Start topping up again...but what?

[funduffer]

I have avoided topping up my HYP for almost a year, on the basis that a Brexit No Deal was possible, or even likely and this could cause undue mayhem to the FTSE.

The politics of the last month or so seems to have reduced the risk of No Deal (certainly the FTSE is riding high on this assumption), so I am about ready to start topping up again.

I have accumulated nearly 6% of dividends (as a % of my HYP) for top ups, so my starting point is the HYPTUSS.

First, the new Overview feature (thanks to itsallaguess and kiloran) gives the following state of play:

                                                                                 Value     Div    Fcst 
Share                           Epic    Sector                                  %Total  %Total   Yield
BAE Systems                     BA      Aerospace & Defence                      3.96%   2.96%   4.60%
HSBC Holdings                   HSBA    Banks                                    7.57%   7.37%   6.00%
Lloyds Banking Group            LLOY    Banks                                    3.42%   3.05%   5.50%
Galliford Try                   GFRD    Construction & Materials                 3.32%   5.44%  10.10%
SSE                             SSE     Electricity                              4.33%   4.91%   7.00%
Sainsbury (J)                   SBRY    Food & Drug Retailers                    5.18%   3.87%   4.60%
Unilever                        ULVR    Food Producers                           6.21%   3.32%   3.30%
Legal and General Group         LGEN    Life Insurance                           7.45%   7.49%   6.20%
WPP                             WPP     Media                                    3.03%   3.39%   6.90%
South32 Limited (DI)            S32     Mining                                   3.75%   5.47%   9.00%
BHP Group                       BHP     Mining                                   7.52%   9.28%   7.60%
Vodafone Group                  VOD     Mobile Telecommunications                4.31%   6.37%   9.10%
National Grid                   NG      Multiutilities                           3.05%   2.92%   5.90%
Royal Dutch Shell 'B'           RDSB    Oil & Gas Producers                      7.68%   7.10%   5.70%
GlaxoSmithKline                 GSK     Pharmaceuticals & Biotechnology         13.13%  10.87%   5.10%
British Land Company            BLND    Retail REITs                             3.51%   3.08%   5.40%
Capita                          CPI     Support Services                         1.62%   0.00%   0.00%
Imperial Brands                 IMB     Tobacco                                  3.72%   4.96%   8.20%
Marston's                       MARS    Travel & Leisure                         4.76%   5.88%   7.60%
Stagecoach Group                SGC     Travel & Leisure                         2.47%   2.29%   5.70%

Portfolio Running Yield = 6.16%

                                                  Value      Div
Sector                                           %Total   %Total
Aerospace & Defence                               3.96%    2.96%
Banks                                            10.99%   10.42%
Construction & Materials                          3.32%    5.44%
Electricity                                       4.33%    4.91%
Food & Drug Retailers                             5.18%    3.87%
Food Producers                                    6.21%    3.32%
Life Insurance                                    7.45%    7.49%
Media                                             3.03%    3.39%
Mining                                           11.27%   14.75%
Mobile Telecommunications                         4.31%    6.37%
Multiutilities                                    3.05%    2.92%
Oil & Gas Producers                               7.68%    7.10%
Pharmaceuticals & Biotechnology                  13.13%   10.87%
Retail REITs                                      3.51%    3.08%
Support Services                                  1.62%    0.00%
Tobacco                                           3.72%    4.96%
Travel & Leisure                                  7.23%    8.17%
Total                                           100.00%  100.00%

Note: 1...'Value %Total' is the portfolio value of the share as a % of the total portfolio
      2...'Div %Total' is the expected dividend of the share based on forecast yield
                       as a % of the total portfolio expected dividend

Second, my top up order (top 8) is as follows:

1. Galliford Try (GFRD)
2. WPP (WPP)
3=. Imperial Brands (IMB)
3+. South32 (S32)
5. Vodafone (VOD)
6. Stagecoach (SGC)
7. National Grid (NG.)
8. Marstons (MARS)

I am thinking of topping up Imperial Brands, WPP and possibly National Grid, or purchasing a new share. Of pyad's recent picks on the other thread, I might consider Standard Life Aberdeen (SLA) as I have no fund manager, or IGG, as I have no gambling.

