Beginners HYP Next Purchase

[TopOfDaMornin]

In the last 6 weeks, my 29 shares HYP, has received dividend from: National Grid, BAT, Man Group, Unilever, BAE Systems, AstraZeneca, Rio Tinto, SSE, RDSB, Pearson, BHP and Aviva, L and G, BP, Imperial, Diago and GSK.

The money has accumulated and I am ready for the next purchase or top up. According to the HYP Top Up Spreadsheet the top up order would be:




Any comments or suggestions?

Regards
TDM

[Wizard]

In the last 6 weeks, my 29 shares HYP, has received dividend from: National Grid, BAT, Man Group, Unilever, BAE Systems, AstraZeneca, Rio Tinto, SSE, RDSB, Pearson, BHP and Aviva, L and G, BP, Imperial, Diago and GSK.

The money has accumulated and I am ready for the next purchase or top up. According to the HYP Top Up Spreadsheet the top up order would be:




Any comments or suggestions?

Regards
TDM

If you are following the methodology IMB seems the share for you, as given BP's negative cover the sustainability could reasonably be questioned.

[Arborbridge]

Any comments or suggestions?

Regards
TDM

I would hold back on BP only because of the cover - things might improve, but it doesn't look inspiring!

IMB or Aviva would probably fill the bill - however, beware of the yields returned by HYPTUSS at the moment. I would go back through the various news items, the "cancelled dividends" thread and this link https://www.dividenddata.co.uk/dividend ... ldividends and make up your own mind about cuts. Having done so, plug in the yields you deduce to HYPTUSS and see if it makes much difference.
I does make it a labour of love at the moment because my feeling is the yield dials are still swinning and the analysts can't catch up - so we have to make a judgement.

For what it's worth, I have IMB down as 9.8% (137.7p divi) and Aviva as 6.08% (18p?). It's all a bit Alice in Wonderland, and one should make one's own judgement.

Having sounded a note of caution, I'd still reckon IMB or Aviva would come near the top, but there's no reason why you should look further down the table. For example, LGEN seems to have been a more reliable payer and could do with topping up so I'd pay serious attention to giving that a shot.

Arb.

[idpickering]

Any comments or suggestions?

Regards
TDM

I would hold back on BP only because of the cover - things might improve, but it doesn't look inspiring!

IMB or Aviva would probably fill the bill - however, beware of the yields returned by HYPTUSS at the moment. I would go back through the various news items, the "cancelled dividends" thread and this link https://www.dividenddata.co.uk/dividend ... ldividends and make up your own mind about cuts. Having done so, plug in the yields you deduce to HYPTUSS and see if it makes much difference.
I does make it a labour of love at the moment because my feeling is the yield dials are still swinning and the analysts can't catch up - so we have to make a judgement.

For what it's worth, I have IMB down as 9.8% (137.7p divi) and Aviva as 6.08% (18p?). It's all a bit Alice in Wonderland, and one should make one's own judgement.

Having sounded a note of caution, I'd still reckon IMB or Aviva would come near the top, but there's no reason why you should look further down the table. For example, LGEN seems to have been a more reliable payer and could do with topping up so I'd pay serious attention to giving that a shot.

Arb.

Well said Arb. I particularly like your suggestion of Legal & General. I intend topping my own holdings of these up soon. As for BP., my top up of them scheduled for this Thursday, and BAE Systems, still stands.

Ian

[Dod101]

If it were I, I think L & G is the only one but if pushed I would buy Aiviva. The new CEO seems to have got a following at the moment, that is until the next disaster of course.

Dod

[kempiejon]

I'm tended to focus on the bad, history is only a small part of the process in assessing dividend sustainability and these are unusual times but I can see a lot of negatives. Imperial have cut their dividend this year haven't they? That usually rules a share out. Aviva have a history of reductions every 5 or 6 years; they seem to have suspended recently, this year so far no income. BP the cover looks shonky, Regional REIT low cap? RSA pulled last year's final ditto Sainsbury. So Legal and General might be the first down the list for more info but you seem to have a few insurers above it are Aviva and RSA that different? Vod and Shell cutters again? BATS looks like another for investigation.
That's very negative TDM I'm afraid but In my own HYP I hold most of them and I'm struggling what to add to as dividends accumulate. I consider relaxing my filters on cap, history and yield etc.

