10 Years Strong

[JohnnyCyclops]

I read with interest the recent post on ‘Abandoned HYPs…’

I’ve just come back to our HYP (and back to TLF) after being an ‘absentee landlord’ for over three years. The HYP’s not in too bad a shape, all things considered. To me, that’s part of HYP’s attraction. If I’d been investing for growth, technical analysis, small/micro caps, etc. I’d more likely not have ‘got away’ with being away from the portfolio.

Around early 2018, and for various reasons, we paused adding new funds to the HYP(ISAs). Adding new funds over the years prior to 2018 had provided an impetus to be ‘active’, monitor the HYP, and reinvest the dividends – and also to post to TMF/TLF! We were (and still are) in the accumulation stage, not yet needing to draw down the income, although now in our early 50s the years ahead are fewer than the years behind, and retirement planning comes more into focus, rather than being some vague notion of “down the road”.

Reflecting back to 2018, I think I knew towards year-end there would have been enough accumulated dividends to reinvest, but inertia got the better of me. Then Covid arrived (not personally, fortunately) and I figured there was no point fretting about the HYP, so didn’t peek then either.

So, how’s it fared? We’ll, I’ve spent a good few hours this weekend updating my old Excel tracker of all the dividends paid. Plus, a few of the firms got sold – Cobham, Greene King, Inmarsat, Signature (BBA), and one went bust – Carillion.

On income, measured to 31 March each year, we were rising quite nicely with a steady annual income increase of 8% in Year 8 (2018/19) with no additional funds added. Then a further 1% in Year 9 (2019/20), followed by the inevitable drop of -34% in Year 10 (2020-21). Now, of that drop, I’ll attribute most to the dividend cutting/stopping triggered by the Covid-era. I’m sure some drop is from having had stocks sold out from under us and not reinvesting those funds to generate further income.

The first four months of Year 11 (2021/22), April to July, show a very robust +49% bounce back in dividends year-on-year.

None of those numbers include special dividends, of which I see a few since 2018 (BHP, BBA (SIG), TSCO, PNN).

I’ll need to think if I can back-unitise over three years. I’ve an inkling with no activity (incl. reinvestment) it might not be too hard to do, but I will likely want to find the portfolio values on the 31 March’s to work out the actual portfolio yields.

We’ve had large capital increases from Segro (+282%), AstraZeneca (+180%), Admiral (+151%), plus Sage, BAE, Rio, Britvic, Unilever and BHP, all between +50-100% up on purchase prices.

On the downside, there are Kier (-90%), Centrica (-80%), Wood Group (was ex-Amec) (-76%), Stagecoach (-70%) and BT (-50%). And also, let’s not forget Carillion (-100%).

Those four sales in capital terms – COB (-35%), GNK (+16%), ISAT (-25%), BBA (+96%). And with accumulated dividends factored in – COB (-12%), GNK (+30%), ISAT (-15%), BBA (+160%).

BBA’s gain more than offsets CLLN’s loss.

Summary
Over 10 and a bit years of HYPing, on some crude calculations, we’re up 55% on capital invested. 37% from dividends, 4% from special dividends, and 14% from capital growth. I make that (incredibly roughly!) a 5% p.a. gain. Better than a bank savings account since 2011, but with the risk of market ups and downs through equity investing. However, but even with CLLN going bust, CNA tanking, KIE crashing, we’re still in an overall “good place”.

I’ve got a decade’s evidence behind me. A broad basket HYP (doubling up companies in each sector, where possible, e.g. both VOD/BT, SGRO/BLND, BP/RDSB), containing 35 holdings at peak (now back to 30) has provided resilience and returns that meet our needs.

The accumulated investments are now quite substantial, and would generate perhaps 10% of our target income in retirement, while (hopefully) holding capital value. Based on the last decade, I’m increasingly confident to use HYP as a venue for some of our pension funds as they crystallise from employers’ DB schemes in the 5-10 years ahead.

Here’s the current beast. Needs a bit of work. We’ve got approx. 30% of the current value available as cash to invest (combo of those four sales and accumulated dividends over the last three years). I’ll need to scour this board to see what’s “hot” and what’s “not” in high(er) yielding stocks.

[Breelander]

I’ve just come back to our HYP (and back to TLF) after being an ‘absentee landlord’ for over three years....

Welcome back, I've always found your contributions well worth reading

[JohnnyCyclops]

I’ve just come back to our HYP (and back to TLF) after being an ‘absentee landlord’ for over three years....