I have ruled out GFRD due to its dividend cuts, S32 due to Mining sector weight, VOD due to low cover, SGC due to today's news, and MARS as I have invested enough in this, and am trying to avoid low cap shares.

Any thoughts?

All comments appreciated.

FD

[monabri]

I'd be tempted to skip over #1 (GFRD) and select from IMB and/or WPP (based on market cap - the "smaller" shares seem to get a real caning on any sniff of bad news, chasing yield at capital risk?). Alternatively, how about BATS rather than IMB?

Note : SLA is ex-dividend tomorrow (along with Aviva, ITV and quite a few others) so it's a long(ish) wait until the next XD

[tjh290633]

My choice would be either IMB or S32, both of which I hold.

TJH

[Dod101]

Imperial Brands would be my choice. Surely you would not touch SLA with a bargepole. If you want a fund manager I would go for Schroders Non Voting. The dividend is much more secure and although it may be lower that is because Schroder is a quality share.

And of course by worrying about the politics you have managed to make the classic error of waiting until the market is high before topping up

Dod

[MDW1954]

Dod is right -- you're topping up at precisely the wrong time.

But my picks would be MARS or BLND, from that list.

For a new share, many other REITs would work. PHP, BBOX, ESP... etc etc.

MDW1954

[funduffer]

Dod is right -- you're topping up at precisely the wrong time.

But my picks would be MARS or BLND, from that list.

For a new share, many other REITs would work. PHP, BBOX, ESP... etc etc.

MDW1954

Thanks for the suggestions. I agree I could add another REIT, so I will have a look at these, as I have not studied them recently.

The market is high, but my forecast yield at >6% is almost the highest it has been since I started 5 years ago, so my HYP shares are probably not overpriced. Also, some of them have eye-wateringly high yields.

FD

[Arborbridge]

The market may or may not be high, but WPP certainly isn't. Unless there's a very good reason in your mind to veto it, I'd go with that. The yield is not unreasonably high and they will eventually sort out their problems - this is where some faith is needed in a share you already own.

If you feel like vetoing WPP, then go for IMB.

Alternatively, adding a fund manager would be an excellent idea, so if you want a new share, I'd agree with Dod: add Schroder's SRDC (that is, non-voting). A yield for this company of around 5.2% is unusual so should be a strong claimant for your mix,


Arb.

[TUK020]

My suggestion would be either MARS or WPP

[Dod101]

Actually, looking at the FTSE in a world context the market is not high and were it not for the local problem of Brexit it would surely be much higher. FD may therefore be right and there is never a 'right' time to buy, at least it will not be known for a few years.

I think that there is a relatively small pool of attractive HYP shares though and they have mostly been mentioned on this thread.

Dod

[IanTHughes]

I am thinking of topping up Imperial Brands, WPP and possibly National Grid, or purchasing a new share. Of pyad's recent picks on the other thread, I might consider Standard Life Aberdeen (SLA) as I have no fund manager, or IGG, as I have no gambling.

Any of the foregoing would make sense to me although Standard Life Aberdeen (SLA) would be "wait and see" - wait and see where the dividend goes now that SLA has divested itself of all the Insurance business.

As Imperial Brands (IMB) is the highest yield, that is where my vote goes.


Ian

[ElectronicFur]

because Schroder is a quality share.

Quality, what does that mean exactly? I recall Hypers said Lloyds was a quality share a while back...

[IanTHughes]

because Schroder is a quality share.

Quality, what does that mean exactly? I recall Hypers said Lloyds was a quality share a while back...

Dod101 uses the term to mean any share that he approves of.

More generally, on this board, it is code for Low Yield.




Ian

[stacpo]

Schroders (SDRC) is currently giving a yield above 5% which is fine for me and one that I would not call a low yield !

[Dod101]

because Schroder is a quality share.

Quality, what does that mean exactly? I recall Hypers said Lloyds was a quality share a while back...

It is not just a share I approve of contrary to what that wind up merchant ITH has to say. Anyway, over 5% is not low yield. It is well over the FTSE100 yield. It is a share with a very large Schroder family holding (about 47%), has been around in one form or another for over 200 years I think it is, and is very conservatively managed. The yield on the non voting shares is over 5% and unlike SLA it has not been losing many mandates for funds under management. It is not remotely like Lloyds (although that to a large extent was of course self destruction when it bought HBOS) and even less like RBS. Just take a look at its record and you will see what I mean. No share is absolutely fool proof but Schroders is a high quality share I believe.

