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I'm so glad....

Practical discussions about equity High-Yield Portfolios (HYP) for income
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Tight HYP discussions only please - OT please discuss in strategies
idpickering
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I'm so glad....

#85708

Postby idpickering » October 4th, 2017, 3:07 pm

...that HYP is all about the income.

With a number of my holdings in the red today, it does become hard to ignore that fact. My main downers today include, Centrica - 5.5%, Royal Mail -2.7%, Sse plc - 2%, Sainsbury -2.6%, and Standard Life - 2.5%. But I don't feel bad.....it's about the income after all. :lol:

Ian.

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Re: I'm so glad....

#85710

Postby moorfield » October 4th, 2017, 3:18 pm

idpickering wrote:...that HYP is all about the income.

With a number of my holdings in the red today, it does become hard to ignore that fact. My main downers today include, Centrica - 5.5%, Royal Mail -2.7%, Sse plc - 2%, Sainsbury -2.6%, and Standard Life - 2.5%. But I don't feel bad.....it's about the income after all. :lol:

Ian.


Yes I do agree Ian, and have commented before it's much easier to mentally ignore if one looks at share price changes in terms of yield - plus or minus a few tenths of percent today? Not too much to panic about is it? :mrgreen:

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Re: I'm so glad....

#85745

Postby daveh » October 4th, 2017, 4:52 pm

idpickering wrote:...that HYP is all about the income.

With a number of my holdings in the red today, it does become hard to ignore that fact. My main downers today include, Centrica - 5.5%, Royal Mail -2.7%, Sse plc - 2%, Sainsbury -2.6%, and Standard Life - 2.5%. But I don't feel bad.....it's about the income after all. :lol:

Ian.

Well I updated my portfolio this morning (without updating the price of 3 ETFs and a preference share) it was up 1.5% compared to the middle of September, plus I had a small unexpected dividend announced from Tesco (which will increase this years dividends by ~0.15%). The capital change is within the day to day noise of the portfolio value. (Of the shares mentioned I hold SSE and Sainsbury).

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Re: I'm so glad....

#85779

Postby richfool » October 4th, 2017, 6:12 pm

idpickering wrote:...that HYP is all about the income.

With a number of my holdings in the red today, it does become hard to ignore that fact. My main downers today include, Centrica - 5.5%, Royal Mail -2.7%, Sse plc - 2%, Sainsbury -2.6%, and Standard Life - 2.5%. But I don't feel bad.....it's about the income after all. :lol:

Ian.

If HYP'ers were really only interested in the income, they wouldn't be looking at the "downers", or which stocks were down (or up). ;) They wouldn't know, would they? Unless of course they were thinking of topping up and wanted to know the best deal. ;)

I admit I do look at SP movements.

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Re: I'm so glad....

#85800

Postby monabri » October 4th, 2017, 7:49 pm

As long as the dividends arrive at a "reasonable level" then it's ok (everyone might have a different idea of what reasonable is but let's
not debate that! ;) ).

Hopefully, I'm looking at it as a 4.5 to 5% yield from now to the year dot.. If the dividend also increases then I effectively "recover" my original outlay in "x"years (please don't go into NPV calcs)

So, the secret to HYP is to continue living as long as possible - let's try to oblige folks!

Speaketh the man who bought into CLLN, IRV and PFG .... but at least my others are paying divis.

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Re: I'm so glad....

#85805

Postby Bouleversee » October 4th, 2017, 7:56 pm

The utilities had already been somewhat clobbered by Labour threats and today they got a further smack from Theresa May, so can we assume that is all in the price now and an opportunity for anyone holding outside an ISA or SIPP to transfer in and make use of their loss for cgt purposes or if showing a loss inside to top up? I think Ian is kidding us and himself. Nobody can be happy about such large losses unless they feel sure they are temporary in which case topping up must be the order of the day. I'm not totally convinced that they will be able to cap charges in the way they hope to but short of renationalisation these companies must be allowed to make reasonable profits and their shareholders a reasonable income so I should have thought further downside potential was somewhat limited. Famous last words! (Just trying to cheer you up, Ian).

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Re: I'm so glad....

#85838

Postby Gengulphus » October 4th, 2017, 10:27 pm

richfool wrote:If HYP'ers were really only interested in the income, ...

... they wouldn't post about day-to-day share price fluctuations.

