Vodafone topped up

[IanTHughes]

Really? As at the beginning of June, there were 41 shares in the FTSE 100 with a rising dividend for at least 6 years, easily enough to construct a diverse HYP containing 15 - 20 shares. If you select from the FTSE 350 there were 97. How many do you need?

That might be ample, if they have yields exceeding the FTSE average.

What has that got to do with HYP?

Seriously, HYP is about selecting a portfolio of shares, suitably diversified, that offer the highest sustainable yields available. Obviously the level of the portfolio yield achieved will depend entirely on the strictness of one's selection criteria, which will of course vary from HYPer to HYPer.

I ask again, what has the FTSE Average yield got to do with HYP?


Ian

[Alaric]

I ask again, what has the FTSE Average yield got to do with HYP?

Quite a lot, as one of the core selection criterion is stated to be that the selected share(s) should have a dividend yield in excess of that of the FTSE 100. That's actually a relative rather than absolute measure. An absolute measure would say that the yield has to exceed , say, 3%, whilst a risk related measure would say that it had to exceed Gilts plus something.

[IanTHughes]

I ask again, what has the FTSE Average yield got to do with HYP?

Quite a lot, as one of the core selection criterion is stated to be that the selected share(s) should have a dividend yield in excess of that of the FTSE 100.

Well, all I can say is that it is not any part of the selection criteria for my HYP - core or otherwise.

If it is a core selection criteria for another person's HYP, can you not post a link to where it is so stated?


Ian

[Arborbridge]

my remark was in the context of investing in UK income ITs as an alternative to HYP - which are investing in the same pool.

How about investing in Companies which have a lower than average dividend yield? Their dividend yield is lower than average because their share prices have increased at a greater pace than their dividends. That contrasts with higher yielding shares that get selected for consideration because their share price has fallen, Vodafone being an example. If over the last ten years you achieved no more than the performance of the FTSE 100, your annualised returns would have been 9.8% compared with Vodafone's 7.8%. Over five years you would have 6% as compared to -0.9%.

The "low yield" choice of Unilever would have given 15% over 10 and 15.5% over 5.

You know perfectly well that this board is for discussion about HYP practical - not for such remarks as you've made here.

[Arborbridge]

As regards to the discussion about whether the "pool" is smaller or not: perhaps I did not express myself well.
The pool may or may not be smaller - I just don''t know. But we need not become to despairing as HYPers since all other UK equity income funds fish in the same pool and are still doing a reasonable job - broadly with a similar yield to what they usually have (i.e. slightly lower than most HYPs) and with some capital growth.

All my comment was saying is that I'm not worried: if the professional managers of UK equity income funds are still finding 40-100 shares worth investing in and producting results, then I am sure HYPers have enough choice also.

However, Dod has an interesting point about the possibility of a shrinking pond, which needs a separate thread and time to explore properly to see if his "gut feeling" stands up to scrutiny. It's well worth exploring.


Arb.

[Arborbridge]

I ask again, what has the FTSE Average yield got to do with HYP?


Ian

Well, I may be wrong, but hasn't the "H" always be taken to mean above the FTSE average? That's the way I've always read it and it seems implicit in Stephen Blands original articles.

The current board guidelines say: "For the HYP Practical board we define an HYP as a portfolio comprised exclusively of ordinary shares. If selected, such shares should have a dividend yield above the average for the FTSE100 index "
and though I've often disputed the board guidelines as having diverged from the original, this seems to more or less state the spirit of the PYAD method.

Arb.

[idpickering]

Well, I may be wrong, but hasn't the "H" always be taken to mean above the FTSE average? That's the way I've always read it and it seems implicit in Stephen Blands original articles.

The current board guidelines say: "For the HYP Practical board we define an HYP as a portfolio comprised exclusively of ordinary shares. If selected, such shares should have a dividend yield above the average for the FTSE100 index "
and though I've often disputed the board guidelines as having diverged from the original, this seems to more or less state the spirit of the PYAD method.

Arb.

Spot on Arb. My sentiments exactly. That's how I read it too.

Ian.

[IanTHughes]

I ask again, what has the FTSE Average yield got to do with HYP?

Well, I may be wrong, but hasn't the "H" always be taken to mean above the FTSE average? That's the way I've always read it and it seems implicit in Stephen Blands original articles.

No, not in my opinion. The "H" simply means "High". The strategy involves listing the shares in descending yield order and working down the list, making selections or rejections, until an appropriately diversified portfolio is achieved. No mention of the FTSE average yield at all.

I do not even know what the FTSE Average Yield is

The current board guidelines say: "For the HYP Practical board we define an HYP as a portfolio comprised exclusively of ordinary shares. If selected, such shares should have a dividend yield above the average for the FTSE100 index "
and though I've often disputed the board guidelines as having diverged from the original, this seems to more or less state the spirit of the PYAD method.

