September top up

[Arborbridge]

Here's the top eleven shares in my HYP. I've already added Chesnara to the mix, but only 0.6 of a unit simply due to the limited amount of cash in that particular broker account.






The table is as usual in top up order as given by the HYPTUSS - at this stage none of the yields have been checked and they are all "first cut" from the spread sheet as downloaded. The capital weight is shown relative to the median being "1". As usual, I do not necessarily pick the first valid share, but allow myself any of the top third of my HYP. I've decided that, if there are no big changes, I will be placing an order tomorrow for BT to bring it up to median value. Lloyds is in first place and may well receive a further top up in future, but I'm holding off for a month or two.

Arb.

[idpickering]

Good morning Arb,

Seems like a good option topping up BT.A . May I ask why BP. and SSE feature in your table at all, as both are capital weighted as being at the medium value? You're not going to go overweight on them in the future are you ?

Regards,

Ian.

[Arborbridge]

May I ask why BP. and SSE feature in your table at all, as both are capital weighted as being at the medium value?

Ian, it's the way HYPTUSS works, based on TJH's ideas. Because their yield is high, it gives them a high weighting in the table overall. One does not have to slavishly following the ranking, of course. You'll notice that the income from each is around 3.9% of my portfolio, and owing to my self imposed limits, I would most likely veto them.

So, the table is a starting point, not my ordering of a wish list.


Arb.

[idpickering]

May I ask why BP. and SSE feature in your table at all, as both are capital weighted as being at the medium value?

Ian, it's the way HYPTUSS works, based on TJH's ideas. Because their yield is high, it gives them a high weighting in the table overall. One does not have to slavishly following the ranking, of course. You'll notice that the income from each is around 3.9% of my portfolio, and owing to my self imposed limits, I would most likely veto them.

So, the table is a starting point, not my ordering of a wish list.


Arb.

Thank you for coming back on this Arb. I understand now.

Ian.

[ZipserSir]

Hello Arb.

The only two we share on our add to lists are VOD and SSE.

What is the attraction of BT? I also hold, but no plans to add to.

Fool on, ZipserSir

[kempiejon]

What is the attraction of BT? I also hold, but no plans to add to.

I see BT's yield has gone up 5% in the past couple of months and over 25% since I added about a year ago and has probably not been this good for income in the past 4/5 years. Alternatively BT is on the skids.

[idpickering]

Alternatively BT is on the skids.

To some here it always has been! Seriously though, great for added diversification, with an adequately covered dividend, and a great forward yield of 5.6%, what's not to like?

Ian.

[Gengulphus]

Seriously though, great for added diversification, with an adequately covered dividend, and a great forward yield of 5.6%, what's not to like?

Serious dividend cuts around 2001 and 2009, as a result of which the dividend per share is still some 22% below its 2000 level (that's with adjustments for the 2001 rights issue).

Big pension deficit.

Not saying those necessarily outweigh the points you mention, but they do counterbalance them to at least some extent - HYPers will have to make up their own minds how much. But as a general rule, if you haven't found things not to like about a HYP share, keep looking - because it's far more likely to indicate a failure to see them than their absence!

Gengulphus

[idpickering]

Seriously though, great for added diversification, with an adequately covered dividend, and a great forward yield of 5.6%, what's not to like?

Serious dividend cuts around 2001 and 2009, as a result of which the dividend per share is still some 22% below its 2000 level (that's with adjustments for the 2001 rights issue).

Big pension deficit.

Not saying those necessarily outweigh the points you mention, but they do counterbalance them to at least some extent - HYPers will have to make up their own minds how much. But as a general rule, if you haven't found things not to like about a HYP share, keep looking - because it's far more likely to indicate a failure to see them than their absence!

Gengulphus

Fair points Gengulphus, but that's the nature of investing surely. All HYPers, and other investors, should DYOR, and if you're happy with the risk go for it. Don't just rely on my, or any other investor's opinion in isolation.

Ian.

[Bouleversee]

I hold all of ARB's list (plus a lot more) and I have to say that I feel no desire to add a penny to any of them as they have been very disappointing investments so far as I am concerned, apart from SSE, whose day I suspect has passed. As regards BT, their yield looks high because the s.p. has come down such a lot but the div. is not particularly well covered and if you look at the fundamentals inc. the EPS they are IMHO not very impressive and if you consider their situation re Openreach, the pension fund obligations and the pressure on them to improve broadband speeds and provide access to their networks to competitors, I am not convinced that the future is all that rosy so far as investors are concerned. I should be delighted, however, if I am proved wrong.

[Arborbridge]

I've been away, so haven't all the threads. I just picked this from something by Gengulphus:

But as a general rule, if you haven't found things not to like about a HYP share, keep looking - because it's far more likely to indicate a failure to see them than their absence!

