too high?

[moorfield]

Thanks for coming back on that IAAG. The list of 2*CTY cutters grows.

The dividend cuts we shall be discussing here this time next year are Vodafone and M&G, which I have already flagged elsewhere. Their yields have been too high for some time now, and not sustainable imo.

Something has to give.

[IanTHughes]

With a view to looking at whether this list of shares has measured up to their promise within a High Yield Portfolio (HYP), with a purchase made on 22 June 2022, the yield achieved compared with the yield originally forecast, would have been as follows:

EPIC    | Name                  | Buy Price | Buy Yield | Act Yield | +/- (%)
PSN     | Persimmon Plc         |  1,808.00 |    13.00% |     9.40% |  -3.60%
RIO     | Rio Tinto             |  5,019.00 |    11.51% |     8.11% |  -3.40%
AAL     | Anglo American plc    |  3,207.00 |     9.68% |     5.21% |  -4.47%
MNG     | M & G PLC             |    195.70 |     9.35% |    10.02% |   0.67%
ANTO    | Antofagasta plc       |  1,244.00 |     8.99% |     3.89% |  -5.10%
ABDN    | Abrdn PLC             |    166.40 |     8.77% |     8.77% |   0.00%
PHNX    | Phoenix Grp Holdings  |    617.20 |     7.92% |     8.23% |   0.31%
LGEN    | Legal & General Grp   |    241.20 |     7.65% |     8.03% |   0.38%
IMB     | Imperial Brands       |  1,831.50 |     7.59% |     8.89% |   1.30%
BDEV    | Barratt Developments  |    459.80 |     7.20% |     7.81% |   0.61%
TW      | Taylor Wimpey         |    116.50 |     7.11% |     7.78% |   0.67%
        |                       |           |           |           |        
Overall |                       |           |     8.98% |     7.83% |  -1.15%
        |                       |           |           |           |        
CTY     | The City of London IT |    396.00 |     4.90% |     5.06% |   0.16%

I would say that the HYP constituents have done rather well. They have certainly beaten CTY into a cocked hat!

Of course, as well as only looking at the income achieved, if one is serious about investigating the success or failure of the highest yielding constituents of an HYP, one must make a comparison with other lower yielding shares. Only then can one begin to get any view as to whether High Yield is preferable to Lower Yield.

Enjoy!


Ian

[BullDog]

Thanks for coming back on that IAAG. The list of 2*CTY cutters grows.

The dividend cuts we shall be discussing here this time next year are Vodafone and M&G, which I have already flagged elsewhere. Their yields have been too high for some time now, and not sustainable imo.

Something has to give.

Thanks. I absolutely agree with you on Vodafone, barge pole territory.

Regarding M&G, I have previously expressed worry about it's dividend sustainability. I have looked as hard as I can to find some evidence that a dividend cut is likely. I can't find any evidence that the current dividend is under threat. Now of course, these things can and do frequently come from nowhere. I shall continue to worry about MNG and it's dividend as it just feels too high. But I cannot find anything to confirm my fears. Can anyone else here?

There, I've done it now. There will be a cut announced next week.

[Alaric]

[I shall continue to worry about MNG and it's dividend as it just feels too high. But I cannot find anything to confirm my fears. Can anyone else here?

Despite the presentation of themselves as fund managers, they still have a sizeable chunk of insurance business inherited from when they were spun out by the Pru. There may be a fear that IFRS17 is going to restrict their ability to pay dividends, or have some other baleful effect.

[BullDog]

[I shall continue to worry about MNG and it's dividend as it just feels too high. But I cannot find anything to confirm my fears. Can anyone else here?

Despite the presentation of themselves as fund managers, they still have a sizeable chunk of insurance business inherited from when they were spun out by the Pru. There may be a fear that IFRS17 is going to restrict their ability to pay dividends, or have some other baleful effect.

Thanks, I honestly don't know. Everything I can see leads me to suggest the revenues of the business are pretty much baked in for the next few years. Of course, black swans appear from nowhere with alarming regularity.

