Vodafone topped up

[Gengulphus]

I am with moorfield on this one - if a share is not eligible as a new purchase, it is also not eligible as a top-up.

... and a corollary is that if a Vodafone top-up is tolerated here then so should a new purchase be. 1 Vodafone share will pay the same income (or not) next year to a TJH as it would to a newbie.

What (if anything) makes you think that new purchases of Vodafone, or discussions about them, are not tolerated here?

To be clear, I see plenty of evidence in this thread that new purchases of Vodafone (and indeed top-up purchases of Vodafone as well) are disagreed with here - that's not what I'm asking about. Talking about our agreements and disagreements on the board's subject is what discussion boards are about. Intolerance is not.

Gengulphus

[Arborbridge]

Another problem with the rising-divi-no-cutter approach is that the universe of such shares has become rather small.
Man cannot live on Shell alone.

V8

That is absolutely correct to my mind, and one reason why I have felt it necessary to look again at growth shares and to some extent ITs.
A HYP does work as long as a choice of high income shares is available.

Dod

It would be interesting to test whether or not the pool of HYP shares has become smaller. I don't have time to look into it at present, but I suspect there is probably still plenty of choice around.

A further point is that retreating to ITs solves nothing, since they are fishing in the same pond (or pool). If our income choices have reduced, so have theirs.


Arb.

[funduffer]

Usually this sort of action is the precursor to a fairly sharp recovery, so it is an opportunity to be grasped. Waiting for 5 years as the price rises and the dividends multiply does not make sense to me. You are losing out on dividend flow and capital appreciation while you wait.

TJH

Hear, hear. My italics - show what I also believe, and why I've topped up "prematurely" on a number of occasions. On this point, like TJH, I diverge from "strictly PYAD": just one of my foibles. And remember I am talking about top-ups here, so by definition not huge forays which would disturb the general run of things.


Arb.

I admire tjh’s ability to distinguish between a falling knife and a genuine recovery situation! I don’t feel I have this skill.

Of course I am not proposing to ‘lose out on dividend flow and capital appreciation while you wait’ - the top-up would be aimed at another company with a ‘safer’ dividend and hopefully a similar yield that will deliver the income flow. As for capital appreciation, well I have given up trying to predict whether the share price of a cutter is going to rise or fall. I can’t do it.

I am not trying to be doctrinaire or religious about HYP, just that I personally would not top up a cutter, on the basis that it’s ability to pay a stable, rising dividend is riskier compared to a company with a good track record of paying rising dividends.

Of course Dod and the have been in this game a lot longer than I have, so I probably still have a lot to learn from them!

FD

[Itsallaguess]

A further point is that retreating to IT's solves nothing, since they are fishing in the same pond (or pool).

If our income choices have reduced, so have theirs.

I don't intend to expand on my reply here, as it's clearly off-topic for this board, but I also feel it's necessary to point out the clear fallacy with the above view Arb, in at least one very important aspect regarding the very diverse markets and also global territories that many Investment Trusts are able to use to help deliver income for us nowadays, over and above the really quite limited number of income-ready large-cap FTSE stocks usually being discussed in 'classic' HYP portfolios....

Cheers,

Itsallaguess

[Alaric]

A further point is that retreating to ITs solves nothing, since they are fishing in the same pond (or pool). If our income choices have reduced, so have theirs.

They don't have self inflicted rules though. For example they can invest new money into shares with lower initial yields but high dividend growth, For that matter they can go overseas or invest outside the FTSE 250. Preference Shares, Corporate and Sovereign Bonds aren't ruled out either.

[moorfield]

What (if anything) makes you think that new purchases of Vodafone, or discussions about them, are not tolerated here?

Well the tone of a few posters I have read here in recent times impresses intolerance rather than disagreement, on me at least.

But this distracts from my point above that a new purchase or a top-up of Vodafone now are equivalent actions.

[IanTHughes]

Another problem with the rising-divi-no-cutter approach is that the universe of such shares has become rather small.
Man cannot live on Shell alone.

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?

And of course, if one is less strict than requiring a six year history of rising dividends, the number of possible candidates is considerably higher.


Ian

[IanTHughes]

This may mean that you miss buying at the bottom of the market, but HYP is a strategy that balances achieving high income with reducing income risk. As a retirement living strategy, a growing and stable income is a must, so if this means sacrificing some potential capital gain for increased dividend security, then that is what HYP is all about, in my view.

The trouble is that the classic HYP is not simply sacrificing some potential capital gain for increased dividend security, it is often sacrificing any capital gain and quite often incurring a capital loss so I do not see HYP as particularly low risk and it needs care in just the same way that any other investment strategy does.

Where is your evidence for that? My HYP certainly disproves it as does pyad's HYP1, and every HYP that I have seen reported on this board! So, without evidence to back up your assertion, it would appear that you are pulling fake facts out of the air? I wonder, would that be because of your well reported rejection of HYP as a strategy and your need to justify that rejection, irrespective of reality?

Only you can answer that of course.


Ian

[Dod101]

I think, to pick up Arb's point, there is for instance HFEL IT which gives a decent income and at the same time derives most of it well away from our shores.

There is nothing to say that the HYP candidates need to be UK oriented or if there is that is a silly rule which needs to be removed.