Welcome back, I've always found your contributions well worth reading

That's very kind of you.

You know, I've always found them to be well worth writing, as it's a way of gathering my thoughts and presenting the information back to myself. I see my last proper annual round up was end of Year 6 at March 2017. I always saw writing those as an 'annual report' to myself and Mrs C as the only 'shareholders' of the HYP!! A habit I broke but hope to get back into.

[idpickering]

Welcome back Jc! I concur with Breelander message above. I enjoyed your offerings too.

Ian.

[Arborbridge]

I read with interest the recent post on ‘Abandoned HYPs…’

Nice to see "JC" back - one of the missing!

I think your contribution is valuable as it shows just what can be done with a "lazy man's HYP" for it seems that you've been more truly "HYP" than most of us and HYP has come through pretty well for you.
HYP does not have to be complicated to succeed, and that's what you are showing us*.


*and before anyone points out that an investment in x or y would have producted higher growth, I will retort that whatever you find, someone else could find something better.
The point here is, as you say, HYP and your ability to take the rough with the smooth, has given you a return higher than most people have to suffer who think stock market investment is "toooo risky".

Arb.

[JohnnyCyclops]

I read with interest the recent post on ‘Abandoned HYPs…’

Nice to see "JC" back - one of the missing!

I think your contribution is valuable as it shows just what can be done with a "lazy man's HYP" for it seems that you've been more truly "HYP" than most of us and HYP has come through pretty well for you.
HYP does not have to be complicated to succeed, and that's what you are showing us*.


*and before anyone points out that an investment in x or y would have producted higher growth, I will retort that whatever you find, someone else could find something better.
The point here is, as you say, HYP and your ability to take the rough with the smooth, has given you a return higher than most people have to suffer who think stock market investment is "toooo risky".

Arb.

Thanks Arb, I'll take "lazy man" from you

I've possibly made my HYP slightly more complex than it needs to be (certainly the amount of Excel worksheets it's created, and I'm currently trying to remember how to easily find HYP candidates!). But then again, I do enjoy a good spreadsheet

But overall, yes I'd agree with you. For effort / outcome / fret-levels, I'd say HYP's been a bit of peace of mind. For sure, I figured they'd be 'noise' from the Covid-era, simply by seeing what happened to the FTSE100 over the last 18 months, but felt no pressing need to jump into the ISAs to go look in detail.

That said, I think I'll work on quarterly HYP check-ins now and not turning a blind eye to the corporation action notices that were clearly telling me a few stocks had been 'sold' through delisting. That should avoid a pot of cash building up again in the ISAs.

[Breelander]

...I'm currently trying to remember how to easily find HYP candidates

You may find this reminder helpful

Poking around online this morning I went to Digital Look and rediscovered some screens I setup a while ago...

https://web.archive.org/web/20150508114 ... 08251.aspx

And yes, DL still exists and can be signed in to here (use the Login button top right): http://finance.digitallook.com/

[MDW1954]

Welcome back! I used to enjoy your posts.

One development that you may have missed is that HYP as practised on this board can include REITs and what we sometime call "quasi-REITs", eg infrastructure funds. Granted, BLND, Landsec, Segro etc were classic HYP picks, but the universe is now broader.

Both REITs and quasi-REITs are reasonably popular among regular HYPers, although the most popular ones have risen in price since 2017 or so.

A few REIT tickers: BBOX, PHP, CREI, WHR, EBOX, ASLI, ESP, LXI, NRR, RGL.

A few quasi-REIT tickers: UKW, FSFL, BSIF, HICL, TRIG, JLEN, 3IN.

Of the REITs mentioned, I hold all of them (and more). Of the infrastructure tickers, I don't (yet) hold the final three.

MDW1954

Correction as of May 2022: I do now hold 3IN -- MDW1954

[JohnnyCyclops]

You may find this reminder helpful

And yes, DL still exists and can be signed in to here (use the Login button top right): http://finance.digitallook.com/

Wow! Indeed I did find it helpful. I do recall you pushing a bunch of TMF posts (not just mine) into the Wayback Machine when the forum shut down.

The DL link still kinda works, rendering as unformated HTML for me.

I see Croda and Diageo are still reliable income shares, but never made it out of "low yield" Some things never change!

[JohnnyCyclops]

Welcome back! I used to enjoy your posts.

