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Highest yielding shares underperformed FTSE 100 over five years

General discussions about equity high-yield income strategies
Alaric
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Re: Highest yielding shares underperformed FTSE 100 over five years

#235975

Postby Alaric » July 11th, 2019, 6:30 pm

IanTHughes wrote:Of course! As an HYPer I try to ascertain, to the best of my ability, whether the dividend is sustainable or not. If I believe it is sustainable and may grow, I buy. If not, I do not buy! What can I ask is wrong with that?


How do you decide whether a dividend is sustainable? A halving of the market price is a sign that it isn't.

Even if the dividend carries on, but the market price fails to recover, it's not very sensible except in a world of extremely distorted values to look for an 8% dividend yield at the cost of a 10% capital loss.

SentimentRules
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Re: Highest yielding shares underperformed FTSE 100 over five years

#235976

Postby SentimentRules » July 11th, 2019, 6:34 pm

"It’s not part of the strategy to be bullish or bearish. Either way, the right time to buy would still be now."...

....
There is nothing wrong with it until you get to the above statement. Because future value is in exactly that. Capital.. Income.. .Total return. It all gained or lost in the bull or bear over time.

#Of course! As an HYPer I try to ascertain, to the best of my ability, whether the dividend is sustainable or not. If I believe it is sustainable and may grow, I buy. If not, I do not buy! What can I ask is wrong with that? Why do you find that process so difficult to understand?#

Your ignoring capital affects on income. .And most of the time, capital will determine income

Dod101
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Re: Highest yielding shares underperformed FTSE 100 over five years

#235978

Postby Dod101 » July 11th, 2019, 6:37 pm

IanTHughes wrote:[Not at all! I cannot answer for pyad but I can say that I bought into Vodafone Group (VOD) at about the same time because, in my opinion, a dividend cut was not likely, certainly not probable.


'About the same time' was March. I sold Vodafone in January because I thought that a dividend cut was quite likely given the various signs, the most obvious of which was the very high yield. Your opinion was, as it often is, rather suspect was it not? And before you start asking which bit of HYP do I not understand, I understand it perfectly well to the extent that I do not altogether follow it because I think it has, as per the pyad version at least, significant flaws.

Dod

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235984

Postby IanTHughes » July 11th, 2019, 6:51 pm

Dod101 wrote:
IanTHughes wrote:Not at all! I cannot answer for pyad but I can say that I bought into Vodafone Group (VOD) at about the same time because, in my opinion, a dividend cut was not likely, certainly not probable.

'About the same time' was March.
In point of fact, in my case it was 10 May, 4 days before the announcement, but whatever.

Dod101 wrote:Your opinion was, as it often is, rather suspect was it not?
I doubt very much that you know enough of my decisions to make such a claim but then again, facts do not really seem to concern you over much. My decision was incorrect, but not suspect. It was made after a thorough study of all facts and even other opinions available to me at the time. Unlike you, I do not allow others to make such decisions for me.


Ian

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235985

Postby IanTHughes » July 11th, 2019, 6:55 pm

Alaric wrote:
IanTHughes wrote:Of course! As an HYPer I try to ascertain, to the best of my ability, whether the dividend is sustainable or not. If I believe it is sustainable and may grow, I buy. If not, I do not buy! What can I ask is wrong with that?


How do you decide whether a dividend is sustainable?
I don't. I simply try to ascertain whether a dividend appears sustainable

Alaric wrote:A halving of the market price is a sign that it isn't.
No it is not.

Alaric wrote:Even if the dividend carries on, but the market price fails to recover, it's not very sensible except in a world of extremely distorted values to look for an 8% dividend yield at the cost of a 10% capital loss.

Of course not! Which is why I do not do that!


Ian

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235987

Postby Dod101 » July 11th, 2019, 7:19 pm

IanTHughes wrote:. Unlike you, I do not allow others to make such decisions for me.


I have no idea on what basis you are saying that but most people who follow my posts I think would by now have realised that I do not 'allow others to make such decisions for me'. In fact I am very independent in my decision making and have always been.

I appreciate that you are a dedicated follower of the pyad HYP philosophy and good luck to you in that endeavour. I realise also that it is a lost cause in trying to change such dedicated followers from their chosen path but it is not one for Doris, despite the original claim. Most investing needs a very careful eye and judgement. I appreciate that we can all get caught out from time to time as obviously happened to you with Vodafone but never mind there is always a next time.

Focussing exclusively on income is folly at the best of times, but all the more so when in the building or non draw down phase. Without capital appreciation we will eventually have nothing. The fact that the highest yielding shares have underperformed the FTSE is hardly surprising nor news.

Dod

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235989

Postby SentimentRules » July 11th, 2019, 7:23 pm

Ian

To determine if a yield is sustainable, you first need to analyse if your capital will remain at in neutral , plus or negative equity.

Capital value is the first step to determining sustainability of future income value / yield

We all cant get that right all the time. But it's where one should start.

Looking at highish yielders in record high markets, in which some sectors are getting yield punishment already, is a major warning sign. I know telecoms has taken some hit. Is it a recovery sector in a downturn? Now with yields cut and potentially more cuts? Well who knows yet. For now it's an absolute no in UK sector anyway. Fair enough some other telecom sectors are not as bad.

