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The history of HYP4, and the possibility of reviving it

Practical discussions about equity High-Yield Portfolios (HYP) for income
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Tight HYP discussions only please - OT please discuss in strategies
Dod101
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Re: The history of HYP4, and the possibility of reviving it

#245398

Postby Dod101 » August 19th, 2019, 10:02 am

IanTHughes wrote:
Dod101 wrote:Incidentally in trying to assess if a dividend is sustainable pyad is of course taking a view on the future so he is not even consistent; no Strategic Ignorance there! Maybe going any further in taking a view is just too much for him.

I can only answer for myself of course but my "assessing whether a dividend is sustainable" relies upon the current and recent historical facts with regard to Cash Flow, Debt Levels, Earnings Growth etc etc. I do not rely on "taking a view on the future".


This is now 'way off topic so I am saying no more.

Dod

tjh290633
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Re: The history of HYP4, and the possibility of reviving it

#245401

Postby tjh290633 » August 19th, 2019, 10:10 am

Looking at the composition of HYP4, I see that I hold, or have held, 12 of the securities.

RBS I have never held, but did hold Halifax at demutualisation in 1997 and disposed of it after RBS had their failed rights issue in June 2008. Foolishly I put the money into Cattles.

Persimmon I have never held, but I bought George Wimpey in August 2005 and still hold as Taylor Wimpey after the merger in 2007.

Land Securities I have never held, but hold Segro, bought in September 2007 almost contemporaneously with the PYAD LAND purchase, and British Land, bought in October 2010.

FCAM I have never held. Its replacement BATS I bought in February 2010.

DSGI I bought in February 2006 and sold in May 2009.

Rentokil I bought in June 2006 and sold in February 2010.

Of the rest, BP. was first bought during the privatisation in November 1979; Lloyds was first bought in December 1988; United Utilities was first bought in August 2001; Tate & Lyle was first bought in July 1999; Compass came from the demerger of Granada Compass in January 2001; The remainder were bought after the HYP4 period: Aviva in October 2010; Glaxo in September 2010; Pearson in October 2009; William Hill in March 2008. All are still held.

Looking through the history since the end of 2007, BP. cancelled its dividends from Q1 to Q3 in 2010 and resumed in Q4 at 7p, half the dividend paid a year before.

Lloyds had the trauma of taking over HBOS during the crisis and had an Open Offer in June 2009 at 38.4p and a Rights Issue in December 2009 at 37p. It paid its last dividend in October 2008 and resumed at a low level in May 2015.

United Utilities returned some capital via B-shares in August 2008 with a share consolidation.

British Telecom cut its dividend in 2009 from 15.8p to 6.5p, from which level it has recovered to 15.4p this year.

DSGI cut their final dividend in half in 2008 and ceased paying dividends after that. I see that they were down to 14p when they cancelled the next interim, but I sold at 43p on a bounceback.

Tate & Lyle seem to have cruised along happily, holding their dividend in 2009-10, but otherwise steadily increasing them.

Compass were about 316p when the final was announced in 2008, giving a total for the year on 10.8p. Currently at £20.38, with the last two dividends totalling 38.5p.

Rentokil reduced their interim from 2.13p to 0.65p in October 2008 and stopped paying dividends after that. They were 44p when the final was cancelled and I sold on a bounceback at 126p in February 2010.

Those are all the details I have of material events after 2007 for the shares which I held at that time.

TJH

IanTHughes
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Re: The history of HYP4, and the possibility of reviving it

#245402

Postby IanTHughes » August 19th, 2019, 10:13 am

Alaric wrote:
IanTHughes wrote: It is simply a recognition that one cannot see into the future without resorting to guesswork which, if you then rely upon it, inevitably means that you might "foresee" just about anything, good or bad!

The whole concept of a "sustainable" dividend is based on guesswork. The investor is guessing that the Board of Directors and management won't decide to cut the dividend whether based on external factors or just because they felt like it. You can sometimes predict a plausible decision based on the financial context, for example a Company that isn't making cash profits, has some capital spending commitments coming up and has exhausted its borrowing options doesn't have that many ways to turn.

You "guess" if you want to, as I am sure you do, an HYPer will rely upon an assessment of the "known facts". Please note that I am not remotely suggesting that an HYPer will always get it right, which of course is one of the reasons that diversification is so important.


Ian

Arborbridge
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Re: The history of HYP4, and the possibility of reviving it

#245403

Postby Arborbridge » August 19th, 2019, 10:14 am

Dod101 wrote:Now you seem to be admitting that the problems facing RBS at the time of its purchase for HYP4 were foreseeable. If so why did he ignore them?
Dod


I didn't comment on whether I thought the problems were known, forseeable or otherwise. If that was the impression you took away, it was not intended - I haven't a clue whether the problems were known, or could have been known and I didn't address the matter. Going back to my own purchase, I definitely was not aware of any problems: they only came out subsequently.

