Imperial Brands Half Yearly Report

[Dod101]

Yep, clear as a bell. If one selects nearly the highest share price occurring just before a now known slide in price down to a 5 year low, the capital value won't look too good.

I did not select the period of three years for anything other than that I had access to the numbers easily. I could have gone back nearly 20 years as I have held both shares in certificated form since before 2000. For reasons mentioned in my response to Gengulphus I did not do that. High yielding shares have been out of favour for some time now, and I think a better approach is probably to be less ambitious on the yield front and so I have been holding Unilever, Schroders and others like that as part of my HYP. The disaster (short term? who knows?) of the tobacco shares is a problem that I have no answer to. I cannot bring myself to abandon them but will certainly not be adding to them.

It illustrates the absolute need for at least modest diversification, and I think a close examination as to whether the pure HYP (which I have never embraced) is the best way to go. I think that we need to have a value or growth portfolio sitting alongside it. That is my main diversification. This is getting off topic for which I apologise but it is part of my argument.

Dod

[IanTHughes]

Yep, clear as a bell. If one selects nearly the highest share price occurring just before a now known slide in price down to a 5 year low, the capital value won't look too good.

I did not select the period of three years for anything other than that I had access to the numbers easily. I could have gone back nearly 20 years as I have held both shares in certificated form since before 2000.

Yes, you explained why you selected that particular time period, all I was suggesting is that it was hardly going to look great for capital of a holding in IMB, based on what we now know has occurred since that date. In other words it does not tell us very much at all.

High yielding shares have been out of favour for some time now, and I think a better approach is probably to be less ambitious on the yield front

You might be interested to know that the historical yield for IMB on the start date selected by you – 7 May 2016 – was 3.86%. I cannot speak for all HYPers but I would not have selected IMB at that low yield for my portfolio, in fact I did not.


Ian

Moderator Message:
[Edited to remove gratuitous and unnecessary personal attack. Play the ball, not the man. -- MDW1954

[Dod101]

I will say no more than that I did not buy Imperial 3 years ago.

Incidentally you have had this pointed out to you before but you are judging the yield on Imperial of three years ago in the context of today's average yield not the average yield at that time.

Dod

[Gengulphus]

I have been taking a look at some numbers over the last three years for Unilever and for Imperial.

Capitalwise, Imperial has gone from £37.575 on 7 May 2016 to £21.66 today (-42%). Over the same timescale, Unilever has gone from £31.075 to £46.52 (49.7%)

On a similar per share basis, the dividends paid over the period were £4.57 for Imperial and £3.43 for Unilever. These dividend numbers are somewhat crude because it depends on the timing but the message is clear.

Yes, the message "three years is short term" is indeed abundantly clear

I agree 3 years is relatively short term. I have produced the share price for Unilever at January 2000 and could produce the dividends paid since then but as you will know they are a series of fiddly little numbers and I do not have time at the moment to do it. ...

So if someone wants to compare a marathon runner with other athletes, but doesn't have the time to look at a ~2-hour race, it's a good idea to judge them by looking at their sprint times instead?

Basically, if one doesn't have the time to judge a HYP's or a HYP share's performance on the long-term income performance a HYP is intended to be good at, it is more helpful not to say anything at all than to present a short-term performance comparison.

Gengulphus

[Gengulphus]

I will say no more than that I did not buy Imperial 3 years ago.

Incidentally you have had this pointed out to you before but you are judging the yield on Imperial of three years ago in the context of today's average yield not the average yield at that time.

FWIW, clicking on the 3Y tab in https://markets.ft.com/data/indices/tea ... =UKX.D:FSI and looking at the chart shows that the FTSE100's yield 3 years ago was about 4.06% (that's not a precise hit for 7 May 2016, but hopefully close enough!). So 3.86% is not high-yield by this board's definition of HYP, but I would personally describe it at that point as medium-yield rather than low-yield...

Gengulphus

[MDW1954]

It is a shame that the HYP boards of TMF are now lost to us. As a long-term HYPer and reader of those boards, I am fairly sure that a HYP stalwart such as IMB (or IMT as it was back then) was featuring in many HYPers' HYPs in early 2016, and also featuring in their top-ups. 3.86% yield or not.

MDW1954

[AJC5001]

If you were interested in "the numbers" ( dividends) then DividendData might help - there is the option to view adjusted or non-adjusted dividends ("corporate actions such as share splits, rights issues, bonus issues etc.").

The adjusted data takes into account the things mentioned above (share splits etc.) and is the default view.

https://www.dividenddata.co.uk/dividend ... ?epic=ULVR

A useful resource..HTH.

Replacing the 'ULVR' at the end of that URL with 'IMB' gives https://www.dividenddata.co.uk/dividend-history.py?epic=IMB which is the same data for Imperial Brands since 2000, for comparison.

HTH

Adian

[IanTHughes]

I will say no more than that I did not buy Imperial 3 years ago.