[moorfield]

With a view to looking at whether this list of shares has measured up to their promise within a High Yield Portfolio (HYP), with a purchase made on 22 June 2022, the yield achieved compared with the yield originally forecast, would have been as follows:

EPIC    | Name                  | Buy Price | Buy Yield | Act Yield | +/- (%)
PSN     | Persimmon Plc         |  1,808.00 |    13.00% |     9.40% |  -3.60%
RIO     | Rio Tinto             |  5,019.00 |    11.51% |     8.11% |  -3.40%
AAL     | Anglo American plc    |  3,207.00 |     9.68% |     5.21% |  -4.47%
MNG     | M & G PLC             |    195.70 |     9.35% |    10.02% |   0.67%
ANTO    | Antofagasta plc       |  1,244.00 |     8.99% |     3.89% |  -5.10%
ABDN    | Abrdn PLC             |    166.40 |     8.77% |     8.77% |   0.00%
PHNX    | Phoenix Grp Holdings  |    617.20 |     7.92% |     8.23% |   0.31%
LGEN    | Legal & General Grp   |    241.20 |     7.65% |     8.03% |   0.38%
IMB     | Imperial Brands       |  1,831.50 |     7.59% |     8.89% |   1.30%
BDEV    | Barratt Developments  |    459.80 |     7.20% |     7.81% |   0.61%
TW      | Taylor Wimpey         |    116.50 |     7.11% |     7.78% |   0.67%
        |                       |           |           |           |        
Overall |                       |           |     8.98% |     7.83% |  -1.15%
        |                       |           |           |           |        
CTY     | The City of London IT |    396.00 |     4.90% |     5.06% |   0.16%

I would say that the HYP constituents have done rather well. They have certainly beaten CTY into a cocked hat!

Of course, as well as only looking at the income achieved, if one is serious about investigating the success or failure of the highest yielding constituents of an HYP, one must make a comparison with other lower yielding shares. Only then can one begin to get any view as to whether High Yield is preferable to Lower Yield.

Enjoy!


Ian

You're making the wrong comparison here. What you should be looking at is forecast income at 24/06/22 versus actual cashflow up to 08/07/23 - by my reckoning that would have been ~20% less than expected. An investor in CTY would not have seen such a drop.

The question then is how much income are you willing to lose for the higher yields you want to chase. My suggestion is that you should draw a line at 2*CTY.

[88V8]

The question then is how much income are you willing to lose for the higher yields you want to chase. My suggestion is that you should draw a line at 2*CTY.

I agree that a benchmark is a useful flag to prompt caution, whether 2xCTY or 160% of the FTSE or other comparators to choice.
A reminder that one should not load up one's portfolio with what might be regarded as ultra-high yielders.

Trouble is, with the exception of housebuilders and miners which are a crash waiting to happen, high yields usually look OK at the time.

V8

[moorfield]

I agree that a benchmark is a useful flag to prompt caution, whether 2xCTY or 160% of the FTSE or other comparators to choice.
A reminder that one should not load up one's portfolio with what might be regarded as ultra-high yielders.

That there is some correlation between a too high yield and the likelihood of a dividend cut I don't think many here would dispute. Those benchmarks are essentially just coarse attempts at understanding what the shape of that correlation might look like.

[Deletion]

Moderator Message:
Discussion of the validity of the HYP set of strategies as loosely defined in this board's guidelines is restricted here. This board is for discussing practical matters when actually running such an HYP. Thanks - Chris

[Dod101]

Thanks for coming back on that IAAG. The list of 2*CTY cutters grows.

The dividend cuts we shall be discussing here this time next year are Vodafone and M&G, which I have already flagged elsewhere. Their yields have been too high for some time now, and not sustainable imo.

Something has to give.

Thanks. I absolutely agree with you on Vodafone, barge pole territory.

Regarding M&G, I have previously expressed worry about it's dividend sustainability. I have looked as hard as I can to find some evidence that a dividend cut is likely. I can't find any evidence that the current dividend is under threat. Now of course, these things can and do frequently come from nowhere. I shall continue to worry about MNG and it's dividend as it just feels too high. But I cannot find anything to confirm my fears. Can anyone else here?