I was not commenting on the guidelines for this board but rather the HYP Strategy.


Ian

[csearle]

The "H" simply means "High". The strategy involves listing the shares in descending yield order and working down the list, making selections or rejections, until an appropriately diversified portfolio is achieved. No mention of the FTSE average yield at all.

Yes but "High" means (roughly) higher than normal, and a reasonable stab at normal, especially when it comes to numbers, is average. So although it is probably possible to define high as being whatever you like it is rather inappropriate to get agitated when people use above average to mean high.

IIRC HYP was a child of Stephen's PYAD value concept where the Y was compared to the FTSE-100 average. (Or have I got that wrong?)

Chris

[Arborbridge]

I was not commenting on the guidelines for this board but rather the HYP Strategy.


Ian

If you list the FTSE shares in order of yield, the chances are that you will end up with a group which is above the FTSE average - that's what I meant by it's being "implicit" in PYAD's instructions. I'm not arguing whether or not he specifically mentioned it, and I'll certainly give you the benefit if there's a doubt. On the other hand, I can't imagine what he meant by "high" when listing shares from the FTSE for a HYP, unless he meant relative to the FTSE. He also rarely chose a share below that - on occasion commenting that an odd lower yield would be permissable to gain diversity - but this was an exception.

No, I'm sure the intention was, all things being equal, overwhelmingly to choose shares higher than the FTSE average with any lower ones being very much the exception. But, strictly to the letter you are correct - he didn't specifiy as far as I know - though for practical purposes, I'll claim I was correct too


Arb.

[IanTHughes]

The "H" simply means "High". The strategy involves listing the shares in descending yield order and working down the list, making selections or rejections, until an appropriately diversified portfolio is achieved. No mention of the FTSE average yield at all.

Yes but "High" means (roughly) higher than normal, and a reasonable stab at normal, especially when it comes to numbers, is average. So although it is probably possible to define high as being whatever you like it is rather inappropriate to get agitated when people use above average to mean high.

I was merely commenting on the incorrect assertion that the HYP constituent selection process included any reference to the FTSE Average Yield.

IIRC HYP was a child of Stephen's PYAD value concept where the Y was compared to the FTSE-100 average. (Or have I got that wrong?)

You may well be right but I was not commenting on pyad's Value ideas but rather his HYP Strategy.


Ian

[csearle]

I was not commenting on the guidelines for this board but rather the HYP Strategy.Ian

This might be getting at the crux of the matter. "the HYP Strategy" doesn't really exist. It is a blur of strategies depending upon the follower. There are huge overlaps but differences on the fringes. It is not up to any one of us to define too exactly what it is because that exactness would be tantamount to saying only-my-flavour-is-the-one-true-HYP. We would all have slightly different one-true-HYPs. So the guidelines attempt to demarcate the cornerstones leaving HYPers to get along nicely with each other and avoid this situation.

[IanTHughes]

I was not commenting on the guidelines for this board but rather the HYP Strategy.

If you list the FTSE shares in order of yield, the chances are that you will end up with a group which is above the FTSE average - that's what I meant by it's being "implicit" in PYAD's instructions. I'm not arguing whether or not he specifically mentioned it, and I'll certainly give you the benefit if there's a doubt. On the other hand, I can't imagine what he meant by "high" when listing shares from the FTSE for a HYP, unless he meant relative to the FTSE. He also rarely chose a share below that - on occasion commenting that an odd lower yield would be permissable to gain diversity - but this was an exception.

No, I'm sure the intention was, all things being equal, overwhelmingly to choose shares higher than the FTSE average with any lower ones being very much the exception. But, strictly to the letter you are correct - he didn't specifiy as far as I know - though for practical purposes, I'll claim I was correct too

Be my guest but the distinction is important in my view.

The reason is that many on this board claim, wrongly in my view, that any share with a yield greater than the FTSE Average Yield is an acceptable selection for an HYP. In reality, each selection should offer the "highest" yield possible, subject to one's selection criteria and the all important diversification. The two are not the same.


Ian

[tjh290633]

The "H" simply means "High". The strategy involves listing the shares in descending yield order and working down the list, making selections or rejections, until an appropriately diversified portfolio is achieved. No mention of the FTSE average yield at all.

Yes but "High" means (roughly) higher than normal, and a reasonable stab at normal, especially when it comes to numbers, is average. So although it is probably possible to define high as being whatever you like it is rather inappropriate to get agitated when people use above average to mean high.

I was merely commenting on the incorrect assertion that the HYP constituent selection process included any reference to the FTSE Average Yield.

