The Lemon Fool

It's about that time of year when I look at what I might afford to pay myself in the next year.

There's a bit of sadness around, for my HYPTUSS seems to be predicting my income per unit will be about 2% less than it was at this time last year.

I'm not sure what the overall picture will be yet in actual income, as my IT and OEIC portfolios have grown in size. I suspect the outcome will be that I will be hard pushed to afford a pay rise, though I might squeeze upwards by RPI if lucky.

This will be the first year since the crash when the outlook has worstened.

Arb.

I wonder if the income per unit is down because of

(1) "cutters" (e.g. VOD)
(2) a preponderance of specials (Rio/BHP/ADM) received in 2019 with specials not being considered (in HYPTUSS)
(3) the purchase of new shares (or top ups) with lower yields than your current running yield.

I dunno - I'm just throwing some ideas out there to see why the income per unit may be down.

You've no doubt got all your "numbers" in a spreadsheet as so you could rapidly estimate where the dividend shortfalls might be.

There's a bit of sadness around, for my HYPTUSS seems to be predicting my income per unit will be about 2% less than it was at this time last year.

(1) "cutters" (e.g. VOD)
(2) a preponderance of specials (Rio/BHP/ADM) received in 2019 with specials not being considered (in HYPTUSS)
(3) the purchase of new shares (or top ups) with lower yields than your current running yield.

Now there's a worry because presumably that reduces the effects of rising portfolio value, specials not yet declared etc. Arb I think you're spending rather than building? and although everything else never is equal surely all purchases would only add to income total? Unless you mean sales of high yields and repurchases at a lower yield.

More likely to be cutters, scrappers etc. in my own I have at least VOD, SSE, CNA.

Arborbridge wrote:It's about that time of year when I look at what I might afford to pay myself in the next year.

There's a bit of sadness around, for my HYPTUSS seems to be predicting my income per unit will be about 2% less than it was at this time last year.

I'm not sure what the overall picture will be yet in actual income, as my IT and OEIC portfolios have grown in size. I suspect the outcome will be that I will be hard pushed to afford a pay rise, though I might squeeze upwards by RPI if lucky.

This will be the first year since the crash when the outlook has worstened.

Arb.

But do you have the same number of units? Total income might still be up.

Are you including specials or not, Arb?.

For FY19-20, my total of ordinary dividends is the same as FY18-19, with 6 or 7 still to be announced. With specials, it is about 2% more.

TJH

Arborbridge wrote:It's about that time of year when I look at what I might afford to pay myself in the next year.

There's a bit of sadness around, for my HYPTUSS seems to be predicting my income per unit will be about 2% less than it was at this time last year.

I'm not sure what the overall picture will be yet in actual income, as my IT and OEIC portfolios have grown in size. I suspect the outcome will be that I will be hard pushed to afford a pay rise, though I might squeeze upwards by RPI if lucky.

This will be the first year since the crash when the outlook has worstened.

I'd probably perform this exercise after December 12th. I don't want to introduce politics here but it seems apparent that the dividend outlook, at least on an after-tax basis, might be very different depending on who is in Number 10.

Not that I know which is worse. Corbyn will increase corporation tax, dividend tax and CGT, and possibly dilute shareholdings with his "10% for the workers" idea, whilst nationalising a few things here and there. BoJo will lead us into the uncertainty that is Brexit. Either way there are rather more unknowns than in a typical year. Given that and the fact that this bull market is very long in the tooth, I share your scepticism.

Lootman wrote:Not that I know which is worse. Corbyn will increase corporation tax, dividend tax and CGT, and possibly dilute shareholdings with his "10% for the workers" idea, whilst nationalising a few things here and there.

Hmmm...I'd hazard a guess that a Labour government just might be the worse for shareholders....just a guess!

Would it be fair to anticipate that if either Labour or the Conservatives win a majority and start spending, that inflation is likely to rise, and that in due course that ought to result in an increase in dividends?

Wizard wrote:

Arborbridge wrote:It's about that time of year when I look at what I might afford to pay myself in the next year.

There's a bit of sadness around, for my HYPTUSS seems to be predicting my income per unit will be about 2% less than it was at this time last year.

I'm not sure what the overall picture will be yet in actual income, as my IT and OEIC portfolios have grown in size. I suspect the outcome will be that I will be hard pushed to afford a pay rise, though I might squeeze upwards by RPI if lucky.

This will be the first year since the crash when the outlook has worstened.

Arb.

But do you have the same number of units? Total income might still be up.

Total units are down about 1% - but this wouldn't alter the dividend in pence per unit. Total income is down for the HYP, but I haven't yet looked at my overall income (HYP+ITs +OEIC etc). Given a main reduction was the recent loss of Greene King, that should have put the income per unit up slightly as the yield was lower than the average.

Lootman wrote:

Arborbridge wrote:It's about that time of year when I look at what I might afford to pay myself in the next year.