As for ITH's comments, if he is prepared to ignore capital regression, them he may well be right. I am not. Capital preservation at the least, is to me paramount.

Dod

[IanTHughes]

As for ITH's comments, if he is prepared to ignore capital regression, them he may well be right. I am not. Capital preservation at the least, is to me paramount.

HYP does not mean having to ignore capital regression! Or do you actually have some evidence to back up your assertion?


Ian

[Dod101]

ITH

As I am sure you know, of course I have no evidence to back up my views and in any case assertion is too strong a word to use. I am simply not prepared to give up capital security for the sake of yield. As has been said many times in the past on this Board and others, money is fungible, it can be spent whether it comes from income or capital accretion.

Dod

[IanTHughes]

As I am sure you know, of course I have no evidence to back up my views

Yes, I am well aware of that!

I am simply not prepared to give up capital security for the sake of yield.

Actually, what you said was:

As for ITH's comments, if he is prepared to ignore capital regression, them [sic] he may well be right.

Please correct me if I am wrong here but, were you not suggesting that I - not you - would only be right if I - not you - was prepared to ignore capital regression?

It is my contention that that assertion - which you made - is complete nonsense, as evidenced by my HYP, HYP1 and other HYP's reported on this board

As has been said many times in the past on this Board and others, money is fungible, it can be spent whether it comes from income or capital accretion.

Something that I learned over 40 years ago but so what? What has that got to do with your continuing incorrect assertion that following the HYP strategy means being prepared:

to ignore capital regression

Surely, in order to make such a statement, you must have done some analysis? Or is it simply a statement needed to justify your rejection of HYP as a valid strategy?


Ian

[Dod101]

ITH

Most people would I think get the gist of my comments. I am not prepared to enter into silly semantics with you. Where I agree with you I have said so. If you do not get the rest of it too bad.

Dod

[tjh290633]

Moderator Message:
This topic is getting very bad tempered. Let's keep comments polite and good natured.

TJH

[Arborbridge]

A further point is that retreating to IT's solves nothing, since they are fishing in the same pond (or pool).

If our income choices have reduced, so have theirs.

I don't intend to expand on my reply here, as it's clearly off-topic for this board, but I also feel it's necessary to point out the clear fallacy with the above view Arb, in at least one very important aspect regarding the very diverse markets and also global territories that many Investment Trusts are able to use to help deliver income for us nowadays, over and above the really quite limited number of income-ready large-cap FTSE stocks usually being discussed in 'classic' HYP portfolios....

Cheers,

Itsallaguess

Yes, I agree - but my remark was in the context of investing in UK income ITs as an alternative to HYP - which are investing in the same pool. If we want to widen our investment to foreign companies, clearly your point is valid.

[Arborbridge]

I think, to pick up Arb's point, there is for instance HFEL IT which gives a decent income and at the same time derives most of it well away from our shores.

There is nothing to say that the HYP candidates need to be UK oriented or if there is that is a silly rule which needs to be removed.


Dod

Just on a point of information, HYP does exclude foreign shares, although I'll admit UK quoted shares are often foreign in their earnings. You may think it's a silly rule, but there we are...
My remark about ITs fishing in the same pond was only in the context of alternatives to HYP for those who feel the "pond" is smaller - i.e. UK focussed ITs. To include ITs that invest abroad such as HFEL is just using a different pond - which is to migrate the argument.

Arb.

[Alaric]

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.

Moderator Message:
This board is not intended for those investing in, or discussing the merits of, a low yield strategy. If you wish to do so please, in future, do it on a more appropriate board, e.g. Investment Strategies.

[IanTHughes]

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.

Your Hindsight Analysis is of course correct. Unfortunately, investing requires one to put one's money on the line without the benefit of hindsight. [Deletion.]

Moderator Message:
Personal bit removed. - Chris

Ian

[88V8]

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.

V8

[Dod101]

I think, to pick up Arb's point, there is for instance HFEL IT which gives a decent income and at the same time derives most of it well away from our shores.

There is nothing to say that the HYP candidates need to be UK oriented or if there is that is a silly rule which needs to be removed.

Just on a point of information, HYP does exclude foreign shares, although I'll admit UK quoted shares are often foreign in their earnings. You may think it's a silly rule, but there we are...
My remark about ITs fishing in the same pond was only in the context of alternatives to HYP for those who feel the "pond" is smaller - i.e. UK focussed ITs. To include ITs that invest abroad such as HFEL is just using a different pond - which is to migrate the argument.

If you were arguing against ITs being included in a HYP, well that is different but you are not. (I would of course say that that was a nonsense but never mind) HFEL is incorporated in Jersey but that is surely a technicality. Most of the earnings of all FTSE100 companies as you acknowledge are derived from overseas. This just shows that the so called guidance of HYP is really quite unrealistic. However I do agree that if one is restricting oneself to the FTSE100 then we are indeed fishing in the same pool.

When you get to the basics, I think we are talking about taxes in the particular jurisdiction of the company and the business style of the company, not where it trades because many of the successful companies are 'fishing in the same pool', that is the world market. Of course some have the advantage of a big domestic market such as the US companies. As an aside, it makes the success of the UK companies all the more credible.

Dod