But that's all a long way from SI, and it's your classic misuse of the term which I was commeting on. It's a man of straw argument you keep employing: you are not describing SI but something which sounds a bit like SI.


Arb.

Moderator Message:
Folks, let's have NO MORE discussion of SI and RBS at all, please. I now regret making my initial observation. Genguphus has made an interesting and useful suggestion, so let's get back to thinking about it. Further digressions into SI and RBS may vanish into the ether. --- MDW1954

MDW1954
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Re: The history of HYP4, and the possibility of reviving it

#245405

Postby MDW1954 » August 19th, 2019, 10:24 am

tjh290633 wrote:
Those are all the details I have of material events after 2007 for the shares which I held at that time.

TJH


Compass did a share consolidation two or three years back, accompanied (I think) by a small return of capital.

Anyone reviving HYP4 need to factor in RBS' own share consolidation, which took place around 2011, I think.

MDW1954

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Re: The history of HYP4, and the possibility of reviving it

#245407

Postby pyad » August 19th, 2019, 10:26 am

Gengulphus wrote:...But HYP4 is probably possible, provided is is treated as a non-tinkering HYP between where pyad left it and now - tinkering decisions are if anything even more difficult to do in an unaffected-by-hindsight way than cash-takeover-proceeds-reinvestment decisions, because for cash takeovers, the fact that they occur and their timing is known and only what share is to be purchased needs to be decided, while tinkering decisions involve all three of those aspects...


HYP4 cannot be recreated in its original guise because as stated I intended it to be a tinkering portolio from the outset and it is impossible now for me or anyone else to know the trades I might have made over the many years since I constructed it. The possibility suggested to overcome that objection by treating it as a non-tinker port, something it was never intended to be, should therefore be unacceptable because it imposes, many years after the construction, rules upon it which are the opposite of how I set it up, ie. non-tinker when it was expressly a tinker port.

Readers should be aware that if this daft idea goes ahead, it will have nothing to do with me or HYP4 as it would have developed had I continued to run it and I find it a really silly and pointless project.

Dod101
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Re: The history of HYP4, and the possibility of reviving it

#245416

Postby Dod101 » August 19th, 2019, 11:06 am

pyad wrote:
Gengulphus wrote:...But HYP4 is probably possible, provided is is treated as a non-tinkering HYP between where pyad left it and now - tinkering decisions are if anything even more difficult to do in an unaffected-by-hindsight way than cash-takeover-proceeds-reinvestment decisions, because for cash takeovers, the fact that they occur and their timing is known and only what share is to be purchased needs to be decided, while tinkering decisions involve all three of those aspects...


HYP4 cannot be recreated in its original guise because as stated I intended it to be a tinkering portolio from the outset and it is impossible now for me or anyone else to know the trades I might have made over the many years since I constructed it. The possibility suggested to overcome that objection by treating it as a non-tinker port, something it was never intended to be, should therefore be unacceptable because it imposes, many years after the construction, rules upon it which are the opposite of how I set it up, ie. non-tinker when it was expressly a tinker port.

Readers should be aware that if this daft idea goes ahead, it will have nothing to do with me or HYP4 as it would have developed had I continued to run it and I find it a really silly and pointless project.


I am very pleased that pyad has written as he has because I thought that I must be missing something. I too cannot understand how HYP4 as a trading HYP could be reconstructed because we do not know what trades would have taken place over the intervening period. I would not have been as brave as to have called it a daft idea but pyad is entitled to do so as it was his project.

Dod

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Re: The history of HYP4, and the possibility of reviving it

#245430

Postby idpickering » August 19th, 2019, 11:56 am

pyad wrote:
Readers should be aware that if this daft idea goes ahead, it will have nothing to do with me or HYP4 as it would have developed had I continued to run it and I find it a really silly and pointless project.


The most sensible comment in this thread imho. Thanks for your input Stephen. I was surprised to even see this thread being initiated. More evidence of those that like to over complicate matters more like. Let’s move on.

Ian.

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Re: The history of HYP4, and the possibility of reviving it

#245443

Postby blobby » August 19th, 2019, 1:28 pm

I’m not sure I agree that this is a “daft idea”; but even if it is, I would still be interested to see the results. It will be another bunch of HYP shares selected and then left to perform in a non-tinkering way.

I’m interested in how it has performed. I’d also be interested in any discussion which it might provoke about whether the different selection techniques make any difference.

I totally accept that Stephen has disowned this exercise and it would be wrong to assign credit to him for any good or bad performance.

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Re: The history of HYP4, and the possibility of reviving it

#245451

Postby Alaric » August 19th, 2019, 2:02 pm

blobby wrote:I’m interested in how it has performed. I’d also be interested in any discussion which it might provoke about whether the different selection techniques make any difference.


