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Vodafone topped up

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tjh290633
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Vodafone topped up

#231937

Postby tjh290633 » June 25th, 2019, 12:34 pm

As I had the cash and VOD are the highest eleigible share in my top-up list, I added almost 20% to my holding at 124p just now. This brought VOD up to 93% of the median holding value.

As a result my top-up table now looks like this:

Top-up          Income                     Cost                
Rank EPIC Rank EPIC % Income Rank Epic % Cost
1 IMB 1 TW. 5.71% 1 MARS 4.93%
2 WMH 2 SSE 4.65% 2 MKS 4.55%
3 TW. 3 MARS 4.51% 3 LLOY 4.47%
4 BLND 4 BT.A 4.30% 4 WMH 4.27%
5 SSE 5 IMB 4.22% 5 GSK 4.21%
6 KGF 6 AV. 4.21% 6 BT.A 4.18%
7 VOD 7 RDSB 4.04% 7 AV. 4.18%
8 BATS 8 BATS 3.88% 8 SSE 4.16%
9 BT.A 9 BP. 3.68% 9 PSON 3.84%
10 LLOY 10 ADM 3.64% 10 RDSB 3.84%
11 S32 11 WMH 3.55% 11 BATS 3.42%
12 MKS 12 GSK 3.55% 12 BHP 3.40%

As I have said in the past, I do not top up a share which, if topped up by 20%, would have its share of either portfolio income or cost raised above 5%. This means that if those factors are above 4.2%, that share is disqualified. Hence the first 6 in share of income and the first 5 in share of cost are excluded from top ups as it stands. This means that BLND is now the share eligible for topping up, followed by KGF and then VOD, as things stand at the moment.

I am conscious of comments made about both VOD and BT.A in other topics about the possible cutting of dividends. I ignore this possibility until it happens.

My portfolio now looks like this:

Value                           
Rank EPIC Weight % Median
1 DGE 3.93% 140.4%
2 SGRO 3.81% 136.4%
3 CPG 3.81% 136.2%
4 RDSB 3.77% 134.7%
5 GSK 3.71% 132.5%
6 MARS 3.62% 129.4%
7 BP. 3.35% 119.7%
8 ADM 3.32% 118.8%
9 RIO 3.32% 118.6%
10 ULVR 3.30% 118.2%
11 UU. 3.23% 115.7%
12 AZN 3.17% 113.3%
13 AV. 3.04% 108.8%
14 LGEN 3.01% 107.8%
15 BHP 2.99% 107.1%
16 BT.A 2.85% 102.0%
17 NG. 2.81% 100.7%
18 TATE 2.80% 100.0%
19 BATS 2.78% 99.6%
20 SSE 2.77% 99.1%
21 TW. 2.76% 98.7%
22 PSON 2.68% 95.9%
23 VOD 2.61% 93.4%
24 S32 2.55% 91.2%
25 LLOY 2.47% 88.3%
26 MKS 2.38% 85.3%
27 RB. 2.36% 84.4%
28 IMI 2.26% 80.8%
29 WMH 2.25% 80.6%
30 BLND 2.25% 80.5%
31 SMDS 2.23% 79.6%
32 BA. 2.21% 79.0%
33 IMB 2.12% 75.8%
34 KGF 1.78% 63.6%
35 TSCO 1.69% 60.6%

The bottom of the yield rankings looks like this:

29   ULVR   2.77%
30 RB. 2.69%
31 SGRO 2.54%
32 TSCO 2.49%
33 PSON 2.25%
34 CPG 2.04%
35 DGE 1.94%

This where a gradual transition to ITs might begin.

TJH

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Re: Vodafone topped up

#231997

Postby StepOne » June 25th, 2019, 4:28 pm

tjh290633 wrote:I am conscious of comments made about both VOD and BT.A in other topics about the possible cutting of dividends. I ignore this possibility until it happens.


Hi TJH,

Vodafone have already announced they are cutting the dividend, and we are past the ex-divi date. Do you actually wait until a reduced dividend has been paid before they drop off your list? Or is Vodafone still eligible for a top-up even at the reduced yield?