One development that you may have missed is that HYP as practised on this board can include REITs and what we sometime call "quasi-REITs", eg infrastructure funds. Granted, BLND, Landsec, Segro etc were classic HYP picks, but the universe is now broader

MDW1954

That's useful to know. I have a sense of where HYP 'purity' lies, but not enough to stop me having Halfords as my first HYP share back in 2011 (actually, it was bought for its own merits at the time, and later in 2011 when I discovered HYP I retrofitted it, although it was never a 'classic' HYP pick). Although it's since returned 51% over the decade in dividends (41%) and capital (10%) - so about 'par' for the portfolio.

For REITs I'm probably fine with SGRO and BLND, plus further property market exposure elsewhere, but thank you for the pointers.

[Breelander]

The DL link still kinda works, rendering as unformated HTML for me.

DL still works perfectly for me in Firefox, Edge and IE. I routinely log in to look at my Portfolio, and my saved screens in Screening Tools are still there and working.

http://finance.digitallook.com/dlmedia/ ... ning_tools

Make sure you are using the http version of the url, the site never got updated to https. If I try it with https then I get that same 'unformatted' look as you. The best way to make sure you use http is to click on one of my links, or to edit your bookmarks and remove the 's'.

http://finance.digitallook.com

[Breelander]

I do recall you pushing a bunch of TMF posts (not just mine) into the Wayback Machine when the forum shut down.

Here's another I saved, and you can click on most (all?) of the links it contains to go to that page in the Wayback Machine.

https://web.archive.org/web/20161115160 ... 12189.aspx

[Wizard]

I read with interest the recent post on ‘Abandoned HYPs…’

I’ve just come back to our HYP (and back to TLF) after being an ‘absentee landlord’ for over three years. The HYP’s not in too bad a shape, all things considered. To me, that’s part of HYP’s attraction. If I’d been investing for growth, technical analysis, small/micro caps, etc. I’d more likely not have ‘got away’ with being away from the portfolio.

Around early 2018, and for various reasons, we paused adding new funds to the HYP(ISAs). Adding new funds over the years prior to 2018 had provided an impetus to be ‘active’, monitor the HYP, and reinvest the dividends – and also to post to TMF/TLF! We were (and still are) in the accumulation stage, not yet needing to draw down the income, although now in our early 50s the years ahead are fewer than the years behind, and retirement planning comes more into focus, rather than being some vague notion of “down the road”.

Reflecting back to 2018, I think I knew towards year-end there would have been enough accumulated dividends to reinvest, but inertia got the better of me. Then Covid arrived (not personally, fortunately) and I figured there was no point fretting about the HYP, so didn’t peek then either.

So, how’s it fared? We’ll, I’ve spent a good few hours this weekend updating my old Excel tracker of all the dividends paid. Plus, a few of the firms got sold – Cobham, Greene King, Inmarsat, Signature (BBA), and one went bust – Carillion.

On income, measured to 31 March each year, we were rising quite nicely with a steady annual income increase of 8% in Year 8 (2018/19) with no additional funds added. Then a further 1% in Year 9 (2019/20), followed by the inevitable drop of -34% in Year 10 (2020-21). Now, of that drop, I’ll attribute most to the dividend cutting/stopping triggered by the Covid-era. I’m sure some drop is from having had stocks sold out from under us and not reinvesting those funds to generate further income.

The first four months of Year 11 (2021/22), April to July, show a very robust +49% bounce back in dividends year-on-year.

None of those numbers include special dividends, of which I see a few since 2018 (BHP, BBA (SIG), TSCO, PNN).

I’ll need to think if I can back-unitise over three years. I’ve an inkling with no activity (incl. reinvestment) it might not be too hard to do, but I will likely want to find the portfolio values on the 31 March’s to work out the actual portfolio yields.

We’ve had large capital increases from Segro (+282%), AstraZeneca (+180%), Admiral (+151%), plus Sage, BAE, Rio, Britvic, Unilever and BHP, all between +50-100% up on purchase prices.

On the downside, there are Kier (-90%), Centrica (-80%), Wood Group (was ex-Amec) (-76%), Stagecoach (-70%) and BT (-50%). And also, let’s not forget Carillion (-100%).

Those four sales in capital terms – COB (-35%), GNK (+16%), ISAT (-25%), BBA (+96%). And with accumulated dividends factored in – COB (-12%), GNK (+30%), ISAT (-15%), BBA (+160%).

BBA’s gain more than offsets CLLN’s loss.