There, I've done it now. There will be a cut announced next week.

If it is of any comfort, that successful investor, Lord Lee of Trafford tells us in his column in today’s FT that he attended M&G’s AGM recently, and spent some time speaking to the CEO and the Chairman and came away impressed to the extent that he felt it had little downside and a big future so he sold his holding in Aviva and bought more of M&G. Its global opportunities are better than Aviva he says. That is not surprising since Aviva has sold most of its overseas businesses.My concern about M& G would be that it has three legs it would seem. The insurance side should be fine but fund management, certainly active fund management is struggling and I do not know about wealth management, nor do I know what proportions of its profits come from each. Lord Lee is not infallible but he is highly successful as an investor.
That for what it is worth.
I do not hold M&G.

Dod

[IanTHughes]

I would say that the HYP constituents have done rather well. They have certainly beaten CTY into a cocked hat!

Of course, as well as only looking at the income achieved, if one is serious about investigating the success or failure of the highest yielding constituents of an HYP, one must make a comparison with other lower yielding shares. Only then can one begin to get any view as to whether High Yield is preferable to Lower Yield.

You're making the wrong comparison here. What you should be looking at is forecast income at 24/06/22 versus actual cashflow up to 08/07/23 - by my reckoning that would have been ~20% less than expected. An investor in CTY would not have seen such a drop.

As someone who invests in a High Yield Portfolio (HYP), the only important requirement to me is to ,maximise the actual income received from the portfolio. As a result of that requirement, that is what I measure. If you want to compare “Apples with Oranges”, you go right ahead. Unlike you, I would not presume to tell you that: “you're making the wrong comparison here”.

The question then is how much income are you willing to lose for the higher yields you want to chase.

From the high yield shares investigated here, an investor has not lost any income at all. On the contrary they would have earned 7.83% in one year, by investing in shares that you would have rejected in favour of lower yielding shares, producing a lower income. The obvious response to what I believe to be a completely invalid question, is:

“How much income are you willing to lose by not selecting sustainable high yields, simply because they are higher than an artificial barrier that would appear to have been dreamed up out of thin air?”

My suggestion is that you should draw a line at 2*CTY.

I know, you do not hang back from banging on about it. Although funnily enough you have never posted any evidence to support such a theory. Why not? All you have to do, is show the research that you have done, together with the results achieved that support your yield limit of “2*CTY”. You surely have done such research, else how could you come up with such clear and precise conclusion? So, why do you not just post the details that you must have recorded?

All I was saying is that, so far, an income investor following your suggestion would most definitely have lost out on the main aim – income! In fact, it is not only this small selection of high yield shares here. With all the portfolios under my management, “real” and “virtual”, your suggestion of “drawing a line at “2*CTY”, would never have resulted in an income investor receiving more income. Not once. Even selecting low yield shares, simply because the yield has been below the yield of “2*CTY” would have, on occasion, proved costly for an income investor. Your limit of “2*CTY “, does not work in that it does not improve the required income result, rather it more likely does the opposite.

Of course, in order to come up with the conclusion that you have – avoid yields “2*CTY”- you must have done so much more research than I have. This is why I look forward so much to reviewing your research and evidence. Evidence which obviously pointed you towards the opposite conclusion to mine. Assuming there is any such research and evidence to review that is. Is there?

Mind you, it could be that the aim of your investment strategy is something other than maximising income, rather odd for an HYPer I know, but this board does attract all sorts. In which case I can only apologise for assuming the opposite. Who knows, you may be winning – well done!

Enjoy!


Ian

[GrahamPlatt]

Here is the raw data for Purchase Yields and subsequent dividend cuts/increases, within the ‘virtual‘ Drawdown Portfolio that I am currently managing.

