A pre-occupation with "yield"

[Itsallaguess]

Currently, I record against each holding, across the (Xcel) spreadsheet:-

The name of the stock, the qty of shares held, the book cost, the current value, a cell with a formula that calculates the % that that holding is of the overall portfolio, then a cell which calculates the capital performance as a % using the book cost and the current value, then 12 columns - one for each month, where I enter dividends rec'd, then at the end of those:

a cell with a formula that totals up the dividends rec'd year to date

then a cell with a formula that calculates the YOC (yield on cost) from the total dividends rec'd & the book cost

then a cell with a formula which calculates the YOCV (yield on current value) from the total dividends rec'd & the current value.

Those are on my normal dividend spreadsheet. I have a couple of other spreadsheets that monitor other things.

Just looking at the relevant spreadsheet on my portfolio, I call it "Income Forward". It has successive columns showing:

1.Company
2.Date Announced
3.Date XD
4.Date Paid
5.No of Shares
6.Dividend/share
7.Dividend (£.p) Forecast
8.Cumulative Dividends
9.Dividend Announced
10.Dividend Paid
11.Cash Balance actual
12.Predicted Cash balance

Replying to both really, with hopefully the same general point, which is that if one thing has become clear to me over the years regarding the way people track income-portfolio-related details, where they do so via spreadsheets and the like, it's that each of us find a way to do it that captures what we think is important, and also manages to do that in a way that we're happy to process and manage as individuals.

It's often a very personal process, and I think it's absolutely right that it should be, because I do think that one of the major over-riding influences that helps to keep us in this game over very long periods is simply to find ways to do things which are 'comfortable' for us as individual investors, and this area is definitely related to trying to achieve that level of 'personal comfort', or it is to me at least...and I perhaps think with hindsight that much of this thread perhaps highlights that 'individual approach' to things in a very good way...

I have two main spreadsheets for my income portfolio. One is largely based around our HYPTUSS tool, which automatically scrapes the important information that I'm interested in on a 'per-share basis' -

Share-price
Latest / Forecast Yield
Latest / Forecast Cover
Latest / Forecast PE

Using the above values, the spreadsheet then automatically calculates holding-values, a couple of weighting values (income / capital), along with potential top-up ratings based on Terry's fantastic formula and approach.

It also calculates my expected '12-month out' dividend income, based on the automatic share-price / forecast-yield / capital value fields. I record this at monthly intervals, and then compare notes in future months to see how accurate those 12-month look-aheads were. They are surprisingly accurate, and certainly accurate enough for the process to be very useful to me...

I'm still working, and hopefully looking ahead to some mythical 'early retirement date', and to easily have available fairly reliable 'future-income figures', as well as the much more important (to me at this present time..) projection of the 'growth' of that future income, compared to previous monthly figures, helps me a great deal in trying to predict and plan for that future mythical date....

My second spreadsheet tracks my 'rolling-12-month' dividend income, and captures all dividends coming into my various shares accounts. Being able to easily aggregate all incoming dividends, and see on a rolling 12-month basis how my investment-income is (hopefully!) gradually rising over time is very, very encouraging to me, and again, this plays a large part in helping me maintain the 'long game' necessary to succeed in using my income-investment strategy to help me achieve my long-term goals..

This second spreadsheet doesn't take long at all to compile, as it just copies and pastes my dividend-income-history details for each account, and adds them to the ongoing capture of previously-paid dividends. Whilst there's sometimes little 'blips' in month-to-month comparisons, the general trend over the years is to see a gradually rising 'rolling-12-month-income' figure, and a long-term history of such details enables me to generally be able to track onward-projections of that income, which of course is likely to be a replication of the 'forward yield' figures obtained via the HYPTUSS methods above, but is an important 'belt and braces' process for me, and also one that enables me to keep track of all paid-in dividends, and perhaps give me the chance to capture one that might not have been paid and should have....