Summary
Over 10 and a bit years of HYPing, on some crude calculations, we’re up 55% on capital invested. 37% from dividends, 4% from special dividends, and 14% from capital growth. I make that (incredibly roughly!) a 5% p.a. gain. Better than a bank savings account since 2011, but with the risk of market ups and downs through equity investing. However, but even with CLLN going bust, CNA tanking, KIE crashing, we’re still in an overall “good place”.

I’ve got a decade’s evidence behind me. A broad basket HYP (doubling up companies in each sector, where possible, e.g. both VOD/BT, SGRO/BLND, BP/RDSB), containing 35 holdings at peak (now back to 30) has provided resilience and returns that meet our needs.

The accumulated investments are now quite substantial, and would generate perhaps 10% of our target income in retirement, while (hopefully) holding capital value. Based on the last decade, I’m increasingly confident to use HYP as a venue for some of our pension funds as they crystallise from employers’ DB schemes in the 5-10 years ahead.

Here’s the current beast. Needs a bit of work. We’ve got approx. 30% of the current value available as cash to invest (combo of those four sales and accumulated dividends over the last three years). I’ll need to scour this board to see what’s “hot” and what’s “not” in high(er) yielding stocks.

A very interesting post, thank you for sharing the outcome of your period of inactivity.

With so much of the portfolio in cash from forced disposal, presumably being paid no interest, there has potentially been a lot of 'drag' on the overall return over the period. I say potential as the actual impact would only be known if you could say what you would have invested the cash in. Presumably if you had been in drawdown mode the dividends would have been 'consumed' and only the forced disposal cash being available.

Interestingly, your post leads me to a very different conclusion to Arb. It seems to suggest that an HYP may not be the best approach for an absentee landlord. Even in drawdown mode there were forced disposals from which the procceds ideally would have been promptly reinvested, the time to buy is always now, etc., etc. But in accumulation the issue is compounded by the, presumably, not inconsiderable amount of dividend that is now sitting as cash.

In addition to investing the accumulated cash do you plan any rebalancing of the portfolio?

[onthemove]

... there has potentially been a lot of 'drag' on the overall return over the period... It seems to suggest that an HYP may not be the best approach for an absentee landlord. ...

Bang, bang, bang fire the snipers

Sitting there, hiding on the sidelines waiting for any opportunity to take pot shots at the HYP approach.

[Arborbridge]

Interestingly, your post leads me to a very different conclusion to Arb. It seems to suggest that an HYP may not be the best approach for an absentee landlord.

Permit me to divorce myself from any inference that I concluded that HYP is the best approach for an absentee landlord I didn't. Although HYP is certainly a "light touch" approach and most corporate events can be virtually ignored, there are still actions which have to be takenfrom time to time, including reinvestment of cash if so inclined.

As a result, absentee landlords will have to put up with less than full efficacy and some paperwork when they return home. What JC does show is that one can move a long way into the "lazyman" direction and still achieve a reasonably good positive result. As I have commented, you have to remember who might be interested in HYP and at whom it was aimed at in the first place.

Those who can do better, will. Those who think the stock market is too risky and flee to the building society would be astounded with such returns.

Arb,

[JohnnyCyclops]

A very interesting post, thank you for sharing the outcome of your period of inactivity.

With so much of the portfolio in cash from forced disposal, presumably being paid no interest, there has potentially been a lot of 'drag' on the overall return over the period. I say potential as the actual impact would only be known if you could say what you would have invested the cash in. Presumably if you had been in drawdown mode the dividends would have been 'consumed' and only the forced disposal cash being available.

Interestingly, your post leads me to a very different conclusion to Arb. It seems to suggest that an HYP may not be the best approach for an absentee landlord. Even in drawdown mode there were forced disposals from which the procceds ideally would have been promptly reinvested, the time to buy is always now, etc., etc. But in accumulation the issue is compounded by the, presumably, not inconsiderable amount of dividend that is now sitting as cash.

In addition to investing the accumulated cash do you plan any rebalancing of the portfolio?

An excellent observation. I can couch it in terms that 'masterly inactivity' led to no great catastrophe (which arguably could happen with straight equity investing, rather than via a collective tool like an OEIC, IT or ETF), but you're right, that with one business a year roughly going into forced disposal, left alone, after ~30 years a HYP may have no or very few active stocks left, no dividend income, and simply be mouldering in unproductive cash. That would include quasi-disposals such as the PNN and TSCO special dividends as they sold off portions of their businesses.