EPIC      | Yield | Cut Y/N? | Cut %    | Next Yr % | Next Yr %
VOD       | 9.00% | Y        |  -40.35% |    -0.92% |    -0.79%
GSK       | 8.91% | N        |    0.00% |     0.00% |     0.00%
IGG       | 8.61% | N        |    0.00% |     0.00% |     0.00%
ABDN      | 7.97% | Y        |  -32.41% |     0.00% |     0.00%
HSBA      | 7.53% | Y        |  -39.13% |   -54.41% |    75.49%
AV        | 7.32% | Y        |  -48.33% |    35.48% |     5.00%
IMB       | 7.16% | Y        |  -33.33% |     0.99% |     0.30%
WPP       | 7.13% | Y        |  -62.17% |     5.73% |   252.88%
Portfolio | 6.32% |          |          |           |          
ITV       | 6.25% | Y        |  -67.50% |  -100.00% |   126.92%
SHEL      | 6.00% | Y        |  -66.55% |    34.08% |    22.92%
BP        | 5.63% | N        |  -38.04% |   -20.64% |    11.11%
LAND      | 5.33% | Y        |  -49.07% |    16.38% |    37.04%
BLND      | 5.26% | Y        |  -48.50% |    -5.79% |    45.74%
BHP       | 5.11% | Y        |  -12.86% |    65.33% |    32.63%
BA        | 4.53% | N        |    2.16% |     5.91% |     0.00%
SMDS      | 4.34% | Y        | -100.00% |    74.69% |    23.97%
CCL       | 3.96% | Y        | -100.00% |     0.00% |     0.00%
IBST      | 3.73% | Y        |  -66.32% |   -50.00% |   368.75%

As far as I can see, in this portfolio at least, there is no correlation that can be drawn with regard to the level of Purchase Yield and subsequent changes in dividend through the pandemic. Indeed the only 100% cuts have been at the lower purchase yields.

Enjoy!


Ian

OK: so I could, if I wished, get into Spearman Rank Correlation analyses etc etc. But I'm not sure that you're right when saying that no correlation can be discerned.

Basically, what I'm seeing is this: six out of eight of the above average yield stocks delivered a cut. Eight out of ten below average yield stocks delivered a cut. 75% versus 80%.

Furthermore, the average cut for the above average yield stocks was 42.62%. The average cut for the below average yield stocks was 72.73%.

So you're very generous in saying "no correlation", in my view. I'm seeing a somewhat different picture.

MDW1954

OK, I stopped reading this thread at a page or so after this, so 4 pages of post that I haven’t read..

ISTR reading (on here I think) a link to a study which more or less said the same thing - Covid &c notwithstanding. That high yields do not indicate / prophesy a decline in a company’s fortunes. If not the opposite. And when you play a little mind-game and turn this on it’s head, do very low yeilds indicate any sort of security? No, thought not.

[IanTHughes]

I agree that a benchmark is a useful flag to prompt caution, whether 2xCTY or 160% of the FTSE or other comparators to choice.
A reminder that one should not load up one's portfolio with what might be regarded as ultra-high yielders.

That there is some correlation between a too high yield and the likelihood of a dividend cut I don't think many here would dispute. Those benchmarks are essentially just coarse attempts at understanding what the shape of that correlation might look like.

In all my experience of investing, I have never seen any evidence that using such a filter as you have both suggested, does anything other than reduce the resulting portfolio income. If you have evidence to the contrary, please do share it. If, as I suspect, you have no such evidence, at least have the decency to admit that you cannot in any way substantiate such a theory!

[Deletion]

Far from being flawed, and unlike your completely unproven theory, the referenced selection procedure, has been proven to successfully achieve its income aims, on multiple occasions.

Enjoy!


Ian

[moorfield]

That there is some correlation between a too high yield and the likelihood of a dividend cut I don't think many here would dispute. Those benchmarks are essentially just coarse attempts at understanding what the shape of that correlation might look like.

In all my experience of investing, I have never seen any evidence that using such a filter as you have both suggested, does anything other than reduce the resulting portfolio income. If you have evidence to the contrary, please do share it. If, as I suspect, you have no such evidence, at least have the decency to admit that you cannot in any way substantiate such a theory!

