Lootman wrote:Dod101 wrote:As I and Lootman have illustrated, getting 6% ad infinitum is not very good and in time is going to lead to penury.
The fact is that the shares I was referring to, HSBC and Shell in particular, have done nothing on the capital front since they froze their dividends. That is what I was referring to and I am a bit fed up of simply getting around 6% income and nothing else. We are kidding ourselves if we think that is very good in itself and as I said it is far from risk free. It is not increasing with RPI nor is there any capital increase, modest or otherwise.
The UK market is dominated by a fairly small number of large-cap low-growth shares with high dividend yields. Those dividends are not particularly well covered and so there remains the risk of static dividends or, worse, a dividend cut.
Well yes, the overall dividend of the FTSE is dominated by 10 mega-caps paying out 54% of the total dividend amount.
https://citywire.co.uk/investment-trust ... h/a1298602Citing recent research (see table) from broker AJ Bell that Royal Dutch Shell, HSBC, BP, British American Tobacco, GlaxoSmithKline, Rio Tinto, AstraZeneca, Lloyds, BHP Group and Vodafone are forecast to generate 54% of the dividends paid by FTSE companies, Brooke and Ure said:
‘Amongst these top 10, only five have grown their dividends over the last 12 months and, although the oil majors have announced their intention to return to dividend growth, it seems increasingly likely that some of these companies may need to moderate their pay-out ratios.’
But of course, an investor seeking income from directly held shares is hardly likely, or indeed able, to "buy the FTSE"! Further, if one looks at that top-ten list:
EPIC | Company | Business | Forecast | Yield | Cover
RDSB | Royal Dutch Shell | Oil & Gas | 12,167 | 5.70% | 1.23
HSBA | HSBC Group | Banking | 8,398 | 6.40% | 1.40
BP | BP Plc | Oil & Gas | 6,834 | 6.00% | 1.26
BATS | British American Tobacco | Tobacco | 4,839 | 7.10% | 1.54
GSK | GlaxoSmithKline | Pharma | 3,991 | 5.10% | 1.45
RIO | Rio Tinto | Mining | 3,943 | 5.50% | 1.66
AZN | AstraZeneca | Pharma | 2,990 | 3.30% | 1.28
LLOY | Lloyds Banking Group | Banking | 2,353 | 6.30% | 2.19
BHP | BHP Group | Mining | 2,295 | 6.10% | 1.32
VOD | Vodafone | Telecom | 2,166 | 6.50% | 0.97
It seems probable to me that a properly diversified income portfolio would only include 6 of those - 1 per Business Sector - together with a number of others - 10 minimum - also from different business sectors.
We seem to have these discussions fairly frequently on these boards and when the last one occurred on the
"High Yield Portfolio (HYP) - Practical" board, I pointed out that, although there were a number of probable dividend holds within my portfolio, the portfolio dividend would probably be boosted by a number of dividend increases. The number of cuts were small by comparison.
viewtopic.php?p=268747#p268747I have now done the same quick analysis for the
"PYAD HYP 2019_04 DRAWDOWN" virtual portfolio, which was set up fairly recently. The most recent report is here
viewtopic.php?p=274972#p274972
| | Last Full | Next Year
EPIC | Company | Year Div | Forecast (1)
AV | Aviva | Increased | Increase
BA | BAE Systems | Increased | Increase
BHP | BHP Group | Increased | Increase
BLND | British Land Company | Increased | Increase
BP | BP | Increased | Hold
CCL | Carnival Corporation | Held | Hold
GSK | GlaxoSmithKline | Held | Hold
HSBA | HSBC Holdings | Held | Hold
IBST | Ibstock | Increased | Increase
IGG | IG Group Holdings | Held | Hold
IMB | Imperial Brands | Increased | Increase
ITV | ITV | Increased | Hold
LAND | Land Securities Group | Increased | Increase
PNN | Pennon Group | Increased | Increase
RDSB | Royal Dutch Shell | Held | Hold
SLA | Standard Life Aberdeen | Increased | Hold
SMDS | DS Smith | Increased | Increase
VOD | Vodafone Group | Cut | Hold
WPP | WPP | Held | Hold
| Last Full | Next Year
Movement | Year Div | Forecast
Increase | 12 | 9
Hold | 6 | 10
Cut | 1 | 0
Note (1) - My simple forecast mostly based on already declared interims. If anyone disagrees do let me know.So yes, there does appear to be a likely increase in "Held Dividends", they will now be the majority in fact, but surely an increased portfolio dividend is on the cards nonetheless.
The dividend diversification is as follows:
EPIC | Company | Div Amount (£) | Div Amount (%) | Forecast
AV | Aviva | 1,250.53 | 8.21% | Increase
IGG | IG Group Holdings | 1,193.18 | 7.84% | Increase
SLA | Standard Life Aberdeen | 1,188.64 | 7.81% | Increase
IMB | Imperial Brands | 1,173.26 | 7.71% | Increase
WPP | WPP | 1,068.00 | 7.01% | Hold
HSBA | HSBC Holdings | 949.30 | 6.23% | Hold
ITV | ITV | 932.16 | 6.12% | Hold
BHP | BHP Group | 855.49 | 5.62% | Hold
PNN | Pennon Group | 795.72 | 5.23% | Increase
GSK | GlaxoSmithKline | 752.80 | 4.94% | Hold
VOD | Vodafone Group | 743.00 | 4.88% | Increase
SMDS | DS Smith | 706.84 | 4.64% | Hold
BA | BAE Systems | 687.71 | 4.52% | Increase
CCL | Carnival Corporation | 589.49 | 3.87% | Increase
IBST | Ibstock | 567.35 | 3.73% | Hold
BP | BP | 540.35 | 3.55% | Hold
RDSB | Royal Dutch Shell | 445.90 | 2.93% | Increase
BLND | British Land Company | 406.46 | 2.67% | Hold
LAND | Land Securities Group | 379.96 | 2.50% | Hold
There does not appear to be any significant "over dominance" by dividend holders/likely cutters in that list
Ian