[idpickering]

I'm tended to focus on the bad, history is only a small part of the process in assessing dividend sustainability and these are unusual times but I can see a lot of negatives. Imperial have cut their dividend this year haven't they? That usually rules a share out. Aviva have a history of reductions every 5 or 6 years; they seem to have suspended recently, this year so far no income. BP the cover looks shonky, Regional REIT low cap? RSA pulled last year's final ditto Sainsbury. So Legal and General might be the first down the list for more info but you seem to have a few insurers above it are Aviva and RSA that different? Vod and Shell cutters again? BATS looks like another for investigation.
That's very negative TDM I'm afraid but In my own HYP I hold most of them and I'm struggling what to add to as dividends accumulate. I consider relaxing my filters on cap, history and yield etc.

Of the shares you’ve mentioned in your message, I would buy more BATS, but I’m fully invested in them. I’m not inclined to bring Imperial Brands on board to sit alongside them, as imho they’re the weaker of the two fag shares, and I don’t want to chase that high yield either.

Ian.

[Wizard]

I'm tended to focus on the bad, history is only a small part of the process in assessing dividend sustainability and these are unusual times but I can see a lot of negatives. Imperial have cut their dividend this year haven't they? That usually rules a share out. Aviva have a history of reductions every 5 or 6 years; they seem to have suspended recently, this year so far no income. BP the cover looks shonky, Regional REIT low cap? RSA pulled last year's final ditto Sainsbury. So Legal and General might be the first down the list for more info but you seem to have a few insurers above it are Aviva and RSA that different? Vod and Shell cutters again? BATS looks like another for investigation.
That's very negative TDM I'm afraid but In my own HYP I hold most of them and I'm struggling what to add to as dividends accumulate. I consider relaxing my filters on cap, history and yield etc.

I may be wrong, but my sense was that 'cutters' were not really frowned on any more - for example, I seem to recall PYAD being supportive of adding to a holding with a zero current yield. The focus now seems to be more on whether the 'rebased' dividend is considered sustainable.

[Dod101]

The shares listed, apart from L & G are typically awful, but feature of course in many HYPs. Aviva, to answer kempiejohn's question, has a lot of life insurance whereas RSA has none, otherwise IMHO was is as bad as the other, and unreliable as dividend payers.

My comments on Aviva are based on the new broom recently installed and I guess that she will do OK for a while but the history of Aviva is not good.

As a dividend source, BAT is probably fine and is one of the few not to have made a cut in a long while. I am just not very keen on tobacco although I hold both BAT and Imps.

Dod

[moorfield]

Of the two tobaccos, IMB. It's (post rebase) dividend cover is now stronger than BATS and I believe its cash profits (aka owner earnings in Buffet speak) are very undervalued and reflected in that high yield. The market is waiting to see perhaps what the new CEO has to say in next months results.

[Itsallaguess]

Any comments or suggestions?

Are you dead-set on making a single purchase with your available capital?

If the dealing costs can be kept to a minimum and you're considering anything with very high yields, then I'd be tempted to split this purchase in two, and achieve some sector diversity with this particular tranche of capital.

Cheers,

Itsallaguess

[TopOfDaMornin]

Any comments or suggestions?

Are you dead-set on making a single purchase with your available capital?

If the dealing costs can be kept to a minimum and you're considering anything with very high yields, then I'd be tempted to split this purchase in two, and achieve some sector diversity with this particular tranche of capital.

Cheers,

Itsallaguess

You asked "Are you dead-set on making a single purchase with your available capital?"
No, as you comment it might be wise to split the investment across 2 or more shares.

TDM

[MDW1954]

Of the shares listed, I'd go for LGEN, GSK, and RGL, in that order. Or split the investment across all three.

MDW1954

[pyad]

...
Any comments or suggestions?

Regards
TDM

Yes, why stick to that list? It might be okay for a new HYPer who should select initially from the FTSE100 but you seem already to have quite a widely diversified port so you may benefit from looking at some of the larger shares in the 250. These can provide diversification not available in the 100.

