United Utilities

[monabri]

Is there any reason why UU are down ~5.5% today (other than the obvious more sellers than buyers)?

[OLTB]

A pesky broker downgrade...

Cheers, OLTB.

[nk104]

It pointed out that a lot of UU's debt is index-linked and so is affected by the rise in RPI. Presumably same applies for the revenues though.

There's a lot of crossover with NG (and SSE etc) here. There's heightened political risk compared to former years, but provided the dividends keep flowing does it matter?

[idpickering]

It pointed out that a lot of UU's debt is index-linked and so is affected by the rise in RPI. Presumably same applies for the revenues though.

There's a lot of crossover with NG (and SSE etc) here. There's heightened political risk compared to former years, but provided the dividends keep flowing does it matter?

I'm very much in line with your later comment nk104. The SP has been disappointing for me since I bought them, but provided the dividend keeps coming, I can ignore it. I may top up soon.

Ian.

[Gengulphus]

I'm very much in line with your later comment nk104. The SP has been disappointing for me since I bought them, but provided the dividend keeps coming, I can ignore it.

Depends what you mean by "keeps coming". It's been in HYP1 since the start, and while it has experienced a few corporate actions, I believe HYP1 has dealt with all of them in a "neither add nor remove capital" way. The first year's income from the holding was £331 (see pyad's year 1 report); this last year's was £309 (see viewtopic.php?f=15&t=8409)... The dividends have kept coming in the sense that they've been paid every year, and there have been a fair number of year-on-year dividend increases between 2001 and 2017. But there have also been year-on-year decreases, and the overall picture over the 16 dividend changes is that dividends have shrunk gently in nominal terms and a bit less gently in real, inflation-adjusted terms.

Not by any means the worst of HYP shares as regards keeping the dividend income flowing, but distinctly mediocre IMHO.

Gengulphus

[monabri]

Ah, there was a return of 170p in 2009 (special...17 for 22 share consolidation).

https://www.dividenddata.co.uk/dividend ... py?epic=UU.

There's also a note regarding a rights issue 2003/05 - 5 for 9 .

The link presents the adjusted dividends and an option to check the unadjusted dividend.

Too complicated for a Sunday night!

[idpickering]

I'm very much in line with your later comment nk104. The SP has been disappointing for me since I bought them, but provided the dividend keeps coming, I can ignore it.

Depends what you mean by "keeps coming". It's been in HYP1 since the start, and while it has experienced a few corporate actions, I believe HYP1 has dealt with all of them in a "neither add nor remove capital" way. The first year's income from the holding was £331 (see pyad's year 1 report); this last year's was £309 (see viewtopic.php?f=15&t=8409)... The dividends have kept coming in the sense that they've been paid every year, and there have been a fair number of year-on-year dividend increases between 2001 and 2017. But there have also been year-on-year decreases, and the overall picture over the 16 dividend changes is that dividends have shrunk gently in nominal terms and a bit less gently in real, inflation-adjusted terms.

Not by any means the worst of HYP shares as regards keeping the dividend income flowing, but distinctly mediocre IMHO.

Gengulphus

Hi Gengulphus, thanks for your post. You raise valid points regarding UU.. To clarify, I get that they've had their ups and downs on the dividend front, which is a concern. But as you say, " Not the worst of HYP shares...." I intend holding on and like the fact that they offer diversification in the general utility sector.

Ian.

[pendas]

I first purchased UU in Dec 05, selling in Feb 17 with top ups during this period. Annualised return over the period was 8.9% beating the portfolio overall return by some margin.

Repurchased in a ISA April 17 with a top up since and the annualised return to Friday's close is -30%, -18% actual, so not a good year capital wise.

Apologies to those who don't like total return figures..........as I frequently top up and the portfolio is not unitised, they are the only meaningful figures I can give.

[Arborbridge]

It pointed out that a lot of UU's debt is index-linked and so is affected by the rise in RPI. Presumably same applies for the revenues though.

There's a lot of crossover with NG (and SSE etc) here. There's heightened political risk compared to former years, but provided the dividends keep flowing does it matter?

Of course it does! Political risk could wipe your income stream and a large chunk of your capital - potentially all of it.

If you had said: "There's heightened political risk compared to former years, but provided the risk evaporates does it matter?
- I would agree.

Arb.

[Gengulphus]

Repurchased in a ISA April 17 with a top up since and the annualised return to Friday's close is -30%, -18% actual, so not a good year capital wise.

Apologies to those who don't like total return figures..........as I frequently top up and the portfolio is not unitised, they are the only meaningful figures I can give.

