Hypster's HYP

[moorfield]

I made a mistake. I've been away travelling with work a lot recently, in fact I'm jet-lagged as I write this having flown home from the most recent trip yesterday. I only mention this because I think the travelling was a contributing factor to my cock-up. Anyway, back in February I topped up Hammerson and United Utilities but I discovered this week that I never updated my spreadsheet with these purchases. This lead to both shares still being ranked as optimum top-up candidates. As a result, when I used my accumulated cash later in February I topped up United Utilities again and in my regular monthly top up at the start of March I again topped up Hammerson. This means I've doubled up my top-ups for both United Utilities and Hammerson. Ah well, c'est la vie. However, by a lucky twist of fate, HMSO jumped almost 25 % this week so my portfolio benefitted from my having a bigger holding than planned. Both shares are now overweight being the largest two holdings in the portfolio. They won't need topping up for a while.

I forgot to cancel a cheap-day order a few years ago which resulted in an additional and unintended top up of Vodafone the following month.

It's a molehill, which very likely you won't remember or notice in a few years time.

IMO there's no need to get overly obsessed by weightings/medians etc. or trying to correct these mistakes while one is in "building" phase. I set myself quite a high bar (10% capital or forecast income per sector, 20% capital or forecast income per industry) that I check I stay under with each top up, and am quite comfortable progressing in lumpy steps.

[Arborbridge]

I forgot to cancel a cheap-day order a few years ago which resulted in an additional and unintended top up of Vodafone the following month.

It's a molehill, which very likely you won't remember or notice in a few years time.

IMO there's no need to get overly obsessed by weightings/medians etc. or trying to correct these mistakes while one is in "building" phase. I set myself quite a high bar (10% capital or forecast income per sector, 20% capital or forecast income per industry) that I check I stay under with each top up, and am quite comfortable progressing in lumpy steps.

You may remember my own worst mistake from many years ago, related here occasionally.

1)The second worst mistake ever: buying £10000 of the owner of Primark instead of £1000.


2)The worst mistake ever: selling £9000 the next day.

Had I held on to them for the next few years, it would probably have been the best invesment of my life. But I didn't.


Arb.

[Hypster]

I like the molehill description Moorfield!

[Hypster]

I’m struggling to find two top-up candidates this month. If I remove all shares above sector and value weighting caps I’m left with the following candidates. I have to go all the way down to rank number 9 to find a share I’m happy with (ITV).



If I remove those that don’t meet my forecast cover safety filter (x1.5) then the ones that remain either have a low yield or one that seems to be “too good to be true”



Key:
c: cover too low
h: yield too-good-to-be-true
l: yield too low

Which one of these would you choose, alongside ITV, for my next top-up? Should I stay in cash or compromise on one of the three reasons for exclusion.

[tjh290633]

I would just take No.1, VOD. Why have a ranking system and ignore it?

TJH

[Itsallaguess]

I would just take No.1, VOD. Why have a ranking system and ignore it?

I don't think it's being ignored - it's simply that it's being used only as part of the selection process.

I personally don't see anything wrong with that, and perhaps would say that as I follow a similar use of the rankings, and am also quite happy to work my way down the list until I come to something I prefer over what are often more prominent options listed.

In fact, I honestly cannot remember the last time I topped-up the highest ranking option...

I don't think there's anything wrong with that, as the ranking list is still a really useful way to quickly visualise the optimum use of fresh HYP capital with regards to income benefits whilst maintaining a good spread of capital weighting across the portfolio; it's just that other factors might well supersede some of the options presented by it.

Cheers,

Itsallagues

[idpickering]

I agree with TJH. I would pick Vodafone, and top it up until it got to being at the average HYP value weighting.

Ian

[FarmerTom]

I topped up both ITV and VOD early on Friday.
Now both sit as median holdings.

[idpickering]

I topped up both ITV and VOD early on Friday.
Now both sit as median holdings.

As it should be FarmerTom. I do intend topping up my holdings in those two soon myself.

Ian.

[Hypster]

Thank you for the replies. Itsallaguess correctly summarised why I wasn't automatically going with the top ranked share. The thing that concerns me with Vodafone is a question mark over the sustainability of the dividend. The forecast dividend cover is below 1 and the Free Cash Flow dividend cover has been below 1 for the last three years:



Is anyone else concerned about the safety of Vodafone's dividend?

