Novel new purchases?

[88V8]

Well, novel to me. Perhaps meh to you, but here I am in my backwater....

In the Saturday Times of 19 December - I'm a bit behindhand - Mark Atherton, LTBH investor, always worth a read.

He proposes various HYP stalwarts, IMB, BAT, L&G, Aviva, UU, PHNX, but also:

- M&G (MNG) the recently Prudential spinoff, forecast yield 9.5% with 2x cover. Currently I see a yield of 5.8% which is not too shabby. However, the classic five years of rising dividends is clearly absent here, at least in terms of M&G as a separate entity.

- Evraz (EVR) on FY 7.5% and 1.6x cover. Current yield 12% and negative cover, so DYOR. Short history, mining hmmm.

- And finally Polymetal (POLY) on a forecast yield of 8.4% and cover of 1.54. This also is a bit of a leap, as LSE show a current yield of 2.8% so, again, investigation needed. It may be as simple as CV19 cuts showing up in the history. Gold mining, again, hmmm.

He also recommends Persimmon (PSN) on FY 7.2% and a thin 1.15% cover. This is not actually novel as it features in various HYPs reported here, but its forecast yield is a standout, at least to me.

Having offloaded most of my bank prefs, I have some headroom in Financials so I have today bought a chunk of MNG, even though this is not a great buying day what with the euphoria over our great ahem Brexit deal and the panpanic now being ahem under control.
Funny old thing, the market.

V8

[Arborbridge]

Maybe I've maligned PSN in my forecast income - I have the dividend at 110p for the year, which does sound pessimistic. Ultracautious indeed.

I'm not sure where this came from: has anyone with knowledge of PSN a take on the dividend?

If the yield is 8.4% at today's price (from HYPTUSS), that boosts it up my topup rankings, but oddly works against it qualifying, as the dividend will contribute more than 5% to my income.

Arb.

[Breelander]

He also recommends Persimmon (PSN) on FY 7.2% and a thin 1.15% cover. This is not actually novel as it features in various HYPs reported here, but its forecast yield is a standout, at least to me.

Persimmon is one I hold. It is something of an exception in that, along with a number of other house builders, back in 2012 it announced "a long term capital return of £1.9 billion to shareholders over the next nine and a half years" and announced the planned repayments for the life of the plan.

It has met or exceeded the plan since then, so the return is virtually a sure thing until the end of the planed repayment period. However that ends this year, what's to replace it has yet to be announced.

[Breelander]

Maybe I've maligned PSN in my forecast income - I have the dividend at 110p for the year, which does sound pessimistic. Ultracautious indeed.

I'm not sure where this came from: has anyone with knowledge of PSN a take on the dividend.

The capital return plan for 2021 is: Late March 2021 110p, Early July 2021 125p. As I said, that is pretty much guaranteed.

https://www.persimmonhomes.com/corporat ... eturn-plan

[pyad]

Well, novel to me. Perhaps meh to you, but here I am in my backwater....

In the Saturday Times of 19 December - I'm a bit behindhand - Mark Atherton, LTBH investor, always worth a read.

He proposes various HYP stalwarts, IMB, BAT, L&G, Aviva, UU, PHNX, but also:

- M&G (MNG) the recently Prudential spinoff, forecast yield 9.5% with 2x cover. Currently I see a yield of 5.8% which is not too shabby. However, the classic five years of rising dividends is clearly absent here, at least in terms of M&G as a separate entity....

V8

I raised MNG here a few months ago at a rather lower price when I purchased it for my HYP. Don't know how you calculate the yield, my div forecast for y/e 31/12/20, based on comments from the company, is around 18p of which a 6p interim has already been paid. That makes a forward yield of something like 8.8% at 204p. The company has said that it will be kept at this level for some time but in my view the likely high initial yield compensates for the lack of any increase for the time being, though no guarantees of course.

