OLTB's HYP - topped up IG Group (IGG)

[OLTB]

Morning all

After a few conversations with Lemon Fool Luminaries (LFLs©) I arrived at a 'system' that works for me regarding top-ups. It's something that I'm comfortable with currently. In simple terms, I will consider topping up those shares whose current value is below the average holding size of my HYP, capital previously deployed + top-up would be below 7% of my overall HYP capital value and finally, the income the holding generates is less than 7% of total HYP income. This way, if a holding reduces/cancels dividends, or goes the way of Carillion, the effect will not be utterly disastrous.

After taking into account my new structure above, the possible top-up options were:

BP
Shell
Glaxo
HSBC
IG Group
ITV
SSE
Unilever
WPP

I thought that BP, Shell, Glaxo and HSBA have been pretty static with dividends over the last few years. ITV, Glaxo and HSBC are right on the cusp of average HYP holding size, SSE has had a little too much capital than the others over the years (still down on capital deployed) and there is the potential political risk, Unilever's yield is too low and WPP was a close consideration for topping up as well.

IGG is a risk (they all are of course) but seeing that I am 50 and have at least 14 years to go before I can think of retiring, plumped for that. I am aware that IGG have reduced their final dividend from last year, but can look over that for the longer term view as their previous dividend increase was a whopper in percentage terms. My HYP now looks like this:



Any comments gladly received.

Cheers, OLTB.

[idpickering]

Looks good. You might recall I’ve not long since added IGG to my own HYP. Very useful for added diversification imho, and a good yield on offer currently.

Ian.

[torata]

Any comments gladly received.
Cheers, OLTB.

You have a system.
It may not be perfect, and I'm sure that others could find fault with it.
But you have a system.

And what I'm finding more and more*, is that sticking with a decent system over the long term takes out the emotional response and starts to deliver those compounding returns.

torata

* as in my capital is less than many here so it takes longer to prove my results to myself

[moorfield]

And what I'm finding more and more*, is that sticking with a decent system over the long term takes out the emotional response and starts to deliver those compounding returns.

You don't by any chance mean buying high yielding shares, holding, and not tinkering/finger twitching/knee jerking (*), do you?




(*) delete as appropriate

[Arborbridge]

Morning all

After a few conversations with Lemon Fool Luminaries (LFLs©) I arrived at a 'system' that works for me regarding top-ups. It's something that I'm comfortable with currently. In simple terms, I will consider topping up those shares whose current value is below the average holding size of my HYP, capital previously deployed + top-up would be below 7% of my overall HYP capital value and finally, the income the holding generates is less than 7% of total HYP income. This way, if a holding reduces/cancels dividends, or goes the way of Carillion, the effect will not be utterly disastrous.

Sounds a good enough system, and leaves some wiggle room for decision making. Nothing wrong with your top-up choice of IGG, in my view. These things can always fall over, but IGG seems quite a good representative for the gambling sector. It's done well enough for me that I've had to trim the capital once when it became too large. That's pretty unusual for me.

I wonder, do you use the HYPTUSS? If not, it's quite a good way of automatically organising your HYP choices, and it would not preclude your particular system - just make it easy to do.

Arb.

[OLTB]

Sounds a good enough system, and leaves some wiggle room for decision making. Nothing wrong with your top-up choice of IGG, in my view. These things can always fall over, but IGG seems quite a good representative for the gambling sector. It's done well enough for me that I've had to trim the capital once when it became too large. That's pretty unusual for me.

I wonder, do you use the HYPTUSS? If not, it's quite a good way of automatically organising your HYP choices, and it would not preclude your particular system - just make it easy to do.

Arb.

Thanks Arb and yes, HYPTUSS is my initial go-to spreadsheet - it helps me with the capital values per holding and also the income generated per holding; it is a very helpful tool.

What a difference a day makes - by the end of yesterday, TUI had zoomed up in capital value and really pleased that I grabbed the higher yield when the share price plummeted earlier this year with the Boeing 737 issues.

Cheers, OLTB.

[idpickering]

What a difference a day makes - by the end of yesterday, TUI had zoomed up in capital value and really pleased that I grabbed the higher yield when the share price plummeted earlier this year with the Boeing 737 issues.

Cheers, OLTB.

It seems that contrarian investing within my HYP has done well on a capital gains front for me yesterday. I've recently topped up a number of shares whilst they were cheap, including Lloyds, British Land, a newbie purchase of Land Securities middle of last week, top up of LGEN, Phoenix Group, and Taylor Wimpey, all rose well. That is nice, but I am aware that HYP is about income, before someone rains on my parade.

Ian.

[idpickering]

Further to my post above, I did not allow the, albeit pleasing, rise in sp of those holdings, to distract me and was not remotely tempted to ‘bag a quick profit’ by selling my holdings. Although being human, there is a temptation to do so in such circumstances, I try to abide by ‘long term buy and hold’. Sorry to seemingly to be trying to divert the direction, and subject matter, of your op OLTB. That is not my intention.

Ian.