[idpickering]

Thank you for the replies. Itsallaguess correctly summarised why I wasn't automatically going with the top ranked share. The thing that concerns me with Vodafone is a question mark over the sustainability of the dividend. The forecast dividend cover is below 1 and the Free Cash Flow dividend cover has been below 1 for the last three years:



Is anyone else concerned about the safety of Vodafone's dividend?

For me that's a no Hypster. I am aware of the maths as pointed out by your good self, but I'm willing to give this massive company the benefit of the doubt, or maybe I'm being a bit naïve? I've held VOD for years, and it's paid out every year.

Hope that helps,

Ian.

[moorfield]

Is anyone else concerned about the safety of Vodafone's dividend?

Not really. Vodafone has been going through a period of some change following the Verizon sale. Ask me again in 5 years.

[torata]

Is anyone else concerned about the safety of Vodafone's dividend?

Not really. Vodafone has been going through a period of some change following the Verizon sale. Ask me again in 5 years.

To echo Moorfield's comment, it was obvious when Vodafone decided to sell their Verizon stake that the dividend would be uncovered, but to summarize my memory of sentiment at that time, it was: they have a pile of cash to allow them to pay it out of reserves for the time being, and the cash will be used for some kind of investment that will make up for dividend flow from Verizon

But, now that I think about it, that sale was around Feb/March 2014...

torata

[Walrus]

vodafone is the share I have that I feel is at most risk to a dividend cut, and it does make me nervous. That being said I don't feel anything has really changed over the last 3 months so theoretically you are getting a better deal now than at 220/240. With the amount of other cheap trades out there it's not one I'm currently eyeing up as a top up. I think the rerating of Utes is probably underway now.

[Hypster]

Thanks everyone for your contributions, I've been mulling things over and have enjoyed going through the process. I've decided to compromise on my "reasons for exclusion" for next month's top-ups: I'm going to exclude only those shares where I'm already above my weighting cap so if I strip those out my top-up rankings look like this:



I'll top-up VOD and IMB on Tuesday.

[Hypster]

It's been an interesting week watching the developments surrounding the Sky takeover situation. Sky's forecast yield is now down to 2.6% but the capital appreciation in the short time I've held it has been superb. Regarding my next top-ups, I'm continuing in the methodology mentioned last month: those above weighting cap are excluded and there ranking order will guide me from then on (barring any obvious exclusionary news flow). Consequently, I'll be topping up Vodafone and ITV.

[Hypster]

The Vodafone and ITV top-ups went through last week and the small change from the deals took my accumulated cash to an economical level for another top-up. On the day, National Grid was in pole position and was duly topped up. I'm thinking of bringing Marks and Spencer on board to double up in the General Retail sector. Since I bought Next the share price has risen 40% so the yield is now relatively low. I've added MKS to the table below for comparison.

[jimleigh]

The Vodafone and ITV top-ups went through last week and the small change from the deals took my accumulated cash to an economical level for another top-up. On the day, National Grid was in pole position and was duly topped up. I'm thinking of bringing Marks and Spencer on board to double up in the General Retail sector. Since I bought Next the share price has risen 40% so the yield is now relatively low. I've added MKS to the table below for comparison.

Personally if I was intending to add MKS, I would have done so before the top-ups of VOD & ITV. As I first use the top-up table to indicate the most likely candidate for a top-up, but then use DL stock screener to find any suitable shares with better yield and proceed to purchase the new share if it passes my HYP selection criteria.

[Hypster]

With additional cash being invested into my HYP last week, I topped up SSE and BT on 1st June. I'm still watching Marks & Spencer. As of 1st June the portfolio looks like this:

[Hypster]

Pinch, punch and all that. Here are the first five in my top-up rankings. Persimmon is due to issue a trading statement on Thursday. The price has fallen around 12% in the last four weeks pushing the forecast yield up to a lofty 9%. I do wonder if the market is expecting the capital return plan to be stopped or reduced. Both Legal and General and SSE are excluded because they are above my weighting cap. Marks and Spencer is on the subs bench.

So, my current thinking is to top-up Vodafone tomorrow, then wait until Thursday for the Persimmon update and either top that up or use the money to open a small position in Marks and Spencer.