10 Years Strong
Posted: August 30th, 2021, 3:46 pm
I read with interest the recent post on ‘Abandoned HYPs…’
I’ve just come back to our HYP (and back to TLF) after being an ‘absentee landlord’ for over three years. The HYP’s not in too bad a shape, all things considered. To me, that’s part of HYP’s attraction. If I’d been investing for growth, technical analysis, small/micro caps, etc. I’d more likely not have ‘got away’ with being away from the portfolio.
Around early 2018, and for various reasons, we paused adding new funds to the HYP(ISAs). Adding new funds over the years prior to 2018 had provided an impetus to be ‘active’, monitor the HYP, and reinvest the dividends – and also to post to TMF/TLF! We were (and still are) in the accumulation stage, not yet needing to draw down the income, although now in our early 50s the years ahead are fewer than the years behind, and retirement planning comes more into focus, rather than being some vague notion of “down the road”.
Reflecting back to 2018, I think I knew towards year-end there would have been enough accumulated dividends to reinvest, but inertia got the better of me. Then Covid arrived (not personally, fortunately) and I figured there was no point fretting about the HYP, so didn’t peek then either.
So, how’s it fared? We’ll, I’ve spent a good few hours this weekend updating my old Excel tracker of all the dividends paid. Plus, a few of the firms got sold – Cobham, Greene King, Inmarsat, Signature (BBA), and one went bust – Carillion.
On income, measured to 31 March each year, we were rising quite nicely with a steady annual income increase of 8% in Year 8 (2018/19) with no additional funds added. Then a further 1% in Year 9 (2019/20), followed by the inevitable drop of -34% in Year 10 (2020-21). Now, of that drop, I’ll attribute most to the dividend cutting/stopping triggered by the Covid-era. I’m sure some drop is from having had stocks sold out from under us and not reinvesting those funds to generate further income.
The first four months of Year 11 (2021/22), April to July, show a very robust +49% bounce back in dividends year-on-year.
None of those numbers include special dividends, of which I see a few since 2018 (BHP, BBA (SIG), TSCO, PNN).
I’ll need to think if I can back-unitise over three years. I’ve an inkling with no activity (incl. reinvestment) it might not be too hard to do, but I will likely want to find the portfolio values on the 31 March’s to work out the actual portfolio yields.
We’ve had large capital increases from Segro (+282%), AstraZeneca (+180%), Admiral (+151%), plus Sage, BAE, Rio, Britvic, Unilever and BHP, all between +50-100% up on purchase prices.
On the downside, there are Kier (-90%), Centrica (-80%), Wood Group (was ex-Amec) (-76%), Stagecoach (-70%) and BT (-50%). And also, let’s not forget Carillion (-100%).
Those four sales in capital terms – COB (-35%), GNK (+16%), ISAT (-25%), BBA (+96%). And with accumulated dividends factored in – COB (-12%), GNK (+30%), ISAT (-15%), BBA (+160%).
BBA’s gain more than offsets CLLN’s loss.
Summary
Over 10 and a bit years of HYPing, on some crude calculations, we’re up 55% on capital invested. 37% from dividends, 4% from special dividends, and 14% from capital growth. I make that (incredibly roughly!) a 5% p.a. gain. Better than a bank savings account since 2011, but with the risk of market ups and downs through equity investing. However, but even with CLLN going bust, CNA tanking, KIE crashing, we’re still in an overall “good place”.
I’ve got a decade’s evidence behind me. A broad basket HYP (doubling up companies in each sector, where possible, e.g. both VOD/BT, SGRO/BLND, BP/RDSB), containing 35 holdings at peak (now back to 30) has provided resilience and returns that meet our needs.
The accumulated investments are now quite substantial, and would generate perhaps 10% of our target income in retirement, while (hopefully) holding capital value. Based on the last decade, I’m increasingly confident to use HYP as a venue for some of our pension funds as they crystallise from employers’ DB schemes in the 5-10 years ahead.
Here’s the current beast. Needs a bit of work. We’ve got approx. 30% of the current value available as cash to invest (combo of those four sales and accumulated dividends over the last three years). I’ll need to scour this board to see what’s “hot” and what’s “not” in high(er) yielding stocks.