I should add that having done this 'dividends-paid/rolling-12-month-income' sheet for many years now, I can't actually remember a dividend ever 'not being paid', and me having to chase it, so whilst, many years ago now, I actually began this 'capture of dividends-paid' process with a view to originally making sure everything was always paid as it should be, distrustful as I was then of the payment-processes, I'd urge anyone who might be thinking of pursuing such records purely from a position of 'distrust' to simply not bother, as the time spent tracking the payment details will, I think, prove to be fruitless given the chances of a payment ever being missed...If you also want to capture them for other reasons too, as I do here for my 'rolling-12-month income' process, then fine, but I personally wouldn't *just* capture and record them to make sure they were being paid....

Anyhow, that's my two major spreadsheet-related processes, now that we're going all 'Jaws' on this thread with these types of details...

It's interesting to see what and how others track regarding their own portfolio details, but for those of us that do it, I think it's such a personal area regarding info and processes that we're unlikely to either agree or influence anyone else in a major way after many years of carrying the processes out and being generally happy with them...

Cheers,

Itsallaguess

[richfool]

Itsallaguess, you missed this bit:

So are you saying that I should add a further column multiplying the current value and the YOCV figures for each holding?
(Noting that those figures will only be correct at the point in time I update the current values).

So there are a couple of points that are worthy of reiterating:

1. Your calculation is only reiterating the dividend yield on current value.
2. Those figs/calculations are only correct at the moment in time that I post those valuations, or that those valuations apply.
3. I.e they are not a constant, whereas yield on cost is a constant as it is based on the book cost plus dividends paid (or at least is constant until another dividend arrives).

To go back to my original point, last night I was looking at MYI on HL. It was showing a yield of 8.4% (this morning something like 7.8), so let's call it 8%. I hold MYI, but I am not getting a dividend stream of 8% on my investment, but if I bought some more I would get the 8% on that new holding.

[Itsallaguess]

To go back to my original point, last night I was looking at MYI on HL. It was showing a yield of 8.4% (this morning something like 7.8), so let's call it 8%.

I hold MYI, but I am not getting a dividend stream of 8% on my investment, but if I bought some more I would get the 8% on that new holding.

But you are getting 8% on your MYI investment.

It's just that the level of your investment changes as the price of your MYI holding fluctuates, so you simply can't ignore that fluctuating MYI share-price as part of your 'income calculation' when wanting to use a naturally-fluctuating 'current yield' figure to help calculate that income from it....

As I've said previously - the income-calculation needed when using a 'current yield' figure for an existing holding is a two-input calculation - one of which is the fluctuating 'current-yield', and one of which is the fluctuating 'current price', which will then give you your 'current capital holding'..

You're wanting to get a reliable answer to a two-input calculation by only using one of the inputs, and seem to be unhappy about the 'answer' then being 'wrong'...

It's not the answer that's 'wrong' - you're simply not using the metric correctly to get the 'right' answer...

Cheers,

Itsallaguess

[richfool]

To go back to my original point, last night I was looking at MYI on HL. It was showing a yield of 8.4% (this morning something like 7.8), so let's call it 8%.

I hold MYI, but I am not getting a dividend stream of 8% on my investment, but if I bought some more I would get the 8% on that new holding.

But you are getting 8% on your MYI investment.

It's just that the level of your investment changes as the price of your MYI holding fluctuates, so you simply can't ignore that fluctuating MYI share-price as part of your 'income calculation' when wanting to use a naturally-fluctuating 'current yield' figure to help calculate that income from it....

As I've said previously - the income-calculation needed when using a 'current yield' figure for an existing holding is a two-input calculation - one of which is the fluctuating 'current-yield', and one of which is the fluctuating 'current price', which will then give you your 'current capital holding'..

You're wanting to get a reliable answer to a two-input calculation by only using one of the inputs, and seem to be unhappy about the 'answer' then being 'wrong'...

It's not the answer that's 'wrong' - you're simply not using the metric correctly to get the 'right' answer...

Cheers,

Itsallaguess

OK, yes, I can see and cope with that definition/assessment.

So, on the one hand I should be celebrating that I am NOW receiving a yield of 8% on my investment, but one the other hand I am likely to be disconsolate because I have lost 25% (on paper) of the capital value of my investment.

[scrumpyjack]

Isn’t this really a rather pointless debate along the lines of how many angels will fit on a pinhead?

It seems we all know that you can compare the trailing dividend to many things – what it cost you, what the market price is today, what the 30 day moving average price is, what the forecast dividend is etc etc.

