Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Diageo

For discussion of the practicalities of setting up and operating income-portfolios which follow the HYP Group Guidelines. READ Guidelines before posting
Forum rules
Tight HYP discussions only please - OT please discuss in strategies
pendas
2 Lemon pips
Posts: 175
Joined: November 4th, 2016, 9:46 am
Has thanked: 24 times
Been thanked: 36 times

Diageo

#31672

Postby pendas » February 15th, 2017, 11:12 am

I hold this share outside an ISA at the moment. It goes xd on the 23rd of this month after which point I will be selling to part fund next year's ISA.

The question is, would you purchase again with a yield of 2.8%?

Annualised return for me has been 16.2% and it has been one of the better shares on this metric. It provides around 2% of the income for 3.3% of the capital. Income is not required on a regular basis.

miner1000
2 Lemon pips
Posts: 180
Joined: November 4th, 2016, 1:36 pm
Has thanked: 10 times
Been thanked: 129 times

Re: Diageo

#31675

Postby miner1000 » February 15th, 2017, 11:25 am

Hi Pendas,

Diageo is a very solid share. I did not have it in my HYP three years ago, but I had a large tranche of cash (equal to about the median capital value of one of my HYP shares). This cash was my safety buffer, but I was uncomfortable with having it sat in the bank earning zero interest.

So, I decided to buy a tranche of Diageo with this cash. The thinking being that I could get a return of maybe 2.9% (interest if you like) and the capital value would hopefully not change much. Well of course what has happened is the capital value has increased 24%, and it has been paying these relatively low divis (compared to normal HYP shares) for the past three years. A lot more than anything I could get at the bank.

So guess what, I now just call it part of my HYP, and I am setting aside a bit of cash from gross dividend income to provide the new safety buffer.

Sometimes I am not sure the safety buffer is such a great idea, but I am sure happy that I decided to convert my safety buffer to a tranche of Diageo.

Cheers, Miner

tjh290633
Lemon Half
Posts: 8209
Joined: November 4th, 2016, 11:20 am
Has thanked: 913 times
Been thanked: 4097 times

Re: Diageo

#31678

Postby tjh290633 » February 15th, 2017, 11:31 am

It's one of those, which I bought in 2009 at 842p and a yield of 4.37%. The IRR has been 17.2%, and there is no suggestion that the rate of increase in the dividends will be abated. I don't sell unless the yield falls below 2% or so, so I am hanging on to mine. I think that in your situation I would repurchase inside my ISA, i.e. do a bed and ISA deal.

TJH

melonfool
Lemon Quarter
Posts: 2939
Joined: November 4th, 2016, 11:18 am
Has thanked: 1365 times
Been thanked: 793 times

Re: Diageo

#31688

Postby melonfool » February 15th, 2017, 11:52 am

This has made me look at my Diageo holding. I bought £1k worth about 9m ago and it is now 'worth' £1222, apparently.

That's quite a small holding and I now have over £800 in cash in my ISA ready to reinvest, so when that gets to £1k I might top up Diageo, it seems reasonably stable.

Mel

Urbandreamer
Lemon Quarter
Posts: 3121
Joined: December 7th, 2016, 9:09 pm
Has thanked: 347 times
Been thanked: 1025 times

Re: Diageo

#31694

Postby Urbandreamer » February 15th, 2017, 12:08 pm

Caveat: While much of my portfolio is run on HYP lines I don't claim to abide by the "rules".

I bought Diageo in 2007 but am considering selling it.
The reason that I am thinking of selling is the level of debt on its books. You may want to consider their level of debt before a purchase.
I'm also not above slow tinkering as the world changes.

vrdiver
Lemon Quarter
Posts: 2574
Joined: November 5th, 2016, 2:22 am
Has thanked: 552 times
Been thanked: 1212 times

Re: Diageo

#31698

Postby vrdiver » February 15th, 2017, 12:13 pm

tjh290633 wrote: I think that in your situation I would repurchase inside my ISA, i.e. do a bed and ISA deal.

TJH



Wot TJH said.

