BT Group down over 3% today.

[monabri]

The new CEO of BT bought just over £1m of shares a few weeks ago, presumably he wouldn't have if the divi was at risk

More like almost £3 million! ( 7 June 19)...1,484,413 shares at £2.02 each.


https://www.londonstockexchange.com/exc ... 03066.html

[onslow]

The new CEO of BT bought just over £1m of shares a few weeks ago, presumably he wouldn't have if the divi was at risk

What makes you think that? Not everyone is a dividend junkie.

Dod

Of course, I doubt he did buy just because of the dividend. However if BT were to announce a reduction in the dividend the share price would likely go down, why would a CEO buy shares today if there is a good chance the shares will be cheaper in future? If he thought there was a good chance of the divi going down its unlikely he would purchase shares today.

I take this purchase of shares by the CEO as a vote of confidence not just in the dividend, but more importantly the company's larger prospects - by the person that knows the most about the company.

[Walrus101]

The new CEO of BT bought just over £1m of shares a few weeks ago, presumably he wouldn't have if the divi was at risk

What makes you think that? Not everyone is a dividend junkie.

Dod

Of course, I doubt he did buy just because of the dividend. However if BT were to announce a reduction in the dividend the share price would likely go down, why would a CEO buy shares today if there is a good chance the shares will be cheaper in future? If he thought there was a good chance of the divi going down its unlikely he would purchase shares today.

I take this purchase of shares by the CEO as a vote of confidence not just in the dividend, but more importantly the company's larger prospects - by the person that knows the most about the company.

You could be correct. Playing devils advocate, he could be incentivised with many stock options far in excess of what he has purchased, knowing full well that buying sends a positive signal to the market.

[Alaric]

"Jan du Plessis, chairman of BT, told investors at the company’s annual meeting in London that it remains confident it can meet this year’s payment.
But he added that a “year or two in the future” BT “ will also consider reducing the dividend” as one way of funding its plans to connect 15m homes to full fibre broadband by the middle of the next decade."

If a Company needs money, one approach is to borrow it. Another is to raid funds set aside for dividends. That may be easier to justify if the share price is such that the dividend yield is well above the FTSE 100 average.

Holders of BT have been warned.

According to the tools.morningstar site, over 10 years the annualised BT total return has been 11.50% compared with 10.23% for the FTSE 100. It's been OK then for longer term holders. The price was at a low of 74.1 in 2009. More recent purchasers have not done so well. Minus 7.43% as compared to 6.47% over 5 years and minus 16.47% against 8.31% for the Index over 3 years.

Calls to spin off Openreach seem to have died down.

[Dod101]

Irrespective of the buys by the new CEO, I am thoroughly unimpressed by the prospects for BT. The reasons remain as before; the big pensions deficit and (like Vodafone) the very large capex pending. Unless you have a very long timeframe, forget it as a HYP share.

Dod

[tjh290633]

I've been meaning to do this for some time, but tonight I looked at my record of holding BT.A since privatisation in 1984, at a price of 130p, paid in 3 instalments. The first two dividends were 3.9p and 3.0p, 6.9p total giving a starting yield of 5.3%.

In February 1990 I sold my holding at 294p and had previously purchased it in my PEP at 263p in October 1989. I added more in 1990 at 251p, in 1994 at 391p, and in 1995 at 352p. Come 1999 I trimmed my holding back at 1357p, sold the rights in 2001 and disposed of mmO2 after demerger in the same year. I then added 3 tranches in 2002 at 269p and 251p. Added more in 2004 at 176p, in 2005 at 208p and in 2006 at 210p. Added more in 2010 at 125p then trimmed back in 2013 when overweight at 339p and again in 2015 at 479p. Since then I have added more on 6 occasions, at 361p, 388p, 280p, 257p, 235p and 202p. The last two dividends were 4.62p and 10.68p, 15.3p in total.

My rate of return has been 11.2% over the entire period using XIRR on the cash flow as recorded.

Had I held my original holding throughout, it would have been 12.7%.

As you will observe the share price has gone up and down a few times over that period. The dividend also fell from its peak of 15.8p in 2009, having now almost recovered to that level.

The path of true love never does run smoothly, and I do not regard myself as infatuated with BT.A, but it has given me a reasonable ride, particularly to the height of over £13 in 1999.

