15 share HYP

[monabri]

Terry,

Regarding "Next" - is this one that would be off your list?

From their August 3rd 2017 Trading Statement:-

http://www.londonstockexchange.com/exch ... 17662.html

"It remains our policy to distribute surplus cash to shareholders through special dividends or share buybacks. In deciding between the "two methods of distribution the Board will take account of the longer term outlook for the business, market conditions and the prevailing share price".

I suspect that share buybacks will be the flavour of the day..(BKG, NG) - well certainly a "dividend risk".

monabri

[Gengulphus]

Having read a couple of the links it seems pretty easy to understand and whilst the list of any shares in a Dogs strategy may overlap with HYP the approach does seem quite difference. Is this summary / comparison to HYP broadly right?

Broadly so, but I would get rid of one difference and modify another:

Selection Universe
HYP: varies by person but typically will dip down to mkt cap of c.£1b
Dogs: FTSE 100

Since "Dogs of the DOW" and "Dogs of the FT30" have also definitely been done, and there's nothing much stopping people doing "Dogs of the FTSE 350", "Dogs of the top 200 LSE shares" and such like, I think this basically just becomes "varies by person but typically done by a lower limit on market cap or membership of a high-cap index" for both. And since there then isn't a difference, I would simply drop it from the list of differences!

Selection Criteria
HYP: multiple covering; yield, debt level and dividend history
Dogs: yield

I would change this to:

Selection Criteria
HYP: yield, other criteria (usually more than one, varying by investor) that the investor thinks suggest the dividend is sustainable/growable
Dogs: yield, market cap

Basically, just about any dividend-safety criterion you care to name has at least some HYPers who put little faith in it - and equally, if you try for every dividend-safety criterion that anyone has made a decent case for, you'll never find enough shares that satisfy them all for a diversified HYP! So HYPers just have to choose the few they're most happy with... One can produce a "typically" list, of course, but it will make things quite a lot more verbose!

Gengulphus

[Gengulphus]

I just did a quick look at DividendData to find what todays 'Dogs' list would be. Not clear whether 'Dogs' include special dividends or not, so two lists:
...
Including Specials**
...
** from this list in addition to the three excluded above I have also excluded National Grid as the special was clearly a one off

I would also exclude any specials that are accompanied by share consolidations, such as Intercontinental Hotels' special. The reason is that almost always, the combined effect of the special and the consolidation is to lower your number of shares by some number and increase your cash by an amount close to the market value of that many shares. I.e. essentially, it's the company doing a compulsory buyback of a fraction of every shareholder's shares (*) - and as companies generally don't make any adjustment to the dividend for the consolidation (whereas they generally do for stand-alone share splits and consolidations), that includes reducing your holding's dividend income as though your holding had been reduced by a compulsory buyback.

(*) Except for tax purposes when the shares are held outside a tax shelter, where the special + consolidation is handled by Income Tax and no change to your CGT base cost, while an actual buyback would be handled by CGT.

Gengulphus

[Raptor]

Moderator Message:
There is a thread on Investment Strategies on this Dogs of FTSE. It would be better to discuss this over there and let this return to the original 15 share HYP. Thanks. Raptor.

Dogs of FTSE100