But as you have said, many times, you will not chase yield. You have also said, many times, you would prefer a selection of a lower yield with an multi-year history of dividend growth. Such criteria might well have avoided the higher yields available at the time and selected the 3.86% offered by Imperial Brands (IMB) which, I think you will agree does have, and had at the time, a fantastic dividend growth record. So, my HYP Strategy avoided the ensuing Capital Loss whilst your non-HYP strategy might easily have bought into it.

Or am I missing something here?

Incidentally you have had this pointed out to you before but you are judging the yield on Imperial of three years ago in the context of today's average yield not the average yield at that time.

In point of fact I made no comparison at all with today's average yield, or any average yield. I do know from my records that there were many higher yields available at the time and that 3.86% was lower than the average for the FTSE 100 at the time and of course too low for my HYP.


Ian

[idpickering]

To get back on topic, IMB rose 2% in a falling market today. It seems others are positive about the share.

Ian.

[Dod101]

Basically, if one doesn't have the time to judge a HYP's or a HYP share's performance on the long-term income performance a HYP is intended to be good at, it is more helpful not to say anything at all than to present a short-term performance comparison.

Thank you G. I will remember that.

Dod

[monabri]

I suspect/hope yesterday was a case of momentum trading.

I'd like to see IMB continuing * to pay down it's debt which it looks like it is trying to do. The article (link below) covers some of their plans to do this.

(*) £15.3bn at March 17 to ~£12b by Sept 18.

https://www.bloomberg.com/news/articles ... r-business

and

https://www.londonstockexchange.com/exc ... 57716.html


Here's a snapshot of PDMR buys over the last year : I'd "pick out" (not to be confused with "idpickering" ! ) Mr Tant as the CFO - good to see the finance chief buying at the end of Dec 18 (and to a lesser extent in Mar 19). He's been in role for over 5 years so he should by now understand if the writing is on the wall or not.


Source : SimplyWallStreet (paywalled - but an email address gets you 10 looks-ups per month for free)

https://simplywall.st/stocks/gb/food-be ... nds-shares




SimplyWallStreet analyst views suggest that EPS will decrease next year but then stabilise out to 2024. Is the divi growth likely to stutter - I'd guess it might!

[Walrus]

To get back on topic, IMB rose 2% in a falling market today. It seems others are positive about the share.

Ian.

Ian

This is known as the HYP buying bounce

Moderator Message:
some stuff removed in a variety of off-topic comments, including some at the authors' own requests, in a series of posts here and below, thank you for which, dspp

[Gengulphus]

It is a shame that the HYP boards of TMF are now lost to us. As a long-term HYPer and reader of those boards, I am fairly sure that a HYP stalwart such as IMB (or IMT as it was back then) was featuring in many HYPers' HYPs in early 2016, and also featuring in their top-ups. 3.86% yield or not.

It's possibly worth pointing out that IanTHughes said that the yield figure of 3.86% he supplied for 7 May 2016 was the historical yield on that date, so presumably based on the 141.0p dividend for its financial year that ended on 30 September 2015. I don't know what the forecast dividend was at the time, but probably not too far off the actual 155.2p dividend for the financial year that ended on 30 September 2016 - which would make the forecast yield at the time about 155.2/141.0 * 3.86% = 4.25%. That would have been over the FTSE100 yield of about 4.06% that I dug up earlier, and so would have satisfied this board's definition of high yield... In short, whether one counts it as a high-yield share would have depended on whether one uses historical or forecast yield even if this board's definition had been in effect at the time. And it might be worth noting that in the second of his introductory HYP articles, pyad talked about the forecast yield of what was later named HYP1 and its constituents - so it's not as though the idea of using the forecast yield was a dangerous HYP novelty at the time! ;-)

And of course this board's definition wasn't in effect at the time - TLF was still about 6 months away and AFAIAA, no-one had any inkling that it was going to come into existence, and this board's guidance was a further year or so after that. And the TMF board guidance simply said "high yield" without specifying what test to use - and some people did use criteria like 'above the FTSE AllShare yield' or 'above the equally-weighted FTSE100 yield', both of which are tests against a significantly lower value than the FTSE100 yield.

So basically, there are lots of ways people could very reasonably have regarded IMB as being a HYP share at the time on TMF, and one of them (using the forecast yield rather than the historical one) would have done that even in the hypothetical situation that the current TLF guidance had been in effect on TMF back then.

Gengulphus

[Arborbridge]

For what it's worth, I've always bought on the forecast yield. I prefer that to the rear view mirror. Although in some cases it makes little difference, it can help with borderline shares, and I'm quite happy to take a view that the forecast has a reasonable chance of coming right.

Arb.

[MDW1954]

It is a shame that the HYP boards of TMF are now lost to us. As a long-term HYPer and reader of those boards, I am fairly sure that a HYP stalwart such as IMB (or IMT as it was back then) was featuring in many HYPers' HYPs in early 2016, and also featuring in their top-ups. 3.86% yield or not.