Or probably more accurately, those HYPers who are only interested in the income, or mainly interested in the income and with some interest in long-term capital growth as a secondary objective, don't post about day-to-day share price fluctuations on this board. And other HYPers miss what is IMHO a major point about the strategy and do post about them.

Guess what impression this board ends up giving about HYPers' interests...

Gengulphus

thebarns
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Re: I'm so glad....

#85843

Postby thebarns » October 4th, 2017, 10:43 pm

I initially declare that I have many of the usual HY shares, including a number that have taken a caning in the last few months.

Also I am set to retire next year, with no security of a final salary pension scheme, relying solely on my own defined contribution pension plus ISAs, a significant chunk of which are invested in HY shares to generate the income needed to live on.

It can be disconcerting looking at falls in capital value, not because hard earned money is showing a paper loss, uncomfortable though that may be, but rather because a number of these falls are possibly indicative of problems down the line with the ability of these companies to continue paying dividends at their current levels, never mind inflationary increases.

That to me is more of a concern than a fall in capital value, the fact that the income from the various different company dividends looks uncertain in the short to medium term future.

And for those without the guaranteed security of a final salary pension, it is unpleasant.

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Re: I'm so glad....

#85857

Postby Bouleversee » October 4th, 2017, 11:49 pm

Gengulphus wrote:
richfool wrote:If HYP'ers were really only interested in the income, ...

... they wouldn't post about day-to-day share price fluctuations.

Or probably more accurately, those HYPers who are only interested in the income, or mainly interested in the income and with some interest in long-term capital growth as a secondary objective, don't post about day-to-day share price fluctuations on this board. And other HYPers miss what is IMHO a major point about the strategy and do post about them.

Guess what impression this board ends up giving about HYPers' interests...

Gengulphus


Oh come on, Geng. There's a big difference between being prepared to sacrifice any significant capital growth in favour of a slightly higher than average income and being prepared to sacrifice a large proportion of your capital to provide a slightly higher than average income, especially when that higher income can be reduced or cancelled altogether. Ian (and I am sure this applies to others as well) has never worried about day to day fluctuations and has been more loyal to HYP than most but you can hardly describe Centrica's steady descent, albeit mildly fluctuating on the way, from 391 in July 2013 to 180 today in those terms. My family have lost many thousands with that one. And the point is that it's not the only one; there have been quite a number of formerly HYP companies which have fallen off a cliff recently and unless one is absolutely loaded it must and should be worrying to see a large proportion of one's capital disappear, possibly never to return. Centrica and similar may look as though they have a high yield but in terms of what one paid in all those years ago, in reality they haven't and to get that yield one has to put in new money and to do that you have to have spare cash in the first place and in the second a pretty strong conviction that the decline will cease and the trajectory reverse. With Brexit and government policies intervening, I don't think anyone can have much conviction about anything at the moment. I am old and have a pretty good guaranteed annuity and sufficient capital left, even after all these HYP disasters, to see me out but if I were approaching retirement with expectation of a long life, I'd be more than a little worried by the loss of so much of my capital and the fact that what is left fluctuates day to day at a much lower level than it used to do. Putting one's head in the sand like an ostrich doesn't mean that you won't continue to get shot in the backside. It sometimes pays to run like hell in a different direction and if you study a map with a bit of luck you might find a comforting oasis or two to sustain you on your way. And to tell your neighbours that there's something nasty going on that they might not be aware of might be doing them a favour. They might just decide to tag along.

Sweet dreams, everyone.
Last edited by tjh290633 on October 5th, 2017, 11:18 am, edited 1 time in total.

idpickering
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Re: I'm so glad....

#85872

Postby idpickering » October 5th, 2017, 6:10 am

Bouleversee wrote:
Ian (and I am sure this applies to others as well) has never worried about day to day fluctuations and has been more loyal to HYP than most but you can hardly describe Centrica's steady descent, albeit mildly fluctuating on the way, from 391 in July 2013 to 180 today in those terms.


Hello Bouleversee, thank you for your excellent post, and your comment above. It seems some around here might like to lighten up a bit, and take my opening post for what it was. It was meant to be very much tongue in cheek, ironic with a bit of folly included. :D I do get that HYP is about income, and the ups and downs of share prices are not important hereabouts, but it would be crass to totally ignore them and be unaware IMHO.

Ian.

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Re: I'm so glad....