There's a bit of sadness around, for my HYPTUSS seems to be predicting my income per unit will be about 2% less than it was at this time last year.

I'm not sure what the overall picture will be yet in actual income, as my IT and OEIC portfolios have grown in size. I suspect the outcome will be that I will be hard pushed to afford a pay rise, though I might squeeze upwards by RPI if lucky.

This will be the first year since the crash when the outlook has worstened.

I'd probably perform this exercise after December 12th. I don't want to introduce politics here but it seems apparent that the dividend outlook, at least on an after-tax basis, might be very different depending on who is in Number 10.

Not that I know which is worse. Corbyn will increase corporation tax, dividend tax and CGT, and possibly dilute shareholdings with his "10% for the workers" idea, whilst nationalising a few things here and there. BoJo will lead us into the uncertainty that is Brexit. Either way there are rather more unknowns than in a typical year. Given that and the fact that this bull market is very long in the tooth, I share your scepticism.

The political situation is unlikely to effect immediately the analysts view of dividends, so I doubt waiting until, say Dec 30 would make much difference. The other matters you mention are either outside the HYPTUSS exercise - or will take some time to filter through to dividend forecasts .

tjh290633 wrote:Are you including specials or not, Arb?.

For FY19-20, my total of ordinary dividends is the same as FY18-19, with 6 or 7 still to be announced. With specials, it is about 2% more.

TJH

HYPTUSS does not know about specials no the comparisons from 2018 to 2019 are neutral on that point.

BTW, I have mentioned some months ago that the dividend forecasts have started to reign back a bit, and this is all that's being reflected here: pessimism in the broker forecasts showing up.



Arb.

The above chart shows what's behind my previous post. The pink line shows how broker forecasts for my HYP have altered with time. The peak was in early 2019 and it has broadly sloped down for the rest of the year.

A couple of caveats: these are forecasts not actuals, and I make no attempt to get rid of "funnies" - things which are incorrect, or website data which has not yet updated. Well, apart from persistent and well known errors such as the yield for BHP at present, which I alter manually.

At this time of year, the most obvious funny I need to correct for is that the HYPTUSS may pick up the forecast for 2019 instead of 2020 in some cases, which is clearly not appropriate in December 2019 for a 12 month look ahead! I usually just run down and check these manually, but haven't done so in this chart.

Arb.

I have no answer to Arb's concerns but were I he, I would be looking at the make up of the dividend income. Like most people I guess, a number of my larger dividend payers have frozen dividends and show no sign of resuming progress. In itself that certainly inhibits increases but the others, with the exception of Imperial, are looking fine. I think actively avoiding cutters, such as Vodafone is helpful. I sold Vodafone before its cut and bought some BATs and HFEL from the proceeds for instance. That not only avoided a cut but replaced Voda's income with a slightly more modest, but I think more sustainable income.

I do not really do any proper research until after 31 December but I do not currently see any signs of problems.

Dod

Arborbridge wrote:

The above chart shows what's behind my previous post. The pink line shows how broker forecasts for my HYP have altered with time. The peak was in early 2019 and it has broadly sloped down for the rest of the year.

A couple of caveats: these are forecasts not actuals, and I make no attempt to get rid of "funnies" - things which are incorrect, or website data which has not yet updated. Well, apart from persistent and well known errors such as the yield for BHP at present, which I alter manually.

At this time of year, the most obvious funny I need to correct for is that the HYPTUSS may pick up the forecast for 2019 instead of 2020 in some cases, which is clearly not appropriate in December 2019 for a 12 month look ahead! I usually just run down and check these manually, but haven't done so in this chart.

Arb.

Thanks for sharing. Am I reading this right, over the period shown unit price (capital value?) is down, and income per unit is up a bit? If that is right it makes me feel a lot better, as my capital is also down (quite a lot) since starting my HYP at about the time your graph starts and all this talk of people being at their highest ever unit value has been a little depressing for me of late.

Wizard wrote:Thanks for sharing. Am I reading this right, over the period shown unit price (capital value?) is down, and income per unit is up a bit? If that is right it makes me feel a lot better, as my capital is also down (quite a lot) since starting my HYP at about the time your graph starts and all this talk of people being at their highest ever unit value has been a little depressing for me of late.

Yes, you are quite correct. Capital in my case has sufferred, but the income has generally increased - although the 12 month outlook for income now look as though it will be somewhere around the same level as 2019.

The chart tends to support the idea that income is more stable than price.

NB: To avoid any doubt: the capital values are actual, the income per unit is forecast not actual.
I suppose I could produce a similar chart showing actual income per unit - never thought of that!


Arb.

Arborbridge wrote:

Wizard wrote:Thanks for sharing. Am I reading this right, over the period shown unit price (capital value?) is down, and income per unit is up a bit? If that is right it makes me feel a lot better, as my capital is also down (quite a lot) since starting my HYP at about the time your graph starts and all this talk of people being at their highest ever unit value has been a little depressing for me of late.

