Stagecoach

[BenValue]

I bought this share sometime ago when it had a decent dividend. After the recent merge with National Express I don’t know if there is any better prospect of a dividend in the future.

Perhaps I should just sell it? What does the HYP rule book say about this sort of non dividend paying share. I look forward to any suggestions.

[idpickering]

I bought this share sometime ago when it had a decent dividend. After the recent merge with National Express I don’t know if there is any better prospect of a dividend in the future.

Perhaps I should just sell it? What does the HYP rule book say about this sort of non dividend paying share. I look forward to any suggestions.

As for the rule book, there is mention in this board’s guidelines that from time to time a HYPer might feel the urge to sell a holding. I’ve done this myself in the past, but nowadays try to be more hands off. However, if a share wasn’t paying me a dividend, and there seemed little hope of it doing so in the future, then I would sell it, and buy a share that is paying out. But each to their own. The bottom line hereabouts is LTBH preferably.

Ian.

[kempiejon]

From the guidelines - viewtopic.php?f=15&t=23846

It is acknowledged that individual HYP investors may from time to time see the need to sell individual HYP stocks, perhaps in response to adverse performance, portfolio imbalance, or a corporate action, e.g. takeover. It is further acknowledged that it would be unrealistic to rule that discussion of such actions is outside the board’s remit. It is stressed, however, that HYP investing was always intended to be a LTBH strategy.

I'm always very reluctant to sell however my transport pick of a decade or so ago First Group (hasn't paid a dividend for years and has lost a fair amount of value for me) recently invited holders to tender their shares, I took advantage of this to dispose of some of my holding.
I also like to sell unsheltered holdings to realise cash for new ISA and SIPPs each year, sometimes I bank capital gains and as most of my dividend payers are sheltered now I'd look on non payers or rump holdings when tiding up.

[Gengulphus]

I bought this share sometime ago when it had a decent dividend. After the recent merge with National Express I don’t know if there is any better prospect of a dividend in the future.

Perhaps I should just sell it? What does the HYP rule book say about this sort of non dividend paying share. ...

It says "for all selling decisions, make up your own mind - just as long as you don't end up making decisions to sell so frequently that your HYP fails to be a Long-Term-Buy-and-Hold portfolio". Not very helpful, I know, but that all a HYP rulebook that covers both the practically-never-sell HYP1 and tjh290633's systematically-trimming-and-topping-up HYP can do!

As regards suggestions, about all I can say from past experience of the companies is that it's a long time since either of them has impressed me with its HYP credentials, and I doubt that the combination of the two would do all that much better. So I would start my research somewhat biased against owning them... Any firmer conclusion would depend on doing a good deal of research, and researching companies in the middle of a takeover bid properly is painful, due to the vast numbers of RNSes needing filtering out...

So I think what I would do is look for any realistic prospect of dividends being restored, sell if I didn't find it, and if I did find it, wait until the dust has settled from the takeover and the merged company has released atb least one set of results, then re-assess.

Gengulphus

[tjh290633]

Perhaps I should just sell it? What does the HYP rule book say about this sort of non dividend paying share. I look forward to any suggestions.

It is up to you. My personal rule is to sell a share if the yield falls below about half that of the FTSE100, but I do not always follow it. I also sell any share which stops paying dividends with no prospect of a resumption in the forseeable future.

Regarding Stagecoach, I bought in 1999 at 208p, when the yield was about 1.5%, because they had some interesting prospects. Then the ordure hit the fan in the USA and Souter had to go out to sort it out. Dividends kept rising, from about 3p to 3.8p, but the SP was falling and I kept adding. The lowest price was 34p, in 2003. They cut the final in 2002, making it 2.6p for the year. I see that I trimmed my holding in 2003 and 2006 and took the special dividends from B and C shares in 2004 and 2007. By 2008 it was up to 5.4p, but the price was rising, and the yield fell to 1.65%, so I got out. The dividend got up to 9.5p by 2014, but the yield was never good enough to persuade me to buy back in, as by now I was firmly of the HYP persuasion. My IRR was 22.3% over the 8 or so years. All down to buying at those low prices.

I keep an eye on all the UK bus companies, and I feel that getting involved in railway operation was perhaps their biggest mistake. Make your own mind up.

TJH

[csearle]

I bought this share sometime ago when it had a decent dividend. After the recent merge with National Express I don’t know if there is any better prospect of a dividend in the future.

Perhaps I should just sell it? What does the HYP rule book say about this sort of non dividend paying share. I look forward to any suggestions.

Good question. Firstly I think that ditching such a company is, although not perhaps pyad's way, within he spirit of the rules here because of the dividend situation.

I hold. Stagecoach make up a 28% median holding at the moment. They currently sit along with Centrica, Marstons, and Mitie on my naughty step. All of these are tax-sheltered so there is no obvious incentive to selling other than that I'm in this for the dividends not some kind of hope-therapy.

So I don't know. I'm not fond of realising losses. I will probably hang on until either these naughty boys resume dividends or I see a good opportunity to sell the lot in order to fund investment in a new sector (or something).

Chris

[moorfield]

Perhaps I should just sell it?

Any well diversified HYP should be able to absorb one or two non paying holdings without inducing too much finger jittering - see the recent HYP1 report for example.

The question that ought to be answered first imo is: "Where does the money go?". And if that new purchase would demonstrate a material change in your overall portfolio yield (*), then you have a good case to sell.


(*) As a rule of thumb I'd suggest at least +0.25% here.

[funduffer]

I recently (October) sold SGC at 90p as I could not see any prospect of the dividend being resumed, given the ongoing covid situation and its effects on public transport. I had to stomach a 40% overall loss. I purchased SGC in 2016 as a diversification for my HYP, and it last paid me a dividend in March 2020 - almost 2 years ago, and that is enough.

Just shows a pick in every sector is not necessarily a great idea. Some are not good enough for HYP. Transport (trains, plans and buses) seems particularly bad!

I still hold one other zero-dividend company - Marstons (MARS). Still hoping that there will be a resumption in dividends some time soon. Loss on that is only 30% on that at the moment!

FD

[csearle]

Just shows a pick in every sector is not necessarily a great idea. Some are not good enough for HYP. Transport (trains, plans and buses) seems particularly bad!

I still hold one other zero-dividend company - Marstons (MARS). Still hoping that there will be a resumption in dividends some time soon. Loss on that is only 30% on that at the moment!

Drink more, do your bit!

Trouble is you'd need to know the future to know exactly which sectors not to pick. Supposing there hadn't been a pandemic but some game-changing breakthrough in renewable energy, the oil and gas sector might have been what the travel sector is now. C.