#85881

Postby Dod1010 » October 5th, 2017, 7:18 am

The ability to recc a post seems to disappear after a while (no thumbs up sign) otherwise I wold recc Bouleversee's post. Thanks for the common sense comments. It is disconcerting to see recent acquisitions lose value; there is no doubt about that. The question and the judgement is in deciding whether it is just market noise or if there is more to it. Over the long term, 10/15 years I am well up on most of my shares except for at least HSBC. It would seem that it will be a while before it reaches £10 again. Still, it has kept producing dividends, even through the worst of the financial crisis albeit at a reduced rate.

Sticking with a relatively few shares and ITs I am up on a purely capital basis around 40% over the last five years and I have extracted all dividends in that time so I am not seeking a comparison with others, I am simply trying to point out that LTBH (and five is not really long) will pay off provided you avoid too many losses. For instance, I held Centrica and sold in December 2015 at £2.12 because I was uneasy about their dividends. Whether this was a good idea or not I do not know because I certainly lost capital but not I think a very significant amount as it was never a very big holding.

I never held any of the recent disasters (except Cobham) and I like to think that was not luck, but because I did not like many of them.

So my point is that despite the recent problems with certain shares, LTBH in the context of a HYP will usually be a successful strategy on both the capital and the income front in my experience. Complacency is our enemy.

Dod

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Re: I'm so glad....

#85888

Postby idpickering » October 5th, 2017, 8:08 am

Dod1010 wrote:
So my point is that despite the recent problems with certain shares, LTBH in the context of a HYP will usually be a successful strategy on both the capital and the income front in my experience. Complacency is our enemy.

Dod



Well said Dod, have a rec/thanks. I agree with your comment, although I own up to being fickle of late as you know.

Ian.

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Re: I'm so glad....

#85907

Postby Bouleversee » October 5th, 2017, 9:14 am

OK, Dod. You have obviously been very skilled in your choices and done better than manyt. It's not long since the experts were advising us to buy the utilities as relatively safe investments with a good reliable income (remember the continuous plug for NG on TMF?) and let's face it SSE did brilliantly for years but much of that gain has now been snatched away. I need to sell it (unless I certificate) but had been hanging on for some recovery instead of which it has dropped a lot more. If you held such shares now, would you be getting out before further erosion (and putting your money where ?) or do you think the fall has perhaps been overdone. Listening to the news this morning, it rather sounds as though our bills will go up because the SVR will be banned, rather than the companies making less profit.

I must have a look and see what the prices have done this morning. I don't call yesterday's 6% down a minor fluctuation.

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Re: I'm so glad....

#85923

Postby Dod1010 » October 5th, 2017, 10:00 am

Bouleversee wrote: If you held such shares now, would you be getting out before further erosion (and putting your money where ?) or do you think the fall has perhaps been overdone. I must have a look and see what the prices have done this morning. I don't call yesterday's 6% down a minor fluctuation.


I hold SSE and have absolutely no intention of selling, or even looking at the price until the weekend. I update values on a Saturday morning but scarcely look at prices at other times. If they really went wrong I would probably sell but not on the threat of some form of price control. Political comments are fine but the country needs a viable electricity industry.

I do not think I am especially skilled but I hold only a small number of shares. Sometimes that avoids diworsifying. I am anything but complacent but if the sky falls in on the likes of HSBC, SSE, Unilever and so on then that will be the end. On the one hand, mine will be regarded as a risky strategy by some, but I am a great fan of Nick Train and his relatively small number of conviction shares. On the other hand, I have avoided the likes of Carillion and if I get it wrong I usually get out soonest because profit warnings seldom come singly.

Dod

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Re: I'm so glad....

#85928

Postby Arborbridge » October 5th, 2017, 10:14 am

The ability to recc a post seems to disappear after a while (no thumbs up sign) otherwise I wold recc Bouleversee's post.


Dod, as a matter of interest, I can still see the thumbs up on that post, and indeed the whole page of them. Perhaps refresh and try again?

Arb.

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Re: I'm so glad....

#85952

Postby monabri » October 5th, 2017, 11:17 am

I take some comfort regarding share prices and their fluctuations

AZN
July 26 2017 5113p
July 27 2017 4325p
Oct 5 2017 5096p

(even more so as I bought in at 4292p for my AZN holding - so, sometimes it is "timing").

Some you win, some you lose...let's hope that AZN keeps paying a divi.