Currently the share price is lower than for a while because of the pressure on fund managers and I would think a good buying opportunity.

Dod

[IanTHughes]

because Schroder is a quality share.

Quality, what does that mean exactly? I recall Hypers said Lloyds was a quality share a while back...

It is not just a share I approve of contrary to what that wind up merchant ITH has to say. Anyway, over 5% is not low yield. It is well over the FTSE100 yield. It is a share with a very large Schroder family holding (about 47%), has been around in one form or another for over 200 years I think it is, and is very conservatively managed.

Like Barings Bank in the early 1990's in fact. Lots of people considered them "quality" at the time?

https://www.telegraph.co.uk/finance/new ... story.html

The bank’s collapse ended the family control that had lasted for more than two centuries, with its chairman at the time, Peter Baring, retiring soon after ING’s acquisition. It was an inglorious end for what was perhaps the banking world’s most famous dynasty.

Ian

[Dod101]

My last offering was deleted, but let me say that Schroders is not like Barings any more than like Lloyds because those two were banks (Lloyds I suppose still is) whereas Schroders is a fund manager. The risks are totally different. What I can say is that Schroders seems to me to have a much better culture than either Barings or Lloyds ever had.

I am searching for an expression like 'terminological inexactitude' to describe my feelings about ITH but currently it escapes me. I expect though that he might get the message.

Dod

[IanTHughes]

My last offering was deleted, but let me say that Schroders is not like Barings any more than like Lloyds because those two were banks (Lloyds I suppose still is) whereas Schroders is a fund manager. The risks are totally different.

Of course the investment risks of Barings Bank and Schroders are different, but so what?

What I was pointing out to ElectronicFur, fundduffer – the original poster – and all readers of this board, including you by the way, was that the use of the single word “Quality” to describe a share or company, on its own, means precisely nothing! Zero! Zilch! Nada! Rien! If you do not agree with that, perhaps you could explain why?

What I can say is that Schroders seems to me to have a much better culture than either Barings or Lloyds ever had.

Based on what exactly? My own business dealings with both organisations, over the past 40 years spent in Banking and Finance, have garnered no such gem! Even after working for one of them, I am unable to make such a determination. If you are serious about such a statement, which you do appear to be, then surely you can elaborate in some way? If you cannot then the statement is, like the "Quality" label, meaningless, completely useless, made up in fact.

All I can say is that I will not hold my breath waiting for your fuller explanation!

I am searching for an expression like 'terminological inexactitude' to describe my feelings about ITH but currently it escapes me. I expect though that he might get the message.

Well let me enlighten you. Terminological Inexactitude was a phrase used by Winston Churchill, in the House of Commons, where accusing another member of lying is not allowed.

In what way have I lied? Please do enlighten me, I am fascinated! If you cannot, I will expect an apology!


Ian

[JoyofBrex8889]

I am enjoying the fireworks guys, keep it up.

Of course you are both wrong: fundduffer is seeking yield.

May I mischievously point out that the highest yield in the FTSE 350 currently is Plus500- dividenddata show over 20% yield. MCap bigger than junk like KIER or GFRD or NRR too....

For a HYP investor to overlook such a stonking rich seam of future dividends seems perverse.

[Dod101]

I am sorry to all for this silly exchange which is clearly getting us nowhere. Any reasonable person will I think agree that Schroders Non Voting shares are a good buy at just over a 5% yield. No share has any guarantee; that is the nature of shares, but Schroders are rather better than many.

I will now say no more on this.

Dod

[funduffer]

Yes, easy guys, I don’t want my thread deleted by a spat over the meaning of quality.

Thanks, for the suggestions. I certainly intend to look at Schroeder’s as well as SLA as candidates for a fund manager.

WPP I have certainly not rejected for top up.

I have 6% of my HYP value to invest, so I am sure it will be either 2 or 3 top ups, or 1 top up and a new share.

I will test some of my criteria on IMB, WPP, SLA, Schroders, MARs etc over the weekend, and let you all know what I finally decide to do.

Thanks for the lively and interest debate.

FD