You can look at the individual shares. Tate & Lyle was included.

According to the dividend data site, the dividend history has been boring in a reliable sort of way. From 2008 at 22.6p, it had climbed to 29.4p by 2019. it had been 17.8p back in 2001. No decreases but a couple of holds on the way. So a substitute for an indexed annuity. The price and thus the dividend yield have been all over the place. The price went down to 275.5 in February 2009 and is now at 703 having being above 800. It had been 270 in February 2000. The yield has been as high as 10% and as low as 3%. It's now 4.11% putting it below the FTSE 100 weighted average.


https://www.dividenddata.co.uk/dividend ... ?epic=TATE
http://tools.morningstar.co.uk/uk/stock ... E%24%24ALL

If you can be confident the economic and trading conditions are such that the Directors will able and willing to maintain the dividend, then high yield on a stock that was previously average can be a buy signal on market timing logic.

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Re: The history of HYP4, and the possibility of reviving it

#245462

Postby Arborbridge » August 19th, 2019, 2:32 pm

blobby wrote:I totally accept that Stephen has disowned this exercise and it would be wrong to assign credit to him for any good or bad performance.


Yes, and no. It was Stephen who selected the shares. How much doubt there is about the outcome depends on how many changes have been necessary and how difficult any decisions about tinkering might be.
In any case, if it were run as a non-tinkering HYP after initial purchase, that in itself would be useful and Stephen can hardly suggest that it's nothing to do with him since that is his preferred mode of operation anyway, using shares he selected! He may disown it, but it cannot be entirely disconnected from him or his published methods.

In my view it may be holed, but not meaningless.

Arb.

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Re: The history of HYP4, and the possibility of reviving it

#245464

Postby Arborbridge » August 19th, 2019, 2:33 pm

Alaric wrote:
blobby wrote:I’m interested in how it has performed. I’d also be interested in any discussion which it might provoke about whether the different selection techniques make any difference.


You can look at the individual shares. Tate & Lyle was included.

According to the dividend data site, the dividend history has been boring in a reliable sort of way. From 2008 at 22.6p, it had climbed to 29.4p by 2019. it had been 17.8p back in 2001. No decreases but a couple of holds on the way. So a substitute for an indexed annuity. The price and thus the dividend yield have been all over the place. The price went down to 275.5 in February 2009 and is now at 703 having being above 800. It had been 270 in February 2000. The yield has been as high as 10% and as low as 3%. It's now 4.11% putting it below the FTSE 100 weighted average.


https://www.dividenddata.co.uk/dividend ... ?epic=TATE
http://tools.morningstar.co.uk/uk/stock ... E%24%24ALL

If you can be confident the economic and trading conditions are such that the Directors will able and willing to maintain the dividend, then high yield on a stock that was previously average can be a buy signal on market timing logic.


I'm not sure that helps at all 8-)

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Re: The history of HYP4, and the possibility of reviving it

#245466

Postby Luniversal » August 19th, 2019, 2:50 pm

"There was one review of HYP4 (together with HYP1, HYP2 and HYP3 as well) by pyad in February 2009."

2008. And what a difference the year would have made to a review of income, had TMFPyad still been around to appraise the first fallout of the Global Financial Crisis.

Then and later nine out of sixteen choices suffered suspensions or big reductions in dividend, though all are back on the lists:

Aviva
BP
BT
DSG International (pre-acqusition by Carphone Warehouse)
Lloyds TSB
Pearson
Rentokil International
Royal Bank of Scotland
William Hill

Glaxo SmithKline has been on a frozen rate for a while. Tate & Lyle froze, then inched upward. United Utilities's rate was rebased downward in 2010-11 by the regulator. BATs and 'LandSexy' have crept up.

The only big winners for income have been Persimmon (though only after an incomeless stretch) and Compass. Between 2000 and 2013 the only picks to grow their dividends at more than 10% pa (a good-average result for the HYPable universe) were these two and BATs, which hardly makes up for the breakdowns and lack of buoyant growth elsewhere.

Excluding three which stopped paying altogether, the two banks and Aviva, the average rate of payout growth in 2000-13 was a paltry 3.7% pa, versus inflation of 3%. Such was the pedigree of stocks on temptingly high running yields.

PS: RBS was bought on a trailing 4.7% when the All-Share Index yielded c. 2.7%. Hence it was well into my 'danger zone' (ratio >=160) at ~175. It would be interesting to know, if I could be bothered, how many other HYP4 selections likewise chanced their arm. For example, pyad's afterthought of Dec. 2007, Rentokil, yielded 5.0% historic when the All-Share paid 2.8%.

Don't chase the yield. Please.