Thanks,
StepOne

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Re: Vodafone topped up

#231998

Postby kempiejon » June 25th, 2019, 4:39 pm

I'd echo that question from StepOne I've ruled out VOD for a while because the dividend cover was too thin, I read on the boards that some holders and top uppers were willing to add more money because of good cash flow on the accounts. Now they have cut the dividend, I think even at a reduced level the yield might still be high - but they'd now fail my test on recent record of increasing dividends.

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Re: Vodafone topped up

#232000

Postby daveh » June 25th, 2019, 5:02 pm

So Vodaphone has an historic yield of 6.4% according to my version of HYPTUSS and the forward yield may be as low as ~5% when a similar reduction in next years interim is taken in to account - so can still be considered high yield. So for a while people weren't buying because the yield was too high and now that the yield is out of the danger zone people are not buying due to the cut.


Personally I'm willing to buy a cutter if I think the company has addressed the problems that required the cut and that the dividend can grow from here (and it still is a high yield compared to the whole index). If you wait for the 5 year record to be reinstated you may have missed the best opportunity to pick up a decent share at a bargain price. The difficult bit is of course ascertaining that the company has addressed the problems that led to the cut. I will be looking for much improved dividend cover, and forecasts that earnings are improving amongst other things.


I will admit VOD was near the top of my top up list before the cut and is still at number 7 now. I didn't top up prior to the cut as the cover was so poor, though cash flow cover did look better. If companies above it are all disallowed it won't be automatically bared from a top up, but I will have to have a look at the last set of results in much more detail than usual before I do.

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Re: Vodafone topped up

#232010

Postby tjh290633 » June 25th, 2019, 5:57 pm

StepOne wrote:Vodafone have already announced they are cutting the dividend, and we are past the ex-divi date. Do you actually wait until a reduced dividend has been paid before they drop off your list? Or is Vodafone still eligible for a top-up even at the reduced yield?

Thanks,
StepOne

They were still eligible, StepOne. Whst we don't know is whether the next year's dividends will be based on the total of €9cents for this year, or whether the interim is adjusted to suit, so that they pay €3c interim and €6c final, as opposed to €2c and €4c with a reduced interim.

I am assuming that next year will be based on this year's total, which is why they were still eligible. If they reduce the total, then they will almost certainly drop out of the reckoning.

TJH

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Re: Vodafone topped up

#232012

Postby monabri » June 25th, 2019, 6:05 pm

Well, there's a 40% divi cut for VOD that we know about, so there's no denying it is a "cutter"

Code: Select all

Year End | Interim | Final      | Special  | Total* | Growth
03/2019  | 4.84¢   | 4.16¢      |        - | 9.00¢  | -40.28%
03/2018  | 4.84¢   | 10.23¢     |        - | 15.07¢ |   2.03%
03/2017  | 4.74¢   | 10.03¢     |        - | 14.77¢ |   2.00%

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Re: Vodafone topped up

#232028

Postby mike » June 25th, 2019, 7:16 pm

tjh290633 wrote:They were still eligible, StepOne. Whst we don't know is whether the next year's dividends will be based on the total of €9cents for this year, or whether the interim is adjusted to suit, so that they pay €3c interim and €6c final, as opposed to €2c and €4c with a reduced interim.

I am assuming that next year will be based on this year's total, which is why they were still eligible. If they reduce the total, then they will almost certainly drop out of the reckoning.

TJH


I read Vodafone's intended policy the same way. A couple of excerpts from their results RNS https://www.investegate.co.uk/vodafone-group-plc--vod-/rns/results-for-the-year-ended-31-march-2019/201905140700099328Y/
Dividend per share rebased to 9.00 eurocents (15.07 eurocents in FY18), implying a final dividend of 4.16 eurocents; progressive future dividend policy

The Board is recommending a dividend per share of 9 eurocents, representing a 40% decrease over the prior financial year's dividend per share. This implies a final dividend of 4.16 eurocents compared to 10.23 eurocents in the prior year. The rebasing of the dividend is intended to support the Group's strategic goals and to rebuild financial headroom, helping the Group to reduce debt and delever to the low end of our targeted 2.5x-3.0x leverage range in the next few years.


I read this as the annual divi is rebased to 9.00€c, not that the final is rebased to 4.16€c, and hence the next interim will be ~2€c.