[Deletion]

Far from being flawed, and unlike your completely unproven theory, the referenced selection procedure, has been proven to successfully achieve its income aims, on multiple occasions.

Enjoy!


Ian

I do intend to publish something but you'll have to wait for that. It's a project that I have earmarked to fill my time when I retire. I may even try and turn into a PhD of some sort, if I can find a supervisor willing enough.

For now, 2*CTY is the nub of an idea, a simple way of encapsulating what is a complicated problem and helping DIY investors manage their hard earned and saved, as I think you well know.

Other than LUnis 160% FTSE, I have not read any attempts here in 7 years or so at describing the correlation I mentioned above better than he or I have.

The floor is open, as always.

[IanTHughes]

In all my experience of investing, I have never seen any evidence that using such a filter as you have both suggested, does anything other than reduce the resulting portfolio income. If you have evidence to the contrary, please do share it. If, as I suspect, you have no such evidence, at least have the decency to admit that you cannot in any way substantiate such a theory!

Far from being flawed, and unlike your completely unproven theory, the referenced selection procedure, has been proven to successfully achieve its income aims, on multiple occasions.

I do intend to publish something but you'll have to wait for that. It's a project that I have earmarked to fill my time when I retire. I may even try and turn into a PhD of some sort, if I can find a supervisor willing enough.

For now, 2*CTY is the nub of an idea, a simple way of encapsulating what is a complicated problem and helping DIY investors manage their hard earned and saved, as I think you well know.

Other than LUnis 160% FTSE, I have not read any attempts here in 7 years or so at describing the correlation I mentioned above better than he or I have.

The floor is open, as always.

I should of course point out that Luniversal, like yourself, never published any researech/evidence to back up his notions of safe/unsafe yield levels. Like yourself, he simply published his unsubstantiated theory as fact, without bothering to explain anything as to how he came up with it. Somehow, again like yourself, he managed to come up up with what was a very precise theory, wiithout having done any research at all. Remarkable really. He, and now you it appears you, have the ability to reach such precise conclusions, simply by thinking of them. Any research can safely be left to a "later" date.

A fantastic achievementt, I salute you. I do so wish I too had such an ability!

Enjoy!


Ian

[moorfield]

I do intend to publish something but you'll have to wait for that. It's a project that I have earmarked to fill my time when I retire. I may even try and turn into a PhD of some sort, if I can find a supervisor willing enough.

For now, 2*CTY is the nub of an idea, a simple way of encapsulating what is a complicated problem and helping DIY investors manage their hard earned and saved, as I think you well know.

Other than LUnis 160% FTSE, I have not read any attempts here in 7 years or so at describing the correlation I mentioned above better than he or I have.

The floor is open, as always.

I should of course point out that Luniversal, like yourself, never published any researech/evidence to back up his notions of safe/unsafe yield levels. Like yourself, he simply published his unsubstantiated theory as fact, without bothering to explain anything as to how he came up with it. Somehow, again like yourself, he managed to come up up with what was a very precise theory, wiithout having done any research at all. Remarkable really. He, and now you it appears you, have the ability to reach such precise conclusions, simply by thinking of them. Any research can safely be left to a "later" date.

A fantastic achievementt, I salute you. I do so wish I too had such an ability!

Enjoy!


Ian

I have never claimed this is a precise theory. Read back through all my posts on this and you will find I frequently describe it as a "coarse" tool.

What I do have so far and based on observing my own holdings is

CLLN
IMB
VOD
RDSB

All of these were running at persistently too high yields above 2*CTY prior to their last dividend cuts. IAAG has added three more to that list today.

Vodafone is the "live" example under scrutiny currently. If its dividend is sustainable - why aren't income investors buying it ?

[IanTHughes]

I should of course point out that Luniversal, like yourself, never published any researech/evidence to back up his notions of safe/unsafe yield levels. Like yourself, he simply published his unsubstantiated theory as fact, without bothering to explain anything as to how he came up with it. Somehow, again like yourself, he managed to come up up with what was a very precise theory, wiithout having done any research at all. Remarkable really. He, and now you it appears you, have the ability to reach such precise conclusions, simply by thinking of them. Any research can safely be left to a "later" date.