For example financial markets bookmaker IG Group which I've mentioned before round here. The div has been held for a few years at 43.2p but at 779p that's a forward yield of 5.5%, which is definitely in HYP territory. And it is big with a cap of around £2.8bn but you must make up your own mind. Similarly there are prob other shares worth a look at the larger end of the 250.

[Arborbridge]

I may be wrong, but my sense was that 'cutters' were not really frowned on any more - for example, I seem to recall PYAD being supportive of adding to a holding with a zero current yield. The focus now seems to be more on whether the 'rebased' dividend is considered sustainable.[/quote]

I think you maybe correct there. At one time, a held dividend was OK, but a cut would lead to a share being held in purgatory for a while, maybe years. Not everyone played the game this way, of course, but my belief is that this was considered the norm.

Cutters are always "frowned on", I'd say, but in the current circumstances more rope is given - especially to companies where the hold appears to be more a question of prudence or political appeasement than anything.

Arb.

[TopOfDaMornin]

Thank you for the comments. Based on the feedback I have decided to update Imperial Brands IMB and Legal and General Group LGEN in equal amounts.

I found it hard to make a decision on IMB as there are so many differing views on this company.

Furthermore, going forward, I am going to pay more attention to individual share “% holding of total” and sector “% of total”. I know some of you already do this so that shares or sectors do not get too large.


I must admit, I was tempted to put the money in a Vanguard LifeStrategy 80 (off topic) as I feel this has / would perform better than my HYP, with income taken by selling shares. I am 10 years off needing the income


TDM

[idpickering]

Thank you for the comments. Based on the feedback I have decided to update Imperial Brands IMB and Legal and General Group LGEN in equal amounts.

I found it hard to make a decision on IMB as there are so many differing views on this company.

Furthermore, going forward, I am going to pay more attention to individual share “% holding of total” and sector “% of total”. I know some of you already do this so that shares or sectors do not get too large.


I must admit, I was tempted to put the money in a Vanguard LifeStrategy 80 (off topic) as I feel this has / would perform better than my HYP, with income taken by selling shares. I am 10 years off needing the income


TDM

Well done. I have previous for being blinded by all the options facing me when picking my next investment, hence the term ‘pickering’ that gets used hereabouts. I don’t mind that tbh.

Good luck in your future investing.

Ian.

[Charlottesquare]

I appreciate strategic ignorance is possibly followed re selections/top ups, but a quick look at RGL's portfolio mix and its number of offices would certainly give me pause for thought.

https://www.regionalreit.com/~/media/Fi ... -june-2020

[TopOfDaMornin]

I appreciate strategic ignorance is possibly followed re selections/top ups, but a quick look at RGL's portfolio mix and its number of offices would certainly give me pause for thought.

https://www.regionalreit.com/~/media/Fi ... -june-2020

Do you mind me asking why it would give you pause for thought? Do you have concerns about future income? Changing market etc and work from home?
The share price appears to have halved since the start of this year. The dividend has increased for at least the last 5 years.

TDM

[Charlottesquare]

I appreciate strategic ignorance is possibly followed re selections/top ups, but a quick look at RGL's portfolio mix and its number of offices would certainly give me pause for thought.

https://www.regionalreit.com/~/media/Fi ... -june-2020

Do you mind me asking why it would give you pause for thought? Do you have concerns about future income? Changing market etc and work from home?
The share price appears to have halved since the start of this year. The dividend has increased for at least the last 5 years.

TDM

The office market would concern me greatly (Leisure and Retail maybe more so, but they do not seem to have much exposure in RGL- though I did not look closely).

Down in the secondary/ tertiary commercial property market where we operate we already have tenants giving up their offices, notice letters arriving, I suspect we have only seen the start with more to come if further lockdowns and if government support runs out/gets reduced- the anecdotal stories amongst the local commercial property agents is that the developers with unlet larger office units are starting to edge out to the window ledges.

One also likely needs to know say what rents have to date been forgiven, what arrears are extant, how many CVAs have been started amongst the rent roll etc, so strategic ignorance seems dangerous.

(I am FD for a private commercial property group which has rents >£1m)

Apologies if off topic but times are very different right now which is why I thought I ought to voice misgivings re that particular option.