Whether the policy is progressive in the AZN sense of progressive, ie not cut, we shall have to wait and see, but I have my forecast for the next couple of years at an unchanged 9€c. Less likely to be disappointed like that.

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Re: Vodafone topped up

#232078

Postby ElectronicFur » June 26th, 2019, 12:32 am

I don't understand the logic. Surely as announced in March 2019, they have cut the annual dividend from 15.07 to 9 and so are no longer eligible for top-up?

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Re: Vodafone topped up

#232082

Postby idpickering » June 26th, 2019, 5:35 am

ElectronicFur wrote:I don't understand the logic. Surely as announced in March 2019, they have cut the annual dividend from 15.07 to 9 and so are no longer eligible for top-up?


That’s how I read it too. I hold, but am unlikely to top up further. But you can never say never I guess?

Ian.

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Re: Vodafone topped up

#232096

Postby tjh290633 » June 26th, 2019, 8:51 am

ElectronicFur wrote:I don't understand the logic. Surely as announced in March 2019, they have cut the annual dividend from 15.07 to 9 and so are no longer eligible for top-up?

That would rule them out for selection as a new share. Topping up criteria are up to the individual.

If they still rank high and are in recovery mode, then I see no reason not to top up.

TJH

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Re: Vodafone topped up

#232098

Postby funduffer » June 26th, 2019, 8:57 am

ElectronicFur wrote:I don't understand the logic. Surely as announced in March 2019, they have cut the annual dividend from 15.07 to 9 and so are no longer eligible for top-up?

I agree.

Whilst I admire tjh's top-up methodology, I personally am not prepared to top-up a cutter until they have re-established their growing dividend credentials.

BHP are a good example, where they cut the dividend by 74% in 2016, but it has been growing rapidly ever since. I would top up BHP now, if the price (yield) was right, and the top-up table for my HYP indicated as such.

I think the situation with VOD is still too uncertain, although fair play to tjh, he has a good track record in buying low and reaping the benefits in both income and capital.

FD

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Re: Vodafone topped up

#232103

Postby idpickering » June 26th, 2019, 9:21 am

tjh290633 wrote:
If they still rank high and are in recovery mode, then I see no reason not to top up.

TJH


Hence my "never say never" comment. I'd need to be convinced that the tide had turned first though. The bottom line though is, each to their own.

Ian.

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Re: Vodafone topped up

#232133

Postby daveh » June 26th, 2019, 11:24 am

funduffer wrote:
BHP are a good example, where they cut the dividend by 74% in 2016, but it has been growing rapidly ever since. I would top up BHP now, if the price (yield) was right, and the top-up table for my HYP indicated as such.



FD


The time to buy BHP was in 2016 when you could pick them up for 650-750p per share, you would now be collecting a very nice dividend and sitting on impressive capital gains. I know I'm looking back in hindsight, and I'm afraid I didn't buy any then, but did buy some in 2017 at 1100p. I thought about it, but didn't have the courage of my convictons. Similarly now could be a good moment to buy Vodafone if you think they can grow the dividend from here. There is though the worry that there is still a lot of debt, particularly the hybrid debt that needs to be dealt with in a few years time.

For me I think I might wait for the next set of results to see what happens with the interim dividend and how earnings and cash flow are performing before I think of topping up VOD, which will probablymean I miss the best buying opportunity, but also should mean I'm not catching a falling knife.

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Re: Vodafone topped up

#232222

Postby moorfield » June 26th, 2019, 8:53 pm

funduffer wrote:Whilst I admire tjh's top-up methodology, I personally am not prepared to top-up a cutter until they have re-established their growing dividend credentials.


It may help to think in terms of overall portfolio income here - the sum of the parts. Mine continues to grow despite a reduced contribution from Vodafone, and I too plan to top up more later this year.

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Re: Vodafone topped up

#232237

Postby moorfield » June 26th, 2019, 10:03 pm

tjh290633 wrote:
ElectronicFur wrote:I don't understand the logic. Surely as announced in March 2019, they have cut the annual dividend from 15.07 to 9 and so are no longer eligible for top-up?

That would rule them out for selection as a new share. Topping up criteria are up to the individual.

If they still rank high and are in recovery mode, then I see no reason not to top up.