The dividends could have been handled by using the DRIP function that my ISA provider allows. And that may also have handled special dividends. But DRIP brings its own issues of possible imbalance (and by its nature, those stocks paying dividends, or the larger dividends, get reinvested into the most).

I've suspect the HYP could have performed better in income terms had we reinvested the cash along the way - as we'd have only picked new stocks with a reasonable yield, or topped-up those existing HYP stocks currently paying dividends. Capital is trickier to say, as we may have picked another dog or two.

Without the forced disposals I doubt we would have added beyond 35 stocks, the last three years would have been a somewhat mechanistic reinvestment into the stocks already in the HYP. I do have caps (similar to TJH's/Geng's from memory) around amount invested, current value, and income, ranging from the company level (5%), sector (10%), super-sector (15%) and industry (20%). Currently Financial industry is 'red' for value (25%) and income (24%) so would not be getting more invested until some balancing happened, as is Basic Resources (the two miners) with income 29%! from just two (of 30) stocks, skewed massively by their largesse in a cyclical market.

I was surprised by how much cash there was. The dividends cash accounts for around 15% of the HYP value (but then after 3.5 years, at say 4% p.a. dividend yield, it's not THAT surprising), the specials another 3%, and the forced disposal monies are 12%. So 30% cash in total.

Yes, we'll now most likely put the cash back into the HYP, to perhaps add a few more stocks back to ~33-35 (currently 30) to further improve diversification, and then top-up others to restore a little balance. We might also sell off some of the rump items that aren't generating dividends currently, like KIE, CNA and WG. While they have a bit of diversity (certainly KIE) they are relatively small sums now, aren't paying dividends currently, and probably not that HYPable.

The rebalance looks a little tricky right now, with many firms breaking stride on dividend payments for Covid (understandable). For some it was a brief pause, others rebased, and a few have not restarted paying again. With 'blocks' in financials, miners and pharma (10), plus those not currently paying (5) that's half the options gone, then a further bunch with recent cuts (Covid or otherwise) (7), that leaves only eight possible stocks (TSCO, TATE, PNN, NG, BVIC, ULVR, BA, SGE) but all-bar-two are yielding below the 4.0%, so would be dilutive, although once topped up would start to bring some of the 10 'blocks' back into play. Choices, choices.

[JohnnyCyclops]

The DL link still kinda works, rendering as unformated HTML for me.

DL still works perfectly for me in Firefox, Edge and IE. I routinely log in to look at my Portfolio, and my saved screens in Screening Tools are still there and working.

http://finance.digitallook.com/dlmedia/ ... ning_tools

Make sure you are using the http version of the url, the site never got updated to https. If I try it with https then I get that same 'unformatted' look as you. The best way to make sure you use http is to click on one of my links, or to edit your bookmarks and remove the 's'.

http://finance.digitallook.com

Verry handy. DL only played ball when I attempted to login, at which point it rendered correctly. Good to know it's still there behind the scenes, so to speak.

[dealtn]

... there has potentially been a lot of 'drag' on the overall return over the period... It seems to suggest that an HYP may not be the best approach for an absentee landlord. ...

Bang, bang, bang fire the snipers

Sitting there, hiding on the sidelines waiting for any opportunity to take pot shots at the HYP approach.

And yet a "practical" point was raised - surely the purpose of the Board - and the reaction of the OP to that post of which you are so critical was ...

An excellent observation ...

[Arborbridge]

... there has potentially been a lot of 'drag' on the overall return over the period... It seems to suggest that an HYP may not be the best approach for an absentee landlord. ...

Bang, bang, bang fire the snipers

Sitting there, hiding on the sidelines waiting for any opportunity to take pot shots at the HYP approach.

And yet a "practical" point was raised - surely the purpose of the Board - and the reaction of the OP to that post of which you are so critical was ...

An excellent observation ...

Perhaps JC was just being polite? HYPers are like that

[Dod101]

Well I am not sniping but the HYP as reported looks like a garden would were it to be left unattended for 3 years or so, full of weeds and overgrown, with a few good bits manfully carrying on and it now needs a lot of attention. If the report does nothing else it shows that a HYP, like any other portfolio, works best if it is looked after on a regular basis and corporate events especially, need to be attended to.

I would also be looking at the important metrics which to me would be the historic trailing yield for each of the three years, by individual share and for the portfolio as a whole, what happened to capital values in the same periods and then get the cash reinvested. Before doing that thpough obviously we would need to have an analysis of the contribution from each holding in terms of capital and income.

Thanks to JC for his post and is good to see him back again.

Dod