It’s only really relevant if you are trying to make a decision as to whether to buy, sell or do nothing. The trailing dividend vs the current share price may indicate how sustainable Mr Market thinks that dividend is (so a lot of trailing dividends are extremely doubtful at present, in Mr Markets opinion!). That factor may also be relevant if trying to decide what to do.

[Itsallaguess]

Isn’t this really a rather pointless debate along the lines of how many angels will fit on a pinhead?

Might it be best if you just ignore it then?

Cheers,

Itsallaguess

[scrumpyjack]

Isn’t this really a rather pointless debate along the lines of how many angels will fit on a pinhead?

Might it be best if you just ignore it then?

Cheers,

Itsallaguess

Yes, did so for 40 odd posts and will now go back to sleep

[JuanDB]

To go back to my original point, last night I was looking at MYI on HL. It was showing a yield of 8.4% (this morning something like 7.8), so let's call it 8%. I hold MYI, but I am not getting a dividend stream of 8% on my investment, but if I bought some more I would get the 8% on that new holding.

Slightly OT but I notice that both dividends and yield calculations on HL have been less than reliable through the recent market gyrations. MYI is a case in point where the 4th interim dividend was originally listed as 12p vs the announcement of 17.5p. Further, the yield Is listed at 7.93% whereas I calculate the 1 year trailing lead .535/9.04 at 5.91%.

Having noticed a few oddities I’ve taken to double checking all yield calculations.

Cheers,

Juan.

[Itsallaguess]

To go back to my original point, last night I was looking at MYI on HL. It was showing a yield of 8.4% (this morning something like 7.8), so let's call it 8%.

I hold MYI, but I am not getting a dividend stream of 8% on my investment, but if I bought some more I would get the 8% on that new holding.

But you are getting 8% on your MYI investment.

It's just that the level of your investment changes as the price of your MYI holding fluctuates, so you simply can't ignore that fluctuating MYI share-price as part of your 'income calculation' when wanting to use a naturally-fluctuating 'current yield' figure to help calculate that income from it....

As I've said previously - the income-calculation needed when using a 'current yield' figure for an existing holding is a two-input calculation - one of which is the fluctuating 'current-yield', and one of which is the fluctuating 'current price', which will then give you your 'current capital holding'..

You're wanting to get a reliable answer to a two-input calculation by only using one of the inputs, and seem to be unhappy about the 'answer' then being 'wrong'...

It's not the answer that's 'wrong' - you're simply not using the metric correctly to get the 'right' answer...

Just to try to wrap up my response above, using a clear example as to how we can definitely use both a fluctuating 'current-yield' figure for a particular share, alongside it's fluctuating 'share-price', to still determine the correct and fixed dividend we would expect to receive from it, and so to help illustrate this I wanted to post the following table showing an example income-investment -



Anyone thinking they can get a true impression of their income from a share they currently own using *only* the 'current-yield' figure as a guide, is clearly going to be disappointed, as that fluctuating 'current-yield' figure is only ever actually relevant when taken into account alongside the equally fluctuating share-price itself...

We can see though, using the above table, that when we use the 'current-yield' figure correctly, we can easily and simply gain visibility of the *true* position regarding our dividend-income from an existing holding, by using the simple formula shown -

Current dividend (pence) = Current Share Price (pence) x Current Yield (%)

The above system works equally well when using a reliable 'Forecast Yield' figure instead of the 'Current Yield' figure, which would then obviously give the expected 'Forecast Dividend' for each income-investment rather than the 'Current Dividend' figure.

As seen from the above table, this also takes into account any *actual change* in dividends paid by a company, and so can be easily used as a regular guide to show the expected dividend-income from each investment....

Cheers,

Itsallaguess

[richfool]

To put the origins of my OP and the ensuing discussion in context, I had been looking for a simple way to monitor my dividend income to see if I was making the right decisions and choices of holdings and that those holdings were performing well in terms of dividend income. (I could monitor their capital performance in a different way). Plus I was irritated by frequent references to ever increasing "headline" dividend yields seeming to imply that I should be getting more dividend income from my EXISTING investment, when I clearly was not.