TJH


How does a Vodafone share know if it's being "bought new" or "topped up" ?

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Re: Vodafone topped up

#232266

Postby seagles » June 27th, 2019, 7:43 am

moorfield wrote:
tjh290633 wrote:
ElectronicFur wrote:I don't understand the logic. Surely as announced in March 2019, they have cut the annual dividend from 15.07 to 9 and so are no longer eligible for top-up?

That would rule them out for selection as a new share. Topping up criteria are up to the individual.

If they still rank high and are in recovery mode, then I see no reason not to top up.

TJH


How does a Vodafone share know if it's being "bought new" or "topped up" ?


Not sure if you are serious or just "trolling" but what is meant is the you have some money to buy in your portfolio. You already have vod in the portfolio and you decide to top-up, thus you purchase and it is acceptable in the guidelines, but if you do not have it in your portfolio already then it fails guidance of a rising yield this is a "brought new" share.

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Re: Vodafone topped up

#232267

Postby Dod101 » June 27th, 2019, 8:05 am

Never mind the semantics, TJH's comment implies that he regards Vodafone as in recovery mode. That is his opinion; I wonder if it is widely shared?

Dod

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Re: Vodafone topped up

#232316

Postby Gengulphus » June 27th, 2019, 12:05 pm

moorfield wrote:
tjh290633 wrote:
ElectronicFur wrote:I don't understand the logic. Surely as announced in March 2019, they have cut the annual dividend from 15.07 to 9 and so are no longer eligible for top-up?

That would rule them out for selection as a new share. Topping up criteria are up to the individual.

If they still rank high and are in recovery mode, then I see no reason not to top up.

How does a Vodafone share know if it's being "bought new" or "topped up" ?

It doesn't - but TJH and his portfolio do know! And I'm sure that many other HYPers here consider whether a share is already in their HYP as a factor in their purchase selection criteria - how important a factor will probably vary widely, from "tiebreaker only, for the cases where I haven't been able to decide between potential purchases on other grounds" (*) to "if I've got a share in a sector, don't buy a new share in that sector". Certainly I do, and I think that what I tend to do in practice (I've never really formalised it) is closer to the "tiebreaker only" end of the scale, though definitely not at it.

I do also think there may be some semantic confusion around, due to "eligible" having (at least) two possible meanings: "eligible for discussion on this board" and "eligible under my HYP's purchase selection criteria". As far as the first is concerned, all this board's guidance says about dividend cuts and history is in the paragraph:

"Selection criteria may include the yield, the dividend record and a history of increases. Debt level and free cash flow should be considered. Personal feelings can affect the choice, including ethical considerations. Additional criteria may be used by individuals."

That's "may include" rather than "must include" or "should include" - i.e. an option one is entirely free to choose to use or not. The only criteria about the share I can see that the guidance imposes on discussing new-share purchases are that it's an ordinary share, in the FTSE 350, has a yield above the FTSE 100 yield and is not a non-REIT investment trust (there are also criteria about diversification and an LTBH approach, but those can only be checked against an entire HYP and how it is run, not about any specific share). Vodafone currently meets all of those criteria, and so any purchase of Vodafone by a HYP is still eligible for discussion on this board. Whether it's a top-up purchase or not might be relevant if Vodafone had stopped meeting those criteria (e.g. if its yield were below the FTSE 100's as a result of the cut), but that isn't the case.

The same paragraph also says that people can use additional criteria, and whether a share is already in one's HYP is clearly an additional criterion.

So I agree with what TJH's comment "That would rule them out for selection as a new share. Topping up criteria are up to the individual." actually says, but only on the understanding that the ruling-out in its first sentence is also a matter of his personal criteria. I.e. I disagree with its (possibly unintended) implied contrast that Vodafone being ineligible for a new-share purchase is not up to the individual, but whether it is eligible for a top-up purchase is up to the individual. As far as I can see, both are up to the individual, including whether the individual wants to distinguish between them.