Yes, you are quite correct. Capital in my case has sufferred, but the income has generally increased - although the 12 month outlook for income now look as though it will be somewhere around the same level as 2019.

The chart tends to support the idea that income is more stable than price.

NB: To avoid any doubt: the capital values are actual, the income per unit is forecast not actual.
I suppose I could produce a similar chart showing actual income per unit - never thought of that!


Arb.

Never know, you might pleasantly surprise yourself.

I am not aware of the make up of your HYP so can only comment in relation to Dividend Outlook for my own HYP.

As many will be aware I do not seek out broker forecasts but restrict any forecast to what has been declared by the company in question. With that in mind I make the following dividend forecasts for my HYP:

EPIC | Full Year Div | Comment                                                                                           | Forecast
VOD  |          9.00 | Interim Dividend of 4.50 (2018: 4.84) declared with an indication that full year will be 9.00     | Hold    
BVIC |         28.20 | Interim Dividend of 8.30p (2018: 7.90p) paid                                                      | Inc     
BP   |         40.75 | First three Dividends of 30.75 (2018: 30.50) paid/declared                                        | Inc     
AZN  |        215.20 | Interim Dividend of 71.90p (2018: 68.40p) paid                                                    | Inc     
RDSB |        188.00 | First three Dividends of 141.00 (2018: 141.00) paid/declared                                      | Hold    
MARS |          7.50 | Interim Dividend of 2.70p (2018: 2.70p) paid with an indication that full year will be 7.50p      | Hold    
SSE  |         97.50 | Indication that coming full year will be 80.00p                                                   | Cut     
SLA  |         21.60 | Interim Dividend of 7.30p (2018: 7.30p) paid with no indication of a full year cut                | Hold    
IMB  |        187.79 | First three Dividends paid/declared as 134.56p (2018: 122.33p)                                    | Inc     
BHP  |        133.00 | Latest yeat was an increase. No indication that the coming year will be cut                       | Inc/Hold
HSBA |         51.00 | First three Dividends paid as 30.00 (2018: 30.00) with no indication of a full year cut           | Hold    
NRR  |         21.60 | First two Dividends paid as 10.80p (2018: 10.80p) with no indication of a full year cut           | Hold    
PHNX |         46.00 | Interim Dividend of 23.40p (2018: 22.60p) paid                                                    | Inc     
ADM  |        126.00 | Interim Dividend of 63.00p (2018: 60.00p) paid                                                    | Inc     
BA   |         22.20 | Interim Dividend of 9.40p (2018: 9.00p) paid                                                      | Inc     
BATS |        195.20 | First three Dividends of 152.25p (2018: 146.40p) paid                                             | Inc     
TATE |         29.40 | Interim Dividend of 8.60p (2018: 8.40p) declared                                                  | Inc     
TALK |          2.50 | Interim Dividend of 1.00p (2018: 1.00p) declared                                                  | Hold    
PSN  |        235.00 | Latest year was a hold. No indication that the coming year will be cut                            | Inc/Hold
BWNG |          7.10 | Latest year was a cut. No indication that the coming year will be cut                             | Inc/Hold
NG   |         47.34 | Interim Dividend of 16.57p (2018: 16.08p) declared                                                | Inc     
AV   |         30.00 | Interim Dividend of 9.50p (2018: 9.25p) paid                                                      | Inc     
SBRY |         11.00 | Interim Dividend of 3.30p (2018: 3.10p) declared                                                  | Inc     
CRST |         33.00 | Interim Dividend of 11.20p (2018: 11.20p) paid                                                    | Hold    
ITV  |          8.00 | Interim Dividend of 2.60p (2018: 2.60p) paid                                                      | Hold    
SGC  |          7.70 | Latest year was a hold. No indication that the coming year will be cut                            | Inc/Hold
BT-A |         15.40 | Interim Dividend of 4.62p (2018: 4.62p) declared                                                  | Hold    
S32  |          7.90 | Latest year was a cut when considering specials. No indication that the coming year will be cut   | Inc/Hold
RMG  |         25.00 | Interim Dividend of 7.50p (2018: 8.00p) declared with an indication that full year will be 15.00p | Cut     
KIE  |          4.90 | Dividend Cancelled until further notice                                                           | Cut

To summarise:

Forecast | # 
Inc      | 12
Inc/Hold |  5
Hold     | 10
Cut      |  3

Anyway, that is my HYP which clearly shows a probable dividend increase over the coming 12 months and I have to say that I find your forecast of an overall cut for your HYP, a bit of a puzzle.


Ian

Arborbridge wrote:I suppose I could produce a similar chart showing actual income per unit - never thought of that!


Arb.

A chart showing forecast vs actual may be interesting

Adrian

I think we have found before that the HYPTUSS forecasts figure at portfolio level is pretty accurate. As IanTHughes has shown many of his holdings are forecast to rise. I guess Arb has been a little less fortunate with his portfolio constituents. Of course a total wipe out will soak up lots of rises.