I’ve just come back to our HYP (and back to TLF) after being an ‘absentee landlord’ for over three years. The HYP’s not in too bad a shape, all things considered. To me, that’s part of HYP’s attraction. If I’d been investing for growth, technical analysis, small/micro caps, etc. I’d more likely not have ‘got away’ with being away from the portfolio.
Around early 2018, and for various reasons, we paused adding new funds to the HYP(ISAs). Adding new funds over the years prior to 2018 had provided an impetus to be ‘active’, monitor the HYP, and reinvest the dividends – and also to post to TMF/TLF! We were (and still are) in the accumulation stage, not yet needing to draw down the income, although now in our early 50s the years ahead are fewer than the years behind, and retirement planning comes more into focus, rather than being some vague notion of “down the road”.
Reflecting back to 2018, I think I knew towards year-end there would have been enough accumulated dividends to reinvest, but inertia got the better of me. Then Covid arrived (not personally, fortunately) and I figured there was no point fretting about the HYP, so didn’t peek then either.
So, how’s it fared? We’ll, I’ve spent a good few hours this weekend updating my old Excel tracker of all the dividends paid. Plus, a few of the firms got sold – Cobham, Greene King, Inmarsat, Signature (BBA), and one went bust – Carillion.
On income, measured to 31 March each year, we were rising quite nicely with a steady annual income increase of 8% in Year 8 (2018/19) with no additional funds added. Then a further 1% in Year 9 (2019/20), followed by the inevitable drop of -34% in Year 10 (2020-21). Now, of that drop, I’ll attribute most to the dividend cutting/stopping triggered by the Covid-era. I’m sure some drop is from having had stocks sold out from under us and not reinvesting those funds to generate further income.
The first four months of Year 11 (2021/22), April to July, show a very robust +49% bounce back in dividends year-on-year.
None of those numbers include special dividends, of which I see a few since 2018 (BHP, BBA (SIG), TSCO, PNN).
I’ll need to think if I can back-unitise over three years. I’ve an inkling with no activity (incl. reinvestment) it might not be too hard to do, but I will likely want to find the portfolio values on the 31 March’s to work out the actual portfolio yields.
We’ve had large capital increases from Segro (+282%), AstraZeneca (+180%), Admiral (+151%), plus Sage, BAE, Rio, Britvic, Unilever and BHP, all between +50-100% up on purchase prices.
On the downside, there are Kier (-90%), Centrica (-80%), Wood Group (was ex-Amec) (-76%), Stagecoach (-70%) and BT (-50%). And also, let’s not forget Carillion (-100%).
Those four sales in capital terms – COB (-35%), GNK (+16%), ISAT (-25%), BBA (+96%). And with accumulated dividends factored in – COB (-12%), GNK (+30%), ISAT (-15%), BBA (+160%).
BBA’s gain more than offsets CLLN’s loss.
Summary
Over 10 and a bit years of HYPing, on some crude calculations, we’re up 55% on capital invested. 37% from dividends, 4% from special dividends, and 14% from capital growth. I make that (incredibly roughly!) a 5% p.a. gain. Better than a bank savings account since 2011, but with the risk of market ups and downs through equity investing. However, but even with CLLN going bust, CNA tanking, KIE crashing, we’re still in an overall “good place”.
I’ve got a decade’s evidence behind me. A broad basket HYP (doubling up companies in each sector, where possible, e.g. both VOD/BT, SGRO/BLND, BP/RDSB), containing 35 holdings at peak (now back to 30) has provided resilience and returns that meet our needs.
The accumulated investments are now quite substantial, and would generate perhaps 10% of our target income in retirement, while (hopefully) holding capital value. Based on the last decade, I’m increasingly confident to use HYP as a venue for some of our pension funds as they crystallise from employers’ DB schemes in the 5-10 years ahead.
Here’s the current beast. Needs a bit of work. We’ve got approx. 30% of the current value available as cash to invest (combo of those four sales and accumulated dividends over the last three years). I’ll need to scour this board to see what’s “hot” and what’s “not” in high(er) yielding stocks.