And you cant assess capital sustainability without assessing the overall bull/bear market state.

In saying that I hope you do well anyway

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235994

Postby IanTHughes » July 11th, 2019, 7:40 pm

Dod101 wrote:I appreciate that you are a dedicated follower of the pyad HYP philosophy and good luck to you in that endeavour.
Well, your appreciation is entirely wrong! I am no-one's follower.

Dod101 wrote:I realise also that it is a lost cause in trying to change such dedicated followers from their chosen path but it is not one for Doris, despite the original claim. Most investing needs a very careful eye and judgement. I appreciate that we can all get caught out from time to time as obviously happened to you with Vodafone but never mind there is always a next time.
I cannot of course speak for dedicated followers but all it would take to change my mind about HYP and my investment process, would be properly researched evidence about the HYP Strategy that showed its flaws. No such evidence exists. Your own attempts to show its flaws are based from the outset on changing HYP's investment aims from income generation to capital preservation/increase, which of course renders them totally invalid, from an HYP point of view.

Dod101 wrote:Focussing exclusively on income is folly at the best of times, but all the more so when in the building or non draw down phase. Without capital appreciation we will eventually have nothing.
Nonsense! If one is successful in achieving a portfolio of shares where the overall dividend increases over time, then the capital value, if that is your aim, will most likely also increase, over time. Of course the time periods for Income and Capital appreciation may be significantly different.

Dod101 wrote:The fact that the highest yielding shares have underperformed the FTSE is hardly surprising nor news.
The HYP Strategy does not advocate simply buying the highest yielding shares on offer, far from it. Perhaps you should read up about it.


Ian

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235995

Postby IanTHughes » July 11th, 2019, 7:44 pm

SentimentRules wrote:Ian

To determine if a yield is sustainable, you first need to analyse if your capital will remain at in neutral , plus or negative equity.


I do not try to determine if the yield is sustainable. It is the sustainability or otherwise of the dividend that I try to ascertain


Ian

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235999

Postby SentimentRules » July 11th, 2019, 7:54 pm

Ian

Your method exists. But its mostly in fixed income bond markets where the risk is deemed zero. Or normal yield bonds where the risk is deemed low.

I think your trying to apply this in stock markets.

Fair enough but the risks of applying bond investing to stocks is a much different beast.

All im saying is, when you said bear and bull is not relevant, it's more bond type investing.

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Re: Highest yielding shares underperformed FTSE 100 over five years

#236014

Postby SentimentRules » July 11th, 2019, 8:41 pm

I will throw a caveat in there. Just to show I'm not dissing it .

Your about diversification. And your about (broadly ) good yield.

So if I was forced to only use your route, I would be in the etf market solely. Not saying there is high yield value in it this very second

But I'd diversify even more than you. I'd diversify the sector by carrying a basket within it.

I think this would reduce risk a lot when not applying bull or bear. One constituent bad choices wont crucify the overall numbers. And at least if the sector turns down, you have much better chance of recovery re not depending on a particular constituent to be part of that recovery. Hence your income overall projection has a better chance.

It's the best I can think of in such a methodology. Not one single constituent holding.

Not advise by the way. Just mulling over how id do your way.
Last edited by SentimentRules on July 11th, 2019, 8:41 pm, edited 1 time in total.

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Re: Highest yielding shares underperformed FTSE 100 over five years

#236015

Postby Itsallaguess » July 11th, 2019, 8:41 pm

Alaric wrote:
What about Vodafone then?

When it appeared in that Bland portfolio back in March, a number of people queried its presence. Buying at the previous yield was ignoring the possibility or even probability of a cut.


Isn't this where your blanket criticism of the HYP approach begins to creak a little though?

I'd have more sympathy with your rejection of the HYP idea if there were no dissenting voices heard regarding Vodafone back in March, but by your own admission there were income-seekers on these boards that were urging caution regarding Vodafone, and, as you say, questioning Pyad's inclusion of Vodafone in his own new HYP portfolio during that time.

I remember them too, and as an owner of VOD in my own HYP, I wasn't willing to commit further capital to the share myself either, at that time...

That seems to suggest that your blanket rejection of the idea may be an over-reaction, as it seems that it's quite possible to run an income-strategy like this at the same time as being open to a level of 'yield-awareness' that you don't seem to be giving quite enough credit to...

Cheers,

Itsallaguess

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Re: Highest yielding shares underperformed FTSE 100 over five years

#236026

Postby IanTHughes » July 11th, 2019, 9:06 pm

Dod101 wrote:
IanTHughes wrote:. Unlike you, I do not allow others to make such decisions for me.


I have no idea on what basis you are saying that but most people who follow my posts I think would by now have realised that I do not 'allow others to make such decisions for me'.

Yes you do! You sold Vodafone Group (VOD) simply because it was high yield, a yield which is of course determined by the market, not you. The market has therefore made the decision for you

Dod101 wrote:In fact I am very independent in my decision making and have always been.

Your holdings in Investment Trusts, who decides what share purchases are to be made with that money?