Seriously, Diageo seems to be a HYPer's Unicorn: they are never visible in the screeners, but a magical share to own. Since you already own them, you won't be lowering the Portfolio yield by repurchasing them, but you will be keeping a high-quality business.

VRD
(who used to work for Grand Metropolitan and now holds DGE shares)

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: Diageo

#31699

Postby Arborbridge » February 15th, 2017, 12:16 pm

The question is, would you purchase again with a yield of 2.8%?


Pendas,
If that's the question, the answer is "no". However, is that the question?

As I understand it, your move is a re-organisation, without which you would probably keep the share. So, the question is "would I want to keep the share if I held it?" Answer, yes.

If you need to re-organise, that's fine, but I see no reason to sell off DGE in the process.


Arb.

kempiejon
Lemon Quarter
Posts: 3488
Joined: November 5th, 2016, 10:30 am
Has thanked: 1 time
Been thanked: 1145 times

Re: Diageo

#31707

Postby kempiejon » February 15th, 2017, 12:35 pm

pendas wrote:I hold this share outside an ISA at the moment. It goes xd on the 23rd of this month after which point I will be selling to part fund next year's ISA.

The question is, would you purchase again with a yield of 2.8%?

Annualised return for me has been 16.2% and it has been one of the better shares on this metric. It provides around 2% of the income for 3.3% of the capital. Income is not required on a regular basis.


Pendas,

Do you have plenty of other shares in your HYP, are you at 15 plus shares fully diversified? If so, I'd think you could double the 2.8% yield by switching into say HSBC, BP or Shell, Capita, Legal n General, Marks and Spencer or another of the ftse 100s which would meet your safety and diversification rules and yielding over 5%.

I'd also consider if the xd is relevant, everything else being equal you'll lose the capital to the value of the dividend when that date passes - of course all else is never equal. I hold DGE in my ISA, in my 7 years as owner the income has risen by about 50%, sp more so, I think I bought at a lucky higher than average yield in early 2010. I'm not one for selling.

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: Diageo

#31710

Postby Arborbridge » February 15th, 2017, 12:42 pm

I'm not one for selling.


So my question would be: why sell now, if you are not one for selling and the only object was to re-organise between accounts?


Arb.

idpickering
The full Lemon
Posts: 11276
Joined: November 4th, 2016, 5:04 pm
Has thanked: 2468 times
Been thanked: 5763 times

Re: Diageo

#31736

Postby idpickering » February 15th, 2017, 2:18 pm

miner1000 wrote:Hi Pendas,

Diageo is a very solid share. I did not have it in my HYP three years ago, but I had a large tranche of cash (equal to about the median capital value of one of my HYP shares). This cash was my safety buffer, but I was uncomfortable with having it sat in the bank earning zero interest.

So, I decided to buy a tranche of Diageo with this cash. The thinking being that I could get a return of maybe 2.9% (interest if you like) and the capital value would hopefully not change much. Well of course what has happened is the capital value has increased 24%, and it has been paying these relatively low divis (compared to normal HYP shares) for the past three years. A lot more than anything I could get at the bank.

So guess what, I now just call it part of my HYP, and I am setting aside a bit of cash from gross dividend income to provide the new safety buffer.

Sometimes I am not sure the safety buffer is such a great idea, but I am sure happy that I decided to convert my safety buffer to a tranche of Diageo.

Cheers, Miner


I did much the same as you miner1000. I bought mine on 22 Jun 2016 @ 1854p. They are my lowest weighted share in value terms at 2.3% of my 24 share HYP, so certainly could do with bringing up to the HYP average weighting of 4.1%. However, I have mentioned in other threads about perhaps bringing on board a higher yielding share of a similar ilk to DGE, maybe GNK, or MARS. I'm not sure that will ever happen as next week my 25th holding is being bought, that being UU., as discussed elsewhere also, so not sure I want to go beyond 25 holdings, and may just top up DGE instead. We'll see.

Ian.