[OLTB]

Further to my post above, I did not allow the, albeit pleasing, rise in sp of those holdings, to distract me and was not remotely tempted to ‘bag a quick profit’ by selling my holdings. Although being human, there is a temptation to do so in such circumstances, I try to abide by ‘long term buy and hold’. Sorry to seemingly to be trying to divert the direction, and subject matter, of your op OLTB. That is not my intention.

Ian.

I don’t mind at all Ian - it’s an interesting remark and I too will not consider trimming at this time.

Cheers, OLTB.

[Arborbridge]

What a difference a day makes - by the end of yesterday, TUI had zoomed up in capital value and really pleased that I grabbed the higher yield when the share price plummeted earlier this year with the Boeing 737 issues.

Cheers, OLTB.

It seems that contrarian investing within my HYP has done well on a capital gains front for me yesterday. I've recently topped up a number of shares whilst they were cheap, including Lloyds, British Land, a newbie purchase of Land Securities middle of last week, top up of LGEN, Phoenix Group, and Taylor Wimpey, all rose well. That is nice, but I am aware that HYP is about income, before someone rains on my parade.

Ian.

Even dead-beat, BT rose too!

[monabri]

It looks to be a case of "swings and roundabouts". The more UK focussed companies gaining in price whilst the bigger multinationals go in the reverse direction share price wise due to a strengthening Pound. So, there might be opportunities to top up on the bigger companies going forward.

LARGE rises from the lower echelons of the FTSE100 just about compensating for falls ( generally) in the upper stalls of the FTSE100.

HSBA actually up by 1.57% on the day.
RDSB down 0.95% ditto
BP down 1.68%
RB down 1.3%
DGE down 3.36%
AZN down 1.3%
GSK down 2.16%
BATS down 3.56%
ULVR down 2.8% on the day (at 4647p)
VOD down 0.93%

Rio up 2.57%
Lloyds up 12.27%
NG up 2.39%
Pru up 4.76%
BARC up 7.56%

[Bagger46]

My ISA, which generally seeks HY and decent divi growth, was 2.35% on the day. Making YTD at 13.01%.

I would not be surprised if this 'exuberance' was reversed by Monday evening or during the week on the 'Brexit wind' changing direction and/or other events.

However, I have stopped investing for HY, for some time I have left the existing investments to do their own thing, and now concentrate on holdings similar to my taxed portfolio, which is broadly a mixture of Small Cos from across the globe, plus a fair slice in the US. Generally much more growth oriented, with divis playing a minor role, but with much higher divi growth in fact. The reason is simple, that portfolio only went up by 1.27% on Friday, but YTD it is 17.96% up.

And that has been the pattern for decades now. The ISA, HYP-like, has done well enough, but the taxed portfolio, despite taxes, has soundly trounced it repeatedly, for example in 27 of the past 30 years.

In my view, young pot builders in particular should take note, because I cannot see that pattern changing much. Quite a few of my investor friends have observed similar results between the two approaches. If I was a youngster starting out with decades to go, it would be a no brainer from my point of view. Small Cos in particular might be more volatile, but in fact their correlations are much lower across a suitably diversified portfolio(number of holdings, markets, aspects...), and long terms the results are much better than the FTSE. More large losses occasionally, but many more multi baggers to more than compensate . As for the US, overpriced as it is today in my view, long term it just keeps delivering.

Bagger

ps All figures in acc unit terms.

[Arborbridge]

My ISA, which generally seeks HY and decent divi growth, was 2.35% on the day. Making YTD at 13.01%.

I would not be surprised if this 'exuberance' was reversed by Monday evening or during the week on the 'Brexit wind' changing direction and/or other events.

However, I have stopped investing for HY, for some time I have left the existing investments to do their own thing, and now concentrate on holdings similar to my taxed portfolio, which is broadly a mixture of Small Cos from across the globe, plus a fair slice in the US. Generally much more growth oriented, with divis playing a minor role, but with much higher divi growth in fact. The reason is simple, that portfolio only went up by 1.27% on Friday, but YTD it is 17.96% up.

And that has been the pattern for decades now. The ISA, HYP-like, has done well enough, but the taxed portfolio, despite taxes, has soundly trounced it repeatedly, for example in 27 of the past 30 years.

In my view, young pot builders in particular should take note, because I cannot see that pattern changing much. Quite a few of my investor friends have observed similar results between the two approaches. If I was a youngster starting out with decades to go, it would be a no brainer from my point of view. Small Cos in particular might be more volatile, but in fact their correlations are much lower across a suitably diversified portfolio(number of holdings, markets, aspects...), and long terms the results are much better than the FTSE. More large losses occasionally, but many more multi baggers to more than compensate . As for the US, overpriced as it is today in my view, long term it just keeps delivering.

Bagger

ps All figures in acc unit terms.

Whether HYP is a good idea or not, isn't an appropriate topic for here - but my advice to a young pot-builder would be broadly similar to yours.

However, for an old grey beard like me, HYP is OK and does what it says on the tin. A steadily rising income and a good chance of the capital increasing with or above inflation. No one said it was guaranteed to out run other methods in TR terms, but I never took it that that was the purpose: HYP is a vehicle for providing income, and should be compared with otherthings within its own terms. If any expects any more than that, then they have misunderstood the whole scheme.

AAMOI: my accumulation units have risen 11.9% YTD.

Arb.