TJH

[onslow]

Irrespective of the buys by the new CEO, I am thoroughly unimpressed by the prospects for BT. The reasons remain as before; the big pensions deficit and (like Vodafone) the very large capex pending. Unless you have a very long timeframe, forget it as a HYP share.

Dod

Dod, the pension defict initally concerned me too however like every company it needs to be balanced with other characteristics.

The deficit is around £6b I recall and while it can vary given underlying performance of its investments, and assumptions around interest rates/longetivity etc for a company with a market cap of £19bn I dont think its terminal, there havent been any new liabilties incurred by that pension scheme for some time now and of course the entitlements under that scheme will slowly disspaear as the beneficaries come to the end of their lives.

The reason the deficit has exploded over recent years is the significantly lower interest rates have led to assumptions about future returns being lowered, unless interest rates fall by this magnitude again the deficit is manageable(and of course rates being so low now cant go down much further)

Yes, BT has large capex spending however that is to realise some of the assets it already has - an enviable position in spectrum for 5G, which has so many more possibilities than just downloading videos faster on your phone, BT also has a signficant asset in Openreach. I'd almost say BT has some attractive Buffet style moats actually, albeit not as deep as some others companies!

So while the company isnt perfect, I think the risks are relatively manageable and at the current price I think the risk/reward ratio is good

[Dod101]

I am certainly no arbiter on a good company. It just seems to me that BT has a systemic problem. Every time they get things right, something goes wrong. We can argue this forever. My choice is to leave it alone but we all have different takes. Good luck to all who hold it. They may need it.

Dod

[daveh]

yet another classic HYP selection bites the dust .

#Except the share price is up ~1% today so the bosses comments yesterday haven't hurt the share price.

For me BT is showing an 87% gain (including dividends) and has paid me close to the original investment cost back in dividends. Capital is only showing a small gain. Share price has been a bit of a bumpy ride, as has the dividend, but I've been receiving more income since 2016 than I did before the big dividend cut in 2009.

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when did you buy these? - presumably at around 200p - must have been many years ago .

so its been a good investment for you - a good yield and held its value - so far .

but not so good for those buying in more recent times, no doubt encouraged by bullish HYPERS , who have lost half their capital with possibly further down to go.

Define many years?

I actually bought them between 2004 and 2010 at various prices, but at an average of less than 200p/share. However I also bought (and sold as it was a bed and ISA) just last year at just over 200p, so those buying recently have not lost half their capital at all (down about 10% from my bed and Isa purchase last year) and that will have been compensated for by a years dividends.


With the price having been knocked back in recent times now could be the time to buy for a future good performance. Yes there are worries, is the dividend safe due to the need for large amounts of capital investment, the pension deficit and regulatory concerns? However, looking at the fundamentals, the dividend is well coverd (1.42x), PE is reasonable (10.23), return on capital is OK (13%) and net gearing seems stable (at~140%) over the last 4 years. It is a share I might top up (#6 in my HYPTUSS), but I think I will wait to see what they say in the next set of results before I do.

[Alaric]

Define many years?

The three year chart is a bad place to be and the five year not so much better. Dividends over the longer period compensate a bit.

http://tools.morningstar.co.uk/uk/stock ... E%24%24ALL

Price 25 July 2016 was 413.35

14 July 2014 was 383.50

[daveh]

Define many years?

The three year chart is a bad place to be and the five year not so much better. Dividends over the longer period compensate a bit.

http://tools.morningstar.co.uk/uk/stock ... E%24%24ALL

Price 25 July 2016 was 413.35

14 July 2014 was 383.50

But would you have been buying in 2016 and 2014 (for a HYP) as the yield according to the LSE site was 3% in 2016 and by my calculation 2.8% in 2014? A quick perusal of a chart of the FTSE 100 yield suggests that at those two dates BT was yielding less than the index so would not have been a high yield pick.

[jackdaww]

Come on buddy I think you are being a bit OTT here. 4% the back end of 2016 was certainly HYPable.

The yield was significantly less than 4.00% until the end of January 2017, when the price did drop fairly significantly over a fairly short period of time.

But you are entirely missing the point. In order to have lost 50% of capital as was claimed here:

but not so good for those buying in more recent times, no doubt encouraged by bullish HYPERS , who have lost half their capital with possibly further down to go.

the price on purchase would have to have been at least 395p. That price has not been seen since around July 2016, and of course the yield was then nowhere near 4.00%!