What a brilliant statement! I've often thought one can find something wrong with any share if you lok hard enough.

In a wider context: sometimes the general market goes up or down for no apparent reason: sometimes it's looking only at the bad news, sometimes the good.

[Arborbridge]

For completeness, here's the state of play of my top third of the HYP after the September topup, which consisted of BT BLND, and GNK.




If this batting order stays the same, a topup of Lloyds is on the cards, with the second string being Aviva or an IT if I feel that way inclined!
In summary: VOD is ruled out due to cover, CNA due to the cost of capital already sunk, SSE, GNK and BP are over or too close to median. Chesnara would be allowable, but there is not enough cash in that account.

Arb.

[OLTB]

Hi Arb - I get what you're saying about VOD's cover and it's very similar to BP's - would you have the same reason for steering clear of BP for the same reason if it was a potential top-up candidate? I only ask as VOD is a potential candidate for me and from what I understand, cover has been on the low side for a while for VOD. It has never been a huge issue for me - perhaps it should be! I assume that most people think the dividend is fairly safe because of the volume of cash flow VOD attracts.

Cheers, OLTB.

[Arborbridge]

VOD's a mystery in that respect. I've been hoping the cover would improve when the Indian matters resolve, but I've been waiting several years now and am losing hope. I've no idea whether this is all "OK" and we can just ignore it, or whether there's a disaster round the corner.
I comfort myself with the fact that VOD is well supported in the market, but even then, I see that support has been a little indifferent for several years which is worrying.

I seem to remember the cover deteriorated around the time of selling out their US investments as that produced a good income.

Arb

[Arborbridge]

Looking at VOD's financial position in the past few years, it looks anything but sweetness and light. I notice that Dod has an investment in VOD and is usually pretty rigorous - could he explain why he feels VOD is secure enough?

That rfeminds of another point about cash flows. On the Mornging star site, I see they give a figure for cash flow per share. Fine, but my confusion is the fact that they also give a CAPEX per share but do not tell us if that has already been subtracted from the cash flow to give a net cash flow. In the case of VOD, for example, the cps is 25.09p and the CAPEX is 26.53p. Is this telling me the net cash flow is negative, or has the CAPEX already been subtracted from the cps?

Can anyone enlighten me?

[monabri]

Recent discussion (19 September) on VOD over at the other place.

http://www.fool.co.uk/investing/2017/09 ... group-plc/


Edit: actually quite a few articles on VOD "over there".

[OLTB]

Looking at VOD's financial position in the past few years, it looks anything but sweetness and light. I notice that Dod has an investment in VOD and is usually pretty rigorous - could he explain why he feels VOD is secure enough?

That rfeminds of another point about cash flows. On the Mornging star site, I see they give a figure for cash flow per share. Fine, but my confusion is the fact that they also give a CAPEX per share but do not tell us if that has already been subtracted from the cash flow to give a net cash flow. In the case of VOD, for example, the cps is 25.09p and the CAPEX is 26.53p. Is this telling me the net cash flow is negative, or has the CAPEX already been subtracted from the cps?

Can anyone enlighten me?

Hi Arb - I've had a look at a few sites (Investopedia etc.) and they seem to say:

'Free cash flow per share is a measure of how much cash per share a business generates after accounting for capital expenditures like equipment or buildings. Free cash flow is available to be used for expansion, dividends, debt reduction, or other purposes.'

So it looks like CAPEX will already have been deducted.

Cheers, OLTB.

[moorfield]

Can anyone enlighten me?

Arb, I think you're right to be asking questions about VOD.

Continuing in the same vein following my previous posts on GNK and WPP's cashflow statements, the numbers I have immediately to hand for VOD's dividend cover from cashflow 2010-16 are:

1.1x, 0.7x, 1.2x, 1.1x, 0.6x, 0.1x, -0.7x

(the numbers bolded are the years before/after the Verizon disposal)

I haven't looked at financial year 16/17 yet, and see that they have restated accounts for 14/15, 15/16, so I'll need to recompute those numbers to get up to date with Project Spring.

I hold VOD and happy to continue doing so while my overall HYP income delivers. It has been persistently floating around #4-5 in my top up list, so unlikely to be added to for the forseeable future (unless perhaps the SP crashes to £1 )

[monabri]

There are no clues from the visible shorts on VOD. But perhaps this might be because it could be very expensive to get it wrong when you go short on a £50 billion company.

[Dod1010]

Arb

I am no font of wisdom but to me Vodafone has delivered and keeps delivering. Why worry? (Slightly tongue in cheek but it is getting late)

A bit like Shell. Keep the faith.

The IC today is if not exactly singing its praises, rates SSE as a buy. With a yield of well over 6% at the moment it is certainly a good buy. I am topping up next week I think, with some spare dividend money from the surfeit of this month.

Dod