In all seriousness, far from making your own decisions, you would rather "follow" the market, which you then go on to claim is all knowing and always right!

There is nothing wrong with being a follower by the way. Indeed for those who lack the confidence in their ability to make enough correct decisions, it is probably a good idea.


Ian

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Re: Highest yielding shares underperformed FTSE 100 over five years

#236027

Postby Alaric » July 11th, 2019, 9:07 pm

Itsallaguess wrote:
I'd have more sympathy with your rejection of the HYP idea if there were no dissenting voices heard regarding Vodafone back in March, but by your own admission there were income-seekers on these boards that were urging caution regarding Vodafone, and, as you say, questioning Pyad's inclusion of Vodafone in his own new HYP portfolio during that time.


There were plenty of dissenting voices. Those who don't accept the point that seeking high yield is also seeking recovery seemed to go out of their way to defend the Vodafone selection on income yield grounds alone and were disinterested in observations that the share price had collapsed over the previous year and might continue to do so.

On another board a recent poster describes how he divides his investment activity into "HYP" and "recovery". If a share is a reject for HYP but might still be of interest regardless it goes into the "recovery" portfolio.

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Re: Highest yielding shares underperformed FTSE 100 over five years

#236030

Postby SentimentRules » July 11th, 2019, 9:37 pm

"seeking high yield is also seeking recovery"

I like that. Very well put.

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Re: Highest yielding shares underperformed FTSE 100 over five years

#236043

Postby Alaric » July 11th, 2019, 11:02 pm

IanTHughes wrote:Yes you do! You sold Vodafone Group (VOD) simply because it was high yield, a yield which is of course determined by the market, not you. The market has therefore made the decision for you


It went high yield because the share price collapsed. If you don't think the share price will recover, it's a signal to sell to cut your losses before the share price goes even lower. If you expect a recovery, the high yield is a buy signal. Similarly low yield from a previous high yielder in the absence of dividend cuts is a signal that prices have recovered. You can take the profits if income needs are paramount or run with the capital gain if they aren't or you can be patient waiting for dividend increases.

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Re: Highest yielding shares underperformed FTSE 100 over five years

#236048

Postby 88V8 » July 11th, 2019, 11:16 pm

All this involves an awful lot of guesswork.

Going into Luni's DZ invites a cut. I topped up IMB the other day, well into the DZ, but I can afford to take the odd bath.
The fact is though, one is trying to outguess the market.
Good luck with making a regular habit of that.

V8

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Re: Highest yielding shares underperformed FTSE 100 over five years

#236049

Postby IanTHughes » July 11th, 2019, 11:17 pm

Alaric wrote:
IanTHughes wrote:Yes you do! You sold Vodafone Group (VOD) simply because it was high yield, a yield which is of course determined by the market, not you. The market has therefore made the decision for you


It went high yield because the share price collapsed. If you don't think the share price will recover, it's a signal to sell to cut your losses before the share price goes even lower. If you expect a recovery, the high yield is a buy signal. Similarly low yield from a previous high yielder in the absence of dividend cuts is a signal that prices have recovered. You can take the profits if income needs are paramount or run with the capital gain if they aren't or you can be patient waiting for dividend increases.

So? In all those cases, you would be "following" the market! The "non-follower" is one who ignores those so-called signals and does their own thing only after making their own investigation of the share in question. The HYP Strategy is a classic case of "not following" the market, but rather going against it,


Ian

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Re: Highest yielding shares underperformed FTSE 100 over five years

#236054

Postby Alaric » July 11th, 2019, 11:38 pm

IanTHughes wrote:The "non-follower" is one who ignores those so-called signals and does their own thing only after making their own investigation of the share in question.


So what investigations into Vodafone lead you to believe it was a "buy" rather than a "sell"?

I thought the underpinning "Doris" theory of HYP was that you don't examine the entrails of the Report and Accounts looking for hidden value and hidden accounting trickery.

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Re: Highest yielding shares underperformed FTSE 100 over five years

#236055

Postby SentimentRules » July 11th, 2019, 11:41 pm

IanTHughes wrote:
Alaric wrote:
IanTHughes wrote:Yes you do! You sold Vodafone Group (VOD) simply because it was high yield, a yield which is of course determined by the market, not you. The market has therefore made the decision for you


It went high yield because the share price collapsed. If you don't think the share price will recover, it's a signal to sell to cut your losses before the share price goes even lower. If you expect a recovery, the high yield is a buy signal. Similarly low yield from a previous high yielder in the absence of dividend cuts is a signal that prices have recovered. You can take the profits if income needs are paramount or run with the capital gain if they aren't or you can be patient waiting for dividend increases.

So? In all those cases, you would be "following" the market! The "non-follower" is one who ignores those so-called signals and does their own thing only after making their own investigation of the share in question. ####The HYP Strategy is a classic case of "not following" the market, but rather going against it####,


Ian


I'm a contrarian value hunter. But it doesn't mean I'm going against the market.

It simply means I am buying with the intention to be following the new market wave. But from the beginning.

I dont think anyone buys believing they can be against the market and win. Unless you want £1.50 as next years income


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