Using the yield on cost had seemed to work well, in that as long as the trajectory was upwards then nothing major was going wrong. Plus I was also looking at and comparing the actual amount of each dividend received and yearly totals with previous amounts received and yearly totals. To use Itsallaguess's analogy based on £100 in the bank earning no interest, so after all, if I took that £100 from my bank account and invested it in XYZ IT when it was yielding 5%, then as long as my dividend income each year was £5 or more and climbing at least by the rate of inflation then all was going well.

Then somewhere along the way, it was pointed out to me that yield on current value was a better metric to use, because it was based on the current SP and value of one's holding. I realise now that that was an attempt by the darkside to seduce me into thinking that current yield/yield on value would provide me with the information I was seeking about my dividend income. Whereas it seems to be far better suited to enabling an investor to compare one stock with another, in order to make decisions whether to sell one stock and replace it with another to further increase dividend income.

So yes, that all confirms my thinking that yield on value was an inappropriate (or incomplete) metric to use for the purpose I had in mind. It will be simpler and more illustrative to monitor the actual amounts of the dividends I receive and the % by which they increase. I can see and monitor the SP and capital growth/loss quite simply (and separately) from my spreadsheets.

[Itsallaguess]

Plus I was irritated by frequent references to ever increasing "headline" dividend yields seeming to imply that I should be getting more dividend income from my EXISTING investment, when I clearly was not.

Could I ask that you please concentrate on that specific point....

Because anyone ever talking about an 'increasing headline dividend yield' would never be implying that YOU, as an owner of that share, should be getting more dividend income because of that...

I'm very sorry to say that your thinking on that specific point has clearly exposed your lack of understanding of the 'current yield' metric, and nothing more...

The 'current yield' metric can be used *on it's own as a single percentage figure* to compare two income-investment options, whether they are already owned by you or not.

In addition to the above, the 'current yield' metric can also be used *in conjunction with the current share price* to determine the level of *actual income* you can expect from an investment, whether you already own it or not.

Those are two distinctly separate uses for the metric, and nowhere in there does anyone say that an 'increasing headline dividend yield' should be used as any sort of indication that someone already owning the share can expect a rising income from it, just because that 'headline dividend yield' might be going up. It will never tell you any such thing on it's own...

You're complaining that it's 'telling you something' that it was never designed to tell you...

Cheers,

Itsallaguess

[tjh290633]

We can see though, using the above table, that when we use the 'current-yield' figure correctly, we can easily and simply gain visibility of the *true* position regarding our dividend-income from an existing holding, by using the simple formula shown -

Current dividend (pence) = Current Share Price (pence) x Current Yield (%)

You have put the cart before the horse.

Yield=Dividend/Share Price.

You cannot define a fixed number by two variable numbers.

TJH

[Itsallaguess]

We can see though, using the above table, that when we use the 'current-yield' figure correctly, we can easily and simply gain visibility of the *true* position regarding our dividend-income from an existing holding, by using the simple formula shown -

Current dividend (pence) = Current Share Price (pence) x Current Yield (%)

You have put the cart before the horse.

Yield=Dividend/Share Price.

You cannot define a fixed number by two variable numbers.

You can Terry.

Both of our formulas are correct, but can be used for different purposes...

The price and yield are variable over time, but they are related at any given point in time.

When one variable changes (current-yield or current-price), the other will too, to give the fixed expected dividend income....

I drew up the table to show this....



That's why richfool was always wrong to be 'irritated' by someone else talking about variable and rising 'yields' - because it's only half of the equation that's actually telling him that nothing has actually changed regarding his income, when the current share price is also taken into account...

That would be like me being told that there were no clouds in the sky, and then me being 'irritated' when I look out of the window and see that it's not sunny.

But when I think about it properly, it's not sunny because it's actually night time..

For it to be sunny, there needs to be no clouds *and* it needs to be day-time....

Two variables to a working equation - don't get irritated if you're choosing to only use one of them and still expect it to tell you something reliable.....

Cheers,

Itsallaguess

[richfool]

Plus I was irritated by frequent references to ever increasing "headline" dividend yields seeming to imply that I should be getting more dividend income from my EXISTING investment, when I clearly was not.

Could I ask that you please concentrate on that specific point....