IIRC HYP was a child of Stephen's PYAD value concept where the Y was compared to the FTSE-100 average. (Or have I got that wrong?)

You may well be right but I was not commenting on pyad's Value ideas but rather his HYP Strategy.

I can recall discussions from a long time ago where the search for further sectors would lead to shares with yields below the average and, in such cases, the comment was made that it was not compulsory to include every sector. I suspect that the epithet "stamp collecting" dates from that period.

HYP1, if my memory serves me correctly, did include more than one share from the same sector and also the odd share with a lower than average yield, and looking at my records I find the Original HYP1 composition:

Name                       EPIC   Sector   
United Utilities           UU.    Water    
Gallaher                   GLH    Tobacco  
Scottish & Newcastle       SCTN   Brewery  
Royal & Sun                RSA    Insurance
Britannic                  BRT    Insurance
Alliance & Leicester       AL.    Bank     
Lloyds TSB                 LLOY   Bank     
Bass                       BASS   Hotels   
Boots                      BOOT   Retail   
Land Securities            LAND   Property 
Associated British Ports   ABP    Ports    
Blue Circle                BCI    Cement   
Rio Tinto                  RIO    Mining   
Anglo American             AAL    Mining   
Shell                      SHEL   Oil

I believe that the mining shares were the low yielders.

I have the original TMF board links, but not for the Wayback system.

TJH

[tjh290633]

See viewtopic.php?p=36395#p36395 for links to the original articles.

TJH

[IanTHughes]

I was not commenting on the guidelines for this board but rather the HYP Strategy.Ian

This might be getting at the crux of the matter. "the HYP Strategy" doesn't really exist. It is a blur of strategies depending upon the follower. There are huge overlaps but differences on the fringes. It is not up to any one of us to define too exactly what it is because that exactness would be tantamount to saying only-my-flavour-is-the-one-true-HYP. We would all have slightly different one-true-HYPs.

The HYP Strategy very much does exist and is clearly definable. What you are describing is the rather obvious fact that, having selected the HYP Strategy, each individual must themselves determine the level of strictness to apply to each of the Strategy's various selection criteria. That is why some, including pyad himself, will restrict selections to those in the FTSE 100, with only the occasional FTSE 250 selection when diversity requires it. At the other extreme there will be those that will select any share in Main Market.


Ian

[Arborbridge]

At the other extreme there will be those that will select any share in Main Market.


Ian

In which case, I'd suggest they may not be HYP shares! Certainly PYAD restricted himself to large - prefereably very large - companies, his theiry being that a portfolio based on the larget shares would be less prone to failure.

[Alaric]

I do not even know what the FTSE Average Yield is

Perhaps you don't use the dividenddata site
https://www.dividenddata.co.uk/dividend ... et=ftse100

As of writing (Monday 1st July 2019) it is quoted as 4.38% for the FTSE 100 and 2.99% for the FTSE 250.

So 4.38% less charges is the dividend yield you would get if you just put everything into a tracker. You would get 4.38% itself if the tracker took charges from capital.

Higher yields can go with distressed share prices, so a sort by yield downwards is also a search for recovery ploys, or a search for shares to dump before even more capital is lost.

[88V8]

It would never occur to me to buy a share yielding less than the average, which currently is... ahhh, Alaric beat me to it.

Nor would I buy a low yielder just to tick a sector box. Yes, that is what Luni dubbed Sectoral Philately.

Now, I might tolerate an existing constituent drifting down in yield - although I recall selling MKS when it did - and Unilever often crops up as an example of a held share with a miserable yield, but for me and I think most who have frequented this board here and on TMF, as a starting point all shares must be High Yield.
At my age - late 60s - why on earth would I buy a low yielder when I can and do buy Fixed Interest at nigh on 6%. I don't give a fig about TR, it's the income, the income.

Nor do I accept the argument that it is the portfolio as a whole which must be high yield and therefore it can include some low yielders, for me that is a copout. So, another variation in the broadish and disputacious church of the HYP theme.

But indeed this is all drifting away from HYP Practical and certainly away from Vodafone which in a moment of inattention I bought last year but will not be topping up.

V8

[IanTHughes]

At the other extreme there will be those that will select any share in Main Market.

In which case, I'd suggest they may not be HYP shares! Certainly PYAD restricted himself to large - prefereably very large - companies, his theiry [sic] being that a portfolio based on the larget shares would be less prone to failure.

You may suggest all you like and there are others, including pyad himself, who would agree with you. Of course there are also others, including myself, who would not agree!

My HYP, for example, includes Marston's PLC (MARS) which has only recently been re-admitted to the FTSE 250 with a Market Capitalisation of around £770M. Not even close to FTSE 100!


Ian