Sorry, but the ISA annualised return figure in that quote is not meaningful. Not because it's a total return figure, but because annualising just about any type of return over a period as short as 7 months doesn't produce a meaningful result.

For meaningful annualised return figures, I would want an absolute minimum period of a year for there to be any real meaning at all, and at least 5 years (preferably more) for there to be much of it.

Gengulphus

[vrdiver]

I first bought in 2004, topped up in 2006, took the cash from the corporate action in 2008 and sold a few (tidying up multiple holdings across different acounts) in 2012.

XIRR gives me an annualized return of just under 6.9%.

A very mundane share, which if the political risks are meaningful, should be paying me a lot more compared to the steady-as-she-goes-nothing-to-see-here utility I wanted to own!

[tjh290633]

I first bought in my ISA in 2001, when they replaced Blue Circle after that was taken over.

I bought in several tranches at 660p in Aug 2001, at 625p and 594p in 2002, in 2003 I sold some of the rights and took up some at 455p, at 721p in Oct 2006, they consolidated at 755p in 2008, and my last purchase was at 442p in Oct 2009.

The IRR has been 9.75% over that period. Despite adverse criticism, I call that a reasonable outcome. The current yield is 4.9%, which is fine for me.

TJH

[tjh290633]

What are the precedents for re-nationalisation? What happened when the government all but confiscated Railtrack shares, were the shareholders wiped out completely?

Fred, from memory the Government issued hypothecated gilts when electricity, gas, etc were nationalised in the 1940s, and there were specific gilts like Electricity 3% 1987, or something similar.

TJH

[richfool]

There must be a limit as to what Governments can afford to re-nationalise, assuming that they were returned to power and with a large enough mandate. Surely the reason so many "entities" were nationalised in the first place, was that the government couldn't afford to support them via the public purse. It's easy to suggest things when in opposition, not so easy to carry them through when in power.

In some areas there might be more of a danger of "windfall taxes", but I wouldn't see that applying with utilities like water companies.

[Arborbridge]

What are the precedents for re-nationalisation? What happened when the government all but confiscated Railtrack shares, were the shareholders wiped out completely?

Fred, from memory the Government issued hypothecated gilts when electricity, gas, etc were nationalised in the 1940s, and there were specific gilts like Electricity 3% 1987, or something similar.

TJH

Oh dear. A wipe out in all but name then.

Yes. indeed. Governments can do what they like, with only a thin veneer of the "reasonable" as a excuse.

As I said earlier:
"Political risk could wipe your income stream and a large chunk of your capital - potentially all of it."

Arb.

[Lootman]

What are the precedents for re-nationalisation? What happened when the government all but confiscated Railtrack shares, were the shareholders wiped out completely?

McDonnell has stated that the price paid for renationalised businesses will be "set by Parliament", which implies that it may not be at the market price.

I believe that EU rules currently demand that a market price be paid in such circumstances. But then we might be out of the EU by then. There would be lawsuits though.

Of course, if we get to that point the market price will already be much lower. That could even be deliberate policy - to drive down valuations so they can be bought cheaply.

I'm not sure that the nationalisations that were done in the 1940's and 1950's are relevant today. The government pretty much took over whatever it wanted during WW2, and the depressed markets at that time made businesses cheap to buy. Not the case now.

[moorfield]

McDonnell has stated that the price paid for renationalised businesses will be "set by Parliament", which implies that it may not be at the market price.

... presumably any price paid would be inversely proportional to the size of a Labour majority.

[Breelander]

I first bought in my ISA in 2001... The IRR has been 9.75% over that period. Despite adverse criticism, I call that a reasonable outcome...

I first bought UU in 2001 too with top ups in 2005 & 2007. Despite the somewhat chequered dividend history (notably a 'return of capital' and a 30% dividend cut in 2008) they have the distinction of being my first HYP holding to return more cash to me than I paid for them, 106% of my purchase costs so far...

[NeilW]

Surely the reason so many "entities" were nationalised in the first place, was that the government couldn't afford to support them via the public purse.

The UK government is a sovereign entity. It can 'afford' anything that is for sale in Sterling and command any resources the UK has access to. That's how we prosecute wars.

The myth that government can run out of money is known as the Noble Lie in economic circles. You'll note there is never a problem when a bank needs bailing out, or a foreign state needs bombing.

Corbyn can nationalise anything he can get through parliament - with or without compensation. That's how we created the NHS three years after the devastation of the second world war when the country had very few real resources and not a great deal of manpower.

[Leither]

What are the precedents for re-nationalisation? What happened when the government all but confiscated Railtrack shares, were the shareholders wiped out completely?

No, we got compensation of about £2.60 per share.

Regards,

Leither.