And I think the discussion would be more productive if less were said about whether Vodafone is eligible, and more about whether participants choose to regard it as eligible under their own criteria and their reasons for regarding it that way... And to try to make a start on this myself ;-) , the dividend cut has pushed me over the edge to regarding it as ineligible for any HYP purchase - I've been uneasy about the company ever since the 2014 deal with Verizon left it with a mountain of corporate action proceeds, only part of which it returned to shareholders. While I had no problem with them retaining part of it for reinvesting in the now-reduced business, success at that reinvestment hasn't by any means been clear. Hence my unease, and the dividend cut has confirmed it to the extent that it's now flagged as "no top-ups" in my main HYP-tracking spreadsheet.

That's all a rather tentative view, as what the practical effect of that flag is actually "don't top this holding up unless you've the time and energy to research the company fully again, actually do that research and decide as a result to remove the flag". I.e. that view is rather quickly formed, on inadequate up-to-date research - but I want to delay actually doing that research until and unless it can be done for the purposes of a purchase I'm actually contemplating at the time (or indeed a sale, but Vodafone hasn't yet done anything that makes it a tinker candidate for me). At present, Vodafone is 12th equal in the top-up order for my 40-share HYP, due to a capital value just below average (and also just below median for those who prefer to use that) and a distinctly above-average yield, but by no means one of the HYP's top-yielders. Even taking into account the fact that I will disallow some of the holdings above it in the top-up order on diversification grounds and/or because they are also flagged, things will need to change a bit before I seriously consider it for a top-up.

(*) Note that as a tiebreaker, it can work both ways - in favour of a new share purchase if the HYPer wants the diversification increase from a new share more than they dislike the admin increase, and in favour of a top-up purchase if the opposite.

(**) Note that it can only disallow discussing purchases that don't meet those criteria, and certainly cannot disallow having personal criteria that sometimes break them or actually purchasing shares chosen by one's personal criteria. Indeed, my personal criteria are slightly more relaxed than them on one detailed point, and as a result 3 shares in my 40-share HYP didn't meet this board's criteria when I bought them, don't now and probably never will. No problem - if and when I want to discuss them, I'll post on another board.

Gengulphus

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Re: Vodafone topped up

#232377

Postby Arborbridge » June 27th, 2019, 6:04 pm

seagles wrote:
moorfield wrote:
tjh290633 wrote:That would rule them out for selection as a new share. Topping up criteria are up to the individual.

If they still rank high and are in recovery mode, then I see no reason not to top up.

TJH


How does a Vodafone share know if it's being "bought new" or "topped up" ?


Not sure if you are serious or just "trolling" but what is meant is the you have some money to buy in your portfolio. You already have vod in the portfolio and you decide to top-up, thus you purchase and it is acceptable in the guidelines, but if you do not have it in your portfolio already then it fails guidance of a rising yield this is a "brought new" share.


That's doesn't seem like trolling to me, but a sensible enough observation. For what it's worth, Stephen Bland's advice to me once was, in this situation, to apply the sorts of rules on topping up that one would use for an initial purchase. That is, a rising (or at the least, steady) dividend record - a cut would therefore rule out a topup, pro tem.

But as TJH commented, we each have slightly different approaches. I'm probably more like TJH, in that if the company appears to on course to recover I might throw in a small topup as a gesture to the potential - and benefit from getting in while the price is still low. This I did with both Lloyds and Tesco when the prices were down. Strictly, and non-HYP action, but it did no harm as I could afford to wait. It worked well as regards share price with Tesco - not so well with Lloyds, though oddly enough, the latter has proved livelier in re-establishing its dividend.

Arb.

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Re: Vodafone topped up

#232644

Postby moorfield » June 28th, 2019, 11:05 pm

seagles wrote:
moorfield wrote:
tjh290633 wrote:That would rule them out for selection as a new share. Topping up criteria are up to the individual.

If they still rank high and are in recovery mode, then I see no reason not to top up.

TJH


How does a Vodafone share know if it's being "bought new" or "topped up" ?


Not sure if you are serious or just "trolling" but what is meant is the you have some money to buy in your portfolio. You already have vod in the portfolio and you decide to top-up, thus you purchase and it is acceptable in the guidelines, but if you do not have it in your portfolio already then it fails guidance of a rising yield this is a "brought new" share.


No not trolling. It seems peculiar to me that buying new "fails guidance" yet a topping up "is acceptable" here - Pyadic checks should apply consistently to both actions, I would have thought, which is why I frame the question from a Vodafone share's perspective.


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