So, the remark about "bullish HYPers" was plainly wrong and must have been made up simply to mock HYPers


Ian

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made up ??

mocking HYPERS ?

absolutely not .

i am certainly critical of some hypers who select and topup the highest yielder with little regard for other considerations , eg avoiding lo margin contractors - carillion and the like , and companies with massive debts and pensions deficits.

my concern is for the newcomers and inexperienced or trusting investors who may be seduced by the cosy complacent rose tinted spectacles view presented to them , of what is essentially narrow stock screen , will they understand the risks?

and that is my reason for posting on this board, to provide balance , they may not look at the other boards.

[tjh290633]

@jackdaww, since you do not run an HYP yourself, how can you make disparaging remarks about the performance of HYPs run by others?

All you are doing is regurgitating your own prejudices. If you invest in any share there is the possibility that its price may rise or fall. Whether its yield is high or low has little effect. What does have an effect is market sentiment, which can be very fickle. If you can post facts about BT.A to support your views, then do so. If not, then take your comments to a more suitable board or topic.

TJH

[jackdaww]

@jackdaww, since you do not run an HYP yourself, how can you make disparaging remarks about the performance of HYPs run by others?

All you are doing is regurgitating your own prejudices. If you invest in any share there is the possibility that its price may rise or fall. Whether its yield is high or low has little effect. What does have an effect is market sentiment, which can be very fickle. If you can post facts about BT.A to support your views, then do so. If not, then take your comments to a more suitable board or topic.

TJH

========================================

i havnt disparaged other posters hyp performance - i'm sure many peoples hyp's are doing just what they want.

i have explained why i post on this board and not others.

[tjh290633]

@jackdaww, since you do not run an HYP yourself, how can you make disparaging remarks about the performance of HYPs run by others?

All you are doing is regurgitating your own prejudices. If you invest in any share there is the possibility that its price may rise or fall. Whether its yield is high or low has little effect. What does have an effect is market sentiment, which can be very fickle. If you can post facts about BT.A to support your views, then do so. If not, then take your comments to a more suitable board or topic.

TJH

========================================

i havnt disparaged other posters hyp performance - i'm sure many peoples hyp's are doing just what they want.

i have explained why i post on this board and not others.

And I have explained to you why your approach is not acceptable. If you persist I shall have no option but to put my mod's hat on and delete such posts. There are other places where you can peddle your prejudiced views.

TJH

[ayshfm1]

Phillip Jansen is loaded - 3 mill is small change to him.
He might have had to buy them as part of his contract
I'm not sure I'm fully sold on him as a choice.
He doesn't need to work, so he's not at BT for the money, which is dangerous in some ways.

BT's basic problem is it owns the underlying networks, but they require huge investment and people don't like paying for it, a commodity or basic right etc. The money is being made by people using them, the over the top providers, Amazon , Facebook, Google etc. If BT ever figures out how it can get a cut of their revenues then it will be very profitable.

Jansen is not an engineer, he is marketing, so you can assume BT are not interested in just being a low margin network provider, or they'd have put an engineer in.

That said, at the AGM

Investors were told to be patient
That the board can't influence the share price
It may have to borrow more and cut the dividend to invest in FTTP. (which it's already said doesn't have a viable ROI)

You can see why the share price dropped.

I am buying currently, not sure they are an especially good HYP choice....

[csearle]

i have explained why i post on this board and not others.

I think it is quite ok for you to post on this board even if you don't run an HYP (as loosely defined by the board's guidelines) providing that you accept that the purpose of this board is to facilitate in practical matters people that are running HYPs . If your aim is to try and dissuade such people from adopting the strategy then this is not the right board for that. This board is for the converted. If however you are for example highlighing safety measures that you personally find practical in running a hypothetical HYP then I see no problem as we all have our own strategies in this regard.

Chris

[jackdaww]

i have explained why i post on this board and not others.

I think it is quite ok for you to post on this board even if you don't run an HYP (as loosely defined by the board's guidelines) providing that you accept that the purpose of this board is to facilitate in practical matters people that are running HYPs . If your aim is to try and dissuade such people from adopting the strategy

definitely not.

then this is not the right board for that. This board is for the converted. If however you are for example highlighing safety measures

yes.

that you personally find practical in running a hypothetical HYP then I see no problem as we all have our own strategies in this regard.

Chris

many thanks for your clarification.