LongbeardRanger
Posts: 36
Joined: November 7th, 2016, 10:25 am
Has thanked: 5 times
Been thanked: 9 times

Re: Diageo

#31756

Postby LongbeardRanger » February 15th, 2017, 3:14 pm

idpickering wrote:
I did much the same as you miner1000. I bought mine on 22 Jun 2016 @ 1854p. They are my lowest weighted share in value terms at 2.3% of my 24 share HYP, so certainly could do with bringing up to the HYP average weighting of 4.1%. However, I have mentioned in other threads about perhaps bringing on board a higher yielding share of a similar ilk to DGE, maybe GNK, or MARS. I'm not sure that will ever happen as next week my 25th holding is being bought, that being UU., as discussed elsewhere also, so not sure I want to go beyond 25 holdings, and may just top up DGE instead. We'll see.

Ian.


Ian,

I can understand why you say it, as they are all drinks companies of one type or another, but personally I don't think that GNK or MARS are that similar to DGE. DGE is a multinational distiller and brewer (probably the world leading scotch and dark beer producer). MARS and GNK are entirely UK focussed brewers and owners of pub chains, so their business dynamics are actually quite different to DGE's. MARS and GNK aren't bad businesses by any means, but DGE is quite a lot better in my view (as demonstrated by its markedly superior return on capital and operating margin).

Personally, I hold DGE and would far rather add to that than diversify into either of those brewers.
Rgds,
Phil

pendas
2 Lemon pips
Posts: 175
Joined: November 4th, 2016, 9:46 am
Has thanked: 24 times
Been thanked: 36 times

Re: Diageo

#31785

Postby pendas » February 15th, 2017, 4:51 pm

Thank you for your thoughts.

It seems the majority are happy to retain the share despite the low yield, but perhaps wouldn't purchase it as a new holding if I read correctly.

We then have the semantics of whether I'm transferring a holding from one account to another or selling up and purchasing a share from the available market.

Certainly within the programme I use to monitor the portfolio, it will be recorded as a sale with a capital gain and if purchased again in another account, subsequent performance will be calculated using the new purchase price.

Bed and ISA doesn't seem straightforward with Halifax Share Dealing, particularly as the unsheltered account is joint and one ISA is held elsewhere, so I've never used it in the past, taking my chances out of the market for a few days.

The holding is 135% of median, so I may repurchase at median as a compromise.

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: Diageo

#31795

Postby Arborbridge » February 15th, 2017, 5:31 pm

The holding is 135% of median, so I may repurchase at median as a compromise.


You can't beat a compromise! I've just trimmed my UBM shares to median: I couldn't decide whether to stick or sell, so trimmed - as a compromise.

Arb.

tjh290633
Lemon Half
Posts: 8209
Joined: November 4th, 2016, 11:20 am
Has thanked: 913 times
Been thanked: 4097 times

Re: Diageo

#31810

Postby tjh290633 » February 15th, 2017, 6:18 pm

pendas wrote:Bed and ISA doesn't seem straightforward with Halifax Share Dealing, particularly as the unsheltered account is joint and one ISA is held elsewhere, so I've never used it in the past, taking my chances out of the market for a few days.

The holding is 135% of median, so I may repurchase at median as a compromise.


The solution is to remit the sale proceeds to your linked account, move it from there to the other linked account (if different) and buy back. It won't be instantaneous, like it ought to be. I have never tried it, but can you transfer cash from one Halifax account to another?

Buying back at median weight makes sense.

TJH

77ss
Lemon Quarter
Posts: 1271
Joined: November 4th, 2016, 10:42 am
Has thanked: 233 times
Been thanked: 414 times

Re: Diageo

#31877

Postby 77ss » February 15th, 2017, 9:50 pm

pendas wrote:I hold this share outside an ISA at the moment. It goes xd on the 23rd of this month after which point I will be selling to part fund next year's ISA.

The question is, would you purchase again with a yield of 2.8%?

Annualised return for me has been 16.2% and it has been one of the better shares on this metric. It provides around 2% of the income for 3.3% of the capital. Income is not required on a regular basis.


I bought late last year, when the prospective dividend rose to 3%. Happy with my decision, and I shan't be selling anytime soon.