A fantastic achievement, I salute you. I do so wish I too had such an ability!

I have never claimed this is a precise theory. Read back through all my posts on this and you will find I frequently describe it as a "coarse" tool.

Your persistance in telling others to avoid any yield that is greater than twice the yield that could be achieved investing in an Investment Trust, is precise.

How did you come up with twice and not three times? Did you pehaps reject one and a half times the IT's yield? Do please tell us, what brought you to the precise figure of twice.

What I do have so far and based on observing my own holdings is

CLLN
IMB
VOD
RDSB

All of these were running at persistently too high yields above 2*CTY prior to their last dividend cuts. IAAG has added three more to that list today.

How many possible holdings did you investigate in order to find out these four holdings? Was it 100, 200? How many?

How did you determine that the only reason to reject these four possible purchases was a too high yield? Between what dates did you determine that the only reason to reject these four possible purchases was a too high yield?

How do you reconcile your findings with the fact that my own experience with three of them has been extremely positive, from an income point of view? Even the fourth one - CLLN - earned as much in income as it lost in capital? When was CLLN offered at a yield of over twice that for CTY, apart from when it was declared as bankrupt? According to my records never, but you must have other information to impart. Why do you not impart it?

Why should anyone accept the unsubstantiated trigger warnings that you are claiming you received, when you will not even describe what and when they occurred? Nor do you provide any details as to the possible warnings, other than high yield, that were already in place?

What about all those High Yields that were successful? What about all those Lower Yields - lower than twice what was offered by CTY - that failed? Do you just ignore them? Are you seriously resting your whole theory on four holdings out of possibly hundreds, simply because they happened to match your unsubstantiated failure criteria?

I could go on and on with the abject pointlessness with regard to what you are claiming is the beginnings of the proof for your so-far unstantiated theory, but all I will say is that, if you are serious about publishing a paper for a PhD, you have a lot to learn!

Any income investor, DIY or otherwise, should be made aware that your theory about rejecting investing in shares offering more than twice the yield offered by The City of London Investment Trust plc (CTY), is based on nothing substantial at all. The only guaranteed consequence of following such a strategy, will be a reduction in income produced.

Enjoy!


ian

[Itsallaguess]

‎
When we're discussing investment approaches, I think there's a lot to be said for the idea that people are willing to accept some lack of accuracy if it helps to achieve a degree of simplicity, and I would hope it's clear that moorfield has consistently put forward his idea of a potential income-investment being too risky if it's currently stated to be yielding over 2-times the current yield of City of London Investment Trust (CTY) in that very light, and as such, I think it's unfair to hold up such a simple idea against a potential '100% data-set' and either dismiss it if that data-set is not available, or to dismiss it if it can't be 'proved' to be 100% accurate every single time, because I think that's attempting to hold up that simple idea to a standard of accuracy that it's not actually intending to deliver to...

I would prefer to consider the '2-times CTY yield' approach as being similar to the 30mph speed limit on many of our UK roads...

As drivers, we're happy to accept that simple 30mph speed-limit as being one where generally, there are detrimental outcomes where that speed limit is broken on such designated roads.

I think that broadly, most drivers are happy to accept that simple idea, and the reasoning behind it.

But that's not to say that there has never been a driver going 32mph on such a road, who didn't have a detrimental outcome...

Of course there has...

It's also not to say that there has never been a driver going 28mph on such a road, who did have a a detrimental outcome...

Of course there has...

And it's also not to say that, as drivers, we expect to be able to see some sort of '100% data-set' where records of every single incident over and under 30mph has been made publicly available before we're happy to accept the idea behind, and the sensible need for, that 30mph limit...

But even despite the above accepted inconsistencies in that 30mph speed limit and any data behind it, I think as drivers we're generally happy to accept that it's a simple, but not 100% accurate method to help guide 30mph road users into following a broadly safe driving process...

