - they often take a long time to do so.
But by investing in a goodly number and diverse selection of very large stocks, the probability is that risks will be mitigated whilst enjoying the resulting income - and income is what I'm after.

Oddly enough, although this idea is quite contrary to normal market advice, it does seem to work. No one ever said it would produce the best possible outcome for capital growth - it wasn't intended to, so should not be judged on that basis.

Judge HYP by what it's intended target was: a high and rising income accompanied by a good probability of rising capital. Not: the fastest possible rising capital note but just a probability.

I'm far from saying, Dod, that you are wrong. You seem a well informed investor who has played a good hand and prefer to make what appear to you to be safer choices. Nothing wrong with that, but HYP wasn't intended for the informed investor, but for someone more like an average John Doe - especially that army of small investors who get nowhere because they keep chopping and changing when one disappointment follows another.

It certainly suits those whose alternative would have been to surrender forever their capital to an insurance company for an annuity - and that's where I'm coming from.

Arb.