I would not, however, move a modest yielding share into an ISA. Is there nothing else you can sell?

Like you, my thoughts are turning to next year's 20K ISA allowance. Fortunately, I have some high yielding shares that I can move.

NotoriousCanary
Posts: 29
Joined: November 4th, 2016, 9:04 am
Has thanked: 56 times
Been thanked: 6 times

Re: Diageo

#31893

Postby NotoriousCanary » February 15th, 2017, 11:03 pm

pendas wrote:
Bed and ISA doesn't seem straightforward with Halifax Share Dealing, particularly as the unsheltered account is joint and one ISA is held elsewhere, so I've never used it in the past, taking my chances out of the market for a few days.


I recently sold some shares in my Halifax Share Dealing account and moved the money into my Halifax Share ISA account.

There was no easy way to do it on the web page (and I couldn't be bothered moving the funds to my nominated bank account, transfer it to the ISA nominated bank account, and back into the ISA), so I gave them a call. Over the phone, they actioned the transfer to happen directly on the settlement day.

I was impressed how easy and straightforward Halifax made the process.

Give them a call!

..NC

JohnnyCyclops
Lemon Slice
Posts: 301
Joined: November 15th, 2016, 9:19 pm
Has thanked: 201 times
Been thanked: 124 times

Re: Diageo

#31906

Postby JohnnyCyclops » February 16th, 2017, 12:01 am

Diageo yield chart, since 1998, relative to the FTSE-AS yield (range 100% to 150%).

Looks like from a HYP POV the best time to buy Diageo was April 2009, at 4.5% yield. Or February 2000 at 4.3%. Most recently it was above 3.0% for nine of eleven months from August 2015 to June 2016, peaking at 3.3% in September 2015.

DGE yields based on trailing twelve month dividends, compared to start of month prices.

Seems to be a "grab it while you can" stock. Further below the dividend history. 5 and 10 year dividend CAGR at 7.9% and 6.6% respectively. Slowed recently back to 5% rises.

Image




Dod1010
Lemon Quarter
Posts: 1058
Joined: November 4th, 2016, 10:18 am
Has thanked: 19 times
Been thanked: 164 times

Re: Diageo

#31909

Postby Dod1010 » February 16th, 2017, 12:24 am

Do we not all find this discussion so much more interesting than the rules under TMF? At least half of this thread would have been ruled off piste under the old rules.

Dod

Moderator Message:
To be honest I have considered reminding posters about this, but then it comes back on course. But you are right and "Posters remember that this is the HYP Practical board, tinkering/top slicing has become part of the process for some but should not be the raison d'etre for any threads, please keep the discussions relevant to the aims of the board." Raptor.


edited to add the T to his.

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: Diageo

#31920

Postby Arborbridge » February 16th, 2017, 7:46 am

At least half of this thread would have been ruled off piste under the old rules.


Dod, I doubt that it would - but that's a matter of speculation of course.

Johnnycyclops - thanks for the chart. I just missed the 2009 peak and caught a yield of 3.5%. It's way off the mark at present, so we have to be patient. Unfortunately, too many people have caught on to investing for dividends from reliable companies.


Arb.

jackdaww
Lemon Quarter
Posts: 2081
Joined: November 4th, 2016, 11:53 am
Has thanked: 3203 times
Been thanked: 417 times

Re: Diageo

#31939

Postby jackdaww » February 16th, 2017, 8:43 am

Urbandreamer wrote:Caveat: While much of my portfolio is run on HYP lines I don't claim to abide by the "rules".

I bought Diageo in 2007 but am considering selling it.
The reason that I am thinking of selling is the level of debt on its books. You may want to consider their level of debt before a purchase.
I'm also not above slow tinkering as the world changes.


==================

i bought diageo at under £10 over the years , and dont plan to sell .

the debt levels have been around the same for over a decade , so perhaps its ok for this business .

fundsmith and nick train are holders .

8-)


Return to “HYP Practical (See Group Guidelines)”

Who is online

Users browsing this forum: No registered users and 13 guests