Conversely, Interserve and Provident.... :(

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Re: I'm so glad....

#85958

Postby tjh290633 » October 5th, 2017, 11:37 am

I have to agree that in general one should ignore day to day fluctuations in share prices. Every now and then most of us will experience a catastrophic drop. Marconi was my first one, followed by British Airways in 2003.

Then we have to move on to 2009, when Mapeley was the first to suffer, then there was a whole string of them, as dividends were abandoned wholesale, and I jumped from DSGI, Trinity Mirror, Premier Foods and Rentokil. More recently we have had Cattles and Carillion, and perhaps Pearson.

2009 took a bit of sorting out, but the recovery came. I always like to repeat my table of dividend per income unit at such a time:

.            Ordinary 
Year to Divs/unit
05-Apr-88 2.87
05-Apr-89 2.75
05-Apr-90 4.33
05-Apr-91 5.75
05-Apr-92 7.97
05-Apr-93 7.33
05-Apr-94 6.65
05-Apr-95 7.93
05-Apr-96 7.81
05-Apr-97 8.90
05-Apr-98 9.35
05-Apr-99 8.91
05-Apr-00 11.96
05-Apr-01 12.42
05-Apr-02 13.82
05-Apr-03 12.95
05-Apr-04 12.48
05-Apr-05 12.96
05-Apr-06 14.09
05-Apr-07 15.07
05-Apr-08 26.09
05-Apr-09 22.76
05-Apr-10 11.91
05-Apr-11 16.71
05-Apr-12 18.79
05-Apr-13 20.89
05-Apr-14 21.48
05-Apr-15 22.40
05-Apr-16 22.77
05-Apr-17 24.93

Here you can see the changes from time to time, particularly the 2009 and 2010 dips and the recovery. The big rise in 2008 was the result of moving into some of those high-yielding shares, to replace shares taken over, which let me and us down in the following year. Currently my yield is about 4.5%. Let's not write Carillion off too quickly.

TJH

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Re: I'm so glad....

#85976

Postby Arborbridge » October 5th, 2017, 12:31 pm

But the shocking thing, and the factor to plan by, is the huge slash in income, followed be the very slow recovery. In fact the income has not yet recovered to its high point.

It's a useful illustration and makes one think twice about the occasionally expressed view that income does not fall as much as share price.

This is a really handy table on which to base our reserve income planning, so thanks to TJH for putting it up from time to time.

Arb.

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Re: I'm so glad....

#85981

Postby Gengulphus » October 5th, 2017, 12:48 pm

Bouleversee wrote:Oh come on, Geng. There's a big difference between being prepared to sacrifice any significant capital growth in favour of a slightly higher than average income and being prepared to sacrifice a large proportion of your capital to provide a slightly higher than average income, especially when that higher income can be reduced or cancelled altogether. Ian (and I am sure this applies to others as well) has never worried about day to day fluctuations and has been more loyal to HYP than most but you can hardly describe Centrica's steady descent, albeit mildly fluctuating on the way, from 391 in July 2013 to 180 today in those terms. ...

Oh come on, Bouleversee. I didn't describe that descent over more than 4 years at all, in those or any other terms, nor did any previous post in the thread. And I responded to the comment by richfool that I quoted, not to Ian's OP or to you.

I've no problem at all about you broadening what this thread is about to take in the longer-term picture, but it would have come across much better if you'd done it straightforwardly, rather than as the above attempt to rebuke me for something I quite obviously hadn't done.

Gengulphus

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Re: I'm so glad....

#86003

Postby NeilW » October 5th, 2017, 1:50 pm

I'd be more than a little worried by the loss of so much of my capital


But you haven't lost any capital. You still have the number of shares you had previously upon which you are getting an income stream.

It's like looking at your retirement annuity and talking about the "lost capital" because the capitalisation value has changed over time - even though you can't sell any of it. It doesn't matter - you will still get X amount a year, same as before.

If Centrica or SSE get price capped then we may see a slowdown in the dividend, but that is no different than if the government had put tax rates on dividends up and done the redistribution to poorer people that way.

So the questions go back to the fundamentals of the businesses. Do they actually earn a turn sufficient to pay off their debts and leave something for the rest of us. Is the basis of capitalist exploitation of the masses still in place and does that still favour large companies with a near oligopoly.

Seems to me it still is and does.


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