It's possibly worth pointing out that IanTHughes said that the yield figure of 3.86% he supplied for 7 May 2016 was the historical yield on that date, so presumably based on the 141.0p dividend for its financial year that ended on 30 September 2015. I don't know what the forecast dividend was at the time, but probably not too far off the actual 155.2p dividend for the financial year that ended on 30 September 2016 - which would make the forecast yield at the time about 155.2/141.0 * 3.86% = 4.25%. That would have been over the FTSE100 yield of about 4.06% that I dug up earlier, and so would have satisfied this board's definition of high yield... In short, whether one counts it as a high-yield share would have depended on whether one uses historical or forecast yield even if this board's definition had been in effect at the time. And it might be worth noting that in the second of his introductory HYP articles, pyad talked about the forecast yield of what was later named HYP1 and its constituents - so it's not as though the idea of using the forecast yield was a dangerous HYP novelty at the time! ;-)

And of course this board's definition wasn't in effect at the time - TLF was still about 6 months away and AFAIAA, no-one had any inkling that it was going to come into existence, and this board's guidance was a further year or so after that. And the TMF board guidance simply said "high yield" without specifying what test to use - and some people did use criteria like 'above the FTSE AllShare yield' or 'above the equally-weighted FTSE100 yield', both of which are tests against a significantly lower value than the FTSE100 yield.

So basically, there are lots of ways people could very reasonably have regarded IMB as being a HYP share at the time on TMF, and one of them (using the forecast yield rather than the historical one) would have done that even in the hypothetical situation that the current TLF guidance had been in effect on TMF back then.

Gengulphus

You are of course correct. And it is also worth reminding ourselves that Pyad at one time countenanced the the occasional lower-yielding share, as long as the overall HYP was high yield. I recall him specifically saying this re: Tesco in around 2009 or 2010, for instance.

MDW1954

[MDW1954]

It's funny that Mr Market, normally obsessed with the short-term, seems so keen to write off a business which must surely have a good few decades to go. Rather like writing off Big Oil because of electric cars.
People have been puffing hallucinogens a lot longer than IMB has been around, and they're not about to desist.

Even if IMB grew its divis by a more gentle 5% - which I would prefer - it would still be a stonking buy for those not already overweight.

And anyway, the share price has only retreated to its level of March 2018.
Panic later.

V8

I see this as similar to the fall in resource stocks in early 2016. In retrospect, that was a great time to buy RDSB and BHP etc, and I'm very glad I did.

Up to today, I was only a couple of percent or so underwater on IMB, so not spooked. When I topped up RDSB, BP etc in 2016, I was significantly underwater. It looked temporary, and it was temporary, and the bought yields were fantastic -- I was getting RDSB on 11-12%.

I shall be buying more IMB.

MDW1954

Just a quick note to say that today I did indeed purchase 91 IMB shares for a consideration of £2023.

Small beer by some standards, I know, but it was all the spare cash that I had available in that particular brokerage account at the time.

MDW1954

[idpickering]

Just a quick note to say that today I did indeed purchase 91 IMB shares for a consideration of £2023.

Small beer by some standards, I know, but it was all the spare cash that I had available in that particular brokerage account at the time.

MDW1954

Thank you for sharing this information with us. May I ask what your total exposure is to IMB in your overall HYP? Do you hold BATS too?
Ian.

[MDW1954]

Just a quick note to say that today I did indeed purchase 91 IMB shares for a consideration of £2023.

Small beer by some standards, I know, but it was all the spare cash that I had available in that particular brokerage account at the time.

MDW1954

Thank you for sharing this information with us. May I ask what your total exposure is to IMB in your overall HYP? Do you hold BATS too?
Ian.

In my main "pure" HYP, that is easy: circa 2.5%, based on a valuation point in mid-April. So today, fractionally lower.

The holding in my SIPP is several times the size of that holding, in monetary terms, but that SIPP is a mix of HYP shares, ITs, funds, and a few exotics. Without taking time to carve it up into a HYP-only portfolio, I've no idea. Probably about the same, though.

I don't hold BATS.

MDW1954

[idpickering]

In my main "pure" HYP, that is easy: circa 2.5%, based on a valuation point in mid-April. So today, fractionally lower.

The holding in my SIPP is several times the size of that holding, in monetary terms, but that SIPP is a mix of HYP shares, ITs, funds, and a few exotics. Without taking time to carve it up into a HYP-only portfolio, I've no idea. Probably about the same, though.

I don't hold BATS.

MDW1954

Cheers once more for your post. You probably know I hold both tobacco outfits, in keeping with my doubling up in any given sector policy, if possible.

Ian.

[monabri]

And today the yield on offer is a 'mere' 10.3% based on a 12m trailing divi of 193.48p and a share price of ...... 1877p.