Bailing out of BT. but what to buy?...

[tjh290633]

I am not at home at the moment, so cannot reply comprehensively. Sufficient to say that adding dividend income to capital gain gives a distorted view, not taking account of other factors.

TJH

[88V8]

The recent strong performance of BT.A reminded me of some of the past discussion of the share. At the time this thread started I was strongly thinking of selling, but I am very glad I did not. There are frequently such discussions on shares that underperform on dividends, but they are usually very hard to assess as the question asked will always be 'what would the alternative have been?'.

That is an interesting retrospective.
Offensive?? Good heavens....

Having decided to do something, I would never wish to go back and review whether I should have done it. That way lies paralysis. As Ian says, one does what seems right at the time
However, it is interesting, in a macabre sort of way.

The closest I came to this was when I sold out of Paypoint last year... I retained one share, and adjusted the book cost to the selling price, so I can see at a glance what has happened to the SP since I sold. Happily - for me - it has been down, quite a lot.
That tells me that as regards the SP, it was a good decision.
Not that I'm operating a TR strategy, and I have no idea what has happened to the divi.

But it does impart a certain glow, to be reminded that one seems to have made a good decision, in that case, at that time.

V8

[MDW1954]

Moderator Message:
If Wizard (and potentially others) are to continue this (very interesting) thought experiment, it would be helpful if they did so while emphasising that idpickering's contribution was to supply some investor-typical data points. This thread should not evolve into a discussion of a particular poster's sales and purchases. --MDW1954

[idpickering]

The recent strong performance of BT.A reminded me of some of the past discussion of the share. At the time this thread started I was strongly thinking of selling, but I am very glad I did not. There are freqently such discussions on shares that underperform on dividends, but they are usualy very hard to assess as the question asked will always be 'what would the alternative have been?'.

Interestingly in this thread there is an opportunity to at least consider that and produce a single data point. In this post earlier in the thread https://lemonfool.co.uk/viewtopic.php?p=320618#p320618 IDPickering helpful told us he had sold BT.A and a number of other shares and also told us what the disposals were replaced with. I have used that to build a theoretical comparison. For the avoidance of doubt, this is not, and can never be, an analysis of IDPickerings decision as there are simplifying assumptions I make which will not hold true in his actual portfolio.

I assumed that all shares mentioned were sold and bought on the day of the post, 23rd June 2020. I also assumed they were held with exactly the same weighting and that the disposal proceeds were spilt exactly equally between the shares puchased. I ignored all dealing costs and stamp duty.



Broadly speaking, based on my simplified assumption the performance of the cutters that were sold (shown over the roughly 12 month period) has been materially better than the shares bought which were continuing to pay. The amount of dividend received is about a third of the gain for those that purchased but was less than 10% for those sold.

In this scenario, simplified though it is, it would seem a pot builder who is not drawing down any income would have been much better to not make the switch. Somebody drawing down a large proportion of the income from the portfolio may have been happy to trade overall performance for maintainng a necessary income level.

SHare price data from Hargreaves Lansdown. Dividend Data from dividenddata.co.uk.

As far as I can see, all you have demonstrated is that shares which have continued to pay dividends have by and large maintained their share price, while those that cancelled or reduced their dividends suffered a fall in share price. Since then they have recovered to some extent, while in the case of BT.A a new shareholder has built a substantial stake of 12%.

I don't think that your conclusions are a valid interpretation of the situation. I have shown several times that one year's losers are often the next year's winners in terms of share price movement. Fluctuations in share price are usually of little consequence in an HYP. Fluctuations in dividend rates are more important. You show an increase in dividends, I think, but this is merely a partial restoration of previous reductions. You will, of course, have noted that BT.A is still not paying dividends and is intimating an intention to recommence with an interim next February.

Distorting facts to suit your personal agenda is not helpful.

TJH

Thanks for your input Terry. I couldn’t agree more with your comments. Especially your last one. I’m not saying anything else on this. Sadly, yet again, a great thread has gone South.

Ian.

[Wizard]

Moderator Message:
If Wizard (and potentially others) are to continue this (very interesting) thought experiment, it would be helpful if they did so while emphasising that idpickering's contribution was to supply some investor-typical data points. This thread should not evolve into a discussion of a particular poster's sales and purchases. --MDW1954

In my post I stated...

...In this post earlier in the thread https://lemonfool.co.uk/viewtopic.php?p=320618#p320618 IDPickering helpful told us he had sold BT.A and a number of other shares and also told us what the disposals were replaced with. I have used that to build a theoretical comparison. For the avoidance of doubt, this is not, and can never be, an analysis of IDPickerings decision as there are simplifying assumptions I make which will not hold true in his actual portfolio...

I am not sure I could have made it any clearer that this was a theoretical exercise based off a stated starting point and not comment on IDPickering’s portfolio. If you think there is more I should say to clarify some guidance would be appreciated.

[Dod101]

To take nearly a year not to resolve a straightforward point (what to buy to replace BT) gives plenty of scope for wanderings off topic, bar room brawls and so on.

Apart from anything else, when the question was asked, market conditions were very different from now. Given what has so far transpired, is the intention that this thread could still be going on next year at this time, ten years time? Why bother to have topics at all?

Anyone coming new to this Board is not going to find anything of much relevance to the original topic here.

Dod

Moderator Message:
This is a good point well made. Let's move on. - Chris