Because anyone ever talking about an 'increasing headline dividend yield' would never be implying that YOU, as an owner of that share, should be getting more dividend income because of that...

I'm very sorry to say that your thinking on that specific point has clearly exposed your lack of understanding of the 'current yield' metric, and nothing more...

The 'current yield' metric can be used *on it's own as a single percentage figure* to compare two income-investment options, whether they are already owned by you or not.

In addition to the above, the 'current yield' metric can also be used *in conjunction with the current share price* to determine the level of *actual income* you can expect from an investment, whether you already own it or not.

Thanks for all your input on this.

Those are two distinctly separate uses for the metric, and nowhere in there does anyone say that an 'increasing headline dividend yield' should be used as any sort of indication that someone already owning the share can expect a rising income from it, just because that 'headline dividend yield' might be going up. It will never tell you any such thing on it's own...

You're complaining that it's 'telling you something' that it was never designed to tell you...

Cheers,

Itsallaguess

Yes, agreed. I am alright with all of that now. I had thought that others were asserting that it (yield on value) was a better way of monitoring dividend income, and so I was trying to use it for that purpose. A purpose, as you point out, that it wasn't designed to do or wouldn't do, (and to be fair to myself I had realised was misleading/wasn't right). I have now reprogrammed my thinking to ignore it for that purpose, though I can and will use it, if and when I am considering adding a new holding, or, as you will be quick to emphasise, when comparing two investment options.

[Itsallaguess]

Yes, agreed.

I am alright with all of that now.

I had thought that others were asserting that it (yield on value) was a better way of monitoring dividend income, and so I was trying to use it for that purpose. A purpose, as you point out, that it wasn't designed to do or wouldn't do, (and to be fair to myself I had realised was misleading/wasn't right).

I have now reprogrammed my thinking to ignore it for that purpose, though I can and will use it, if and when I am considering adding a new holding, or, as you will be quick to emphasise, when comparing two investment options.

Thanks for coming back on that, and great that we got there in the end.

Cheers,

Itsallaguess

(But just noting as I'm backing out of the door, that you can still use it for the purposes you were originally wanting to use it for, but you just need to use in in conjunction with the current price if you're wanting to do that....)

[GoSeigen]

You cannot define a fixed number by two variable numbers.

TJH

Really? Is pi (fixed) not defined as the (variable) circumference of a circle divided by the (variable) diameter?

GS

[tjh290633]

You cannot define a fixed number by two variable numbers.

TJH

Really? Is pi (fixed) not defined as the (variable) circumference of a circle divided by the (variable) diameter?

GS

For any given circle, circumference=2Π (fixed)*radius (fixed).

The circumference is actually a fixed number for that circle, and Π is fixed for every circle.

TJH

[GoSeigen]

You cannot define a fixed number by two variable numbers.

TJH

Really? Is pi (fixed) not defined as the (variable) circumference of a circle divided by the (variable) diameter?

GS

For any given circle, circumference=2Π (fixed)*radius (fixed).

The circumference is actually a fixed number for that circle, and Π is fixed for every circle.

TJH

Lame, wrong, argumentative, completely missing the point and OT.

Everything is fixed if you make it fixed.

But my circle is not fixed. It is randomly expanding and contracting. Yet always its circumference and diameter are a fixed ratio.

Amazing, isn't it?
GS

[Itsallaguess]

Amazing, isn't it?

I think Terry may have inadvertently proved my point for me....

Where I'm saying that a fixed dividend amount can be described as follows -

Dividend income (pence) = Variable share-price (pence) * Variable current-yield (%)

The above variable share-price and variable current-yield, whilst variable, hold a relationship with each other that maintains that fixed 'Dividend income' result...

Terry has also now given another good example where a fixed number can be defined by two related but variable figures -

PI = Variable circle circumference / Variable circle diameter

So this PI equation also neatly proves that a pair of variable figures, which are clearly intrinsically linked (like that variable share-price and variable current-yield figure...), can also be used to always provide the 'correct' fixed result....

Cheers,

Itsallaguess

[GoSeigen]

GoSeigen wrote:

Amazing, isn't it?


I think Terry may have inadvertently proved my point for me....

Indeed but I doubt he'll ever admit it!

GS