I think moorfield's 'two-times the CTY yield' approach should be seen in a similar light to the above, and with attempts to hold it to a higher statistical standard than it was ever intended for as being nothing more than an attempt to shut down an interesting and ongoing debate, as can be seen by some of the recent data on this very thread...

https://www.lemonfool.co.uk/viewtopic.php?f=15&t=34915&start=160#p600721

Finally, and sticking with the above driving analogy for a moment, I think it's also worth remembering that Ayrton Senna might have had quite a lot to say about someone trying to suggest to him that driving under 30mph helps to remove the risk of bad outcomes regarding his driving, but I think it's also worth remembering that the UK Highways Agency probably never intended Ayrton Senna as being the target audience in this particular debate...

Cheers,

Itsallaguess

[monabri]

"Too high" is a floating number, not fixed at say an arbitrary value (eg "2xCTY"). If a business is generating the free cash flow it can afford the dividend otherwise it is making dividend payments that are funded by adding debt. Possibly acceptable if it's a one off or there is a reason such as wanting to invest in the business. If it is a low margin business it might not be able to service the debt and then has the further problem of paying the debt down and then might go cap in hand back to it's investors. Maybe one should not simply reject a company because of 'rateism'.

[MDW1954]

Moderator Message:
There's rather too much personal attack creeping into this thread. ITH, please rein back your sarcasm, or you will find your posts being edited or deleted. If poster moorfield feels that yields higher than 2*CTY are too rich for his or her own personal portfolio, that is his or her affair. Granted, advocating that others pursue the same approach crosses a line, but plenty of people on here advocate all sorts of things without having shovelfuls of sarcasm dumped over them. This is an interesting debate, informed by a small sample of relevant data points. Let's keep it as a debate, and not turn it into a scene from Monty Python's Life of Brian. --MDW1954

[Itsallaguess]

I have never claimed [2-times the current CTY yield] is a precise theory.

Read back through all my posts on this and you will find I frequently describe it as a "coarse" tool.

What I do have so far and based on observing my own holdings is

CLLN
IMB
VOD
RDSB

All of these were running at persistently too high yields above 2*CTY prior to their last dividend cuts. IAAG has added three more to that list today.

I know the above reply wasn't to me moorfield, but just out of interest, I've taken a look at the CLLN history and can present the following relevant evidence to help with your view on that particular share -

As you'll be aware, there was a very lengthy and interesting (at the time, and certainly now with hindsight...) HYP Practical thread here on Carillion, before and during the time of it's end-of-life struggles, and on June 30th 2017, ayshfm1 wrote the following on Page 16 of the CLLN thread linked below -

"With a HYP share like CLLN, now yielding circa 10%" -

https://www.lemonfool.co.uk/viewtopic.php?f=15&t=2950&start=300#p63863


If we then check what the historical yield of CTY was on that same date, June 30th 2017, we can see that it was around 5.1% -




Source - https://finbox.com/LSE:CTY/dividends/


So the above data seems to corroborate your own personal experience with CLLN and your admittedly 'course tool' of testing against a '2-times CTY yield', where the CLLN yield at that time looks likely to have met that 'too high' criteria when viewed with a reasonable eye...


And then, in addition to the above, if we return to the above linked CLLN thread just a few days later, on July 10th 2017, we can see the following update from wanderer101 -

"The [CLLN trading] update has come early, and it is not good: dividends suspended and it sounds like a rights issue in the offing" -

https://www.lemonfool.co.uk/viewtopic.php?f=15&t=2950&start=320#p65965


CLLN shares opened on that day around 40% down, and with the above-mentioned suspension of dividends delivering a double-whallop for income-seeking holders...

I've linked the bomb-shell July 10th 2017 trading statement from CLLN below for completion -

https://www.investegate.co.uk/announcement/rns/carillion--clln/trading-statement/5022261


So in conclusion then, I think it's fair to say that your current broad view on a '2-times CTY yield' that was around 5% at that time, set against a June 30th 2017 yield for CLLN of 'circa 10%' as stated in the above quoted post should hopefully help to back up your position on that particular share...

Cheers,

Itsallaguess