As you say and as pointed out earlier, one question mark is the very short history but I was prepared to accept that in this case though I probably would not have done in normal times. When I bought, a lot of big cap share divs were chancy anyway so many HYP purchases at that time probably required abandoning a lot of the usual criteria. That's still the case with banks for example or ITV, another one I bought in the panda or whatever it's called.

[Arborbridge]

Maybe I've maligned PSN in my forecast income - I have the dividend at 110p for the year, which does sound pessimistic. Ultracautious indeed.

I'm not sure where this came from: has anyone with knowledge of PSN a take on the dividend.

The capital return plan for 2021 is: Late March 2021 110p, Early July 2021 125p. As I said, that is pretty much guaranteed.

https://www.persimmonhomes.com/corporat ... eturn-plan

Thanks for the reminder, Bree. I believe I only allowed 110p in my forecast as it was the only one "in the bag" so to speak. So, we should really expect 235p if there's no further disaster.

Arb,

[88V8]

- M&G (MNG) the recently Prudential spinoff, forecast yield 9.5% with 2x cover.

Don't know how you calculate the yield, my div forecast ....makes a forward yield of something like 8.8% at 204p.

9.5% was the figure in the Times article, presumably the SP at the time.
I don't have an awful lot of faith in forecasts, given that it requires foreknowledge of the divi and the SP, but I have seen comment on here that broker forecasts are on the whole reliable.
As a rule.

Predictably, the day after I bought a few, MNG's SP has fallen. So I just bought a few more. Little point trying to predict the market, especially at the moment.
It would probably be more logical to continue topping up my new portfolio of IT's, but what the heck.

V8

[Dod101]

If pyad is correct in his remarks re the intention of M & G to hold the dividend, I would want to avoid it, unless there is something to really excite the share price on the horizon. I have quite enough held dividends thank you very much.

Dod

[88V8]

If pyad is correct in his remarks re the intention of M & G to hold the dividend, I would want to avoid it

And so would I, but at the current c6% yield I can tolerate no increase, and c9% would be even better.
Depends how long they hold it.

And what happens to inflation of course. If govts decide to let inflation rip so as to deflate national debts, that could become an issue.
But I don't expect it.

V8

[pyad]

If pyad is correct in his remarks re the intention of M & G to hold the dividend, I would want to avoid it

And so would I, but at the current c6% yield I can tolerate no increase, and c9% would be even better.
Depends how long they hold it.

And what happens to inflation of course. If govts decide to let inflation rip so as to deflate national debts, that could become an issue.
But I don't expect it.

V8

The 6% figure is way out of date and inaccurate, being based on the partial div of 11.92p (ex a special) for the year to 31/12/19. They made it clear that this was not a full year's normal payout because of the recent demerger, and was about two thirds of what would have been paid in a full year. The actual historical annual payout is that plus the 6.00p interim for 31/12/20 making 17.92p for a historical yield of around 9% that you mention, not 6%. It follows from the company's comments that they expect to pay 18p or so for 20 to make a similar forecast yield of around 9% at 200p. This is not a broker forecast.

You can't rely on press comment which can be very inaccurate, as in this case and if you are really interested in a share need to delve further. The most reliable source is always the company itself although they often don't say much in which case brokers are the next best thing. Historical actual figures may be a guide but with MNG that doesn't work because it's a new listing with an incomplete first year of payouts.

Regarding future increases, this is what they said in the 30/06/20 interim accounts: ...Against this backdrop, we remain committed to our dividend policy of stable or increasing pay-outs. We will continue to monitor developments carefully and we do not expect to increase the dividend while the threat of Covid-19 remains....

Read that how you want but it does not suggest any long term freeze in my view, just a short term one though of course in practice anything can happen as with any shares. As I said earlier, 9% more than compensates for such a freeze I think.

[Dod101]

I know nothing of M & G but pyad's latest comments gives us a rather more reassuring picture. I think they are not alone re the holding of the dividend during the Covid threat and if they are likely to yield 9% on current value that would suggest that they might be worth taking a proper look at. What I mean is that that sort of yield would normally imply the likelihood of a cut but I doubt that that is so in this case.

Dod