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Re: The history of HYP4, and the possibility of reviving it

#245469

Postby Dod101 » August 19th, 2019, 3:02 pm

blobby wrote:I’m not sure I agree that this is a “daft idea”; but even if it is, I would still be interested to see the results. It will be another bunch of HYP shares selected and then left to perform in a non-tinkering way.

I’m interested in how it has performed. I’d also be interested in any discussion which it might provoke about whether the different selection techniques make any difference.

I totally accept that Stephen has disowned this exercise and it would be wrong to assign credit to him for any good or bad performance.


The whole point about it is that it was to be a trading HYP, therefore not 'left to perform in a non tinkering way'. In any case surely there have been enough demos around here to last a lifetime.

Dod

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Re: The history of HYP4, and the possibility of reviving it

#245472

Postby Arborbridge » August 19th, 2019, 3:20 pm

Dod101 wrote:
The whole point about it is that it was to be a trading HYP, therefore not 'left to perform in a non tinkering way'. In any case surely there have been enough demos around here to last a lifetime.

Dod


Really? How many can you think of, then?
Divide them in to "demo" and "real life" portfolios and let us know how many you can count, and only include those which are properly reported with results rather than a bit of hand waving.

Arb

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Re: The history of HYP4, and the possibility of reviving it

#245483

Postby IanTHughes » August 19th, 2019, 3:38 pm

Luniversal wrote:PS: RBS was bought on a trailing 4.7% when the All-Share Index yielded c. 2.7%. Hence it was well into my 'danger zone' (ratio >=160) at ~175.

Which, apart from it being High Yield, tells us absolutely nothing, then and now, as to whether it was a suitable HYP candidate.



Ian

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Re: The history of HYP4, and the possibility of reviving it

#245484

Postby Dod101 » August 19th, 2019, 3:46 pm

IanTHughes wrote:
Luniversal wrote:PS: RBS was bought on a trailing 4.7% when the All-Share Index yielded c. 2.7%. Hence it was well into my 'danger zone' (ratio >=160) at ~175.

Which, apart from it being High Yield, tells us absolutely nothing, then and now, as to whether it was a suitable HYP candidate.


The excessive yield (for the then average FTSE100 Yield) should have told anyone contemplating buying at that time to take a look very carefully at it before committing good money. They would then have found that Fred was, as I said earlier, at his hubristic best, thinking he could conquer the world, and just in the midst of making what became his final and fatal error, participating in the purchase of ABM Amro. I did not touch RBS anyway but that would have been the final straw for me.

You are I suspect being deliberately obtuse.

Dod

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Re: The history of HYP4, and the possibility of reviving it

#245486

Postby IanTHughes » August 19th, 2019, 3:48 pm

Dod101 wrote:
IanTHughes wrote:
Luniversal wrote:PS: RBS was bought on a trailing 4.7% when the All-Share Index yielded c. 2.7%. Hence it was well into my 'danger zone' (ratio >=160) at ~175.

Which, apart from it being High Yield, tells us absolutely nothing, then and now, as to whether it was a suitable HYP candidate.


The excessive yield (for the then average FTSE100 Yield) should have told anyone contemplating buying at that time to take a look very carefully at it before committing good money. They would then have found that Fred was, as I said earlier, at his hubristic best, thinking he could conquer the world, and just in the midst of making what became his final and fatal error, participating in the purchase of ABM Amro. I did not touch RBS anyway but that would have been the final straw for me.

You are I suspect being deliberately obtuse.

Thank goodness it is not accidental obtuseness! Now that would concern me


Ian

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Re: The history of HYP4, and the possibility of reviving it

#245536

Postby tjh290633 » August 19th, 2019, 6:03 pm

MDW1954 wrote:
tjh290633 wrote:
Those are all the details I have of material events after 2007 for the shares which I held at that time.

TJH


Compass did a share consolidation two or three years back, accompanied (I think) by a small return of capital.

Anyone reviving HYP4 need to factor in RBS' own share consolidation, which took place around 2011, I think.

MDW1954

I forgot about that. Actually they did it twice with a special dividend of 56p in 2014 and another of 61p in 2017, each accompanied by a share consolidation.

TJH

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Re: The history of HYP4, and the possibility of reviving it

#245555

Postby monabri » August 19th, 2019, 7:00 pm

Since HYP4 has morphed into a son of HYP1....

Ignoring DSGI and looking at just 15 selections - a very rough estimate would indicate a dividend pot of ~£41k has been returned and that the original capital input of £75k is now worth ~£100k.

The quantity of shares was roughly calculated by £5k/average purchase price (where this price included costs). The "£ value" is the value of the shares today. There have been some shares that have had a few consolidations - these have not been taken into account. Instead, I've used the raw data (option)for dividends as presented by dividenddata.



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