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International Shares as part of High Yield Portfolio

General discussions about equity high-yield income strategies
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Re: International Shares as part of High Yield Portfolio

#159070

Postby XFool » August 12th, 2018, 7:34 pm

Walrus wrote:Thanks everyone.

Initially I was specifically thinking about blue chip global companies in the developed world paying a decent dividend and offer some growth. Companies that immediately appeal to me are Kraft, Pepsi and Nestle, I'll be honest I don't like the drag on income from an investment trust.

Interesting point here. Is the "drag on income" from holding such shares via a UK IT more or less than the drag on:

1. Income lost from unclaimed witholding tax? - Direct holdings

2. Your time and trouble in reclaiming witholding tax? - Direct holdings (or in an ISA)

OK! I do know about US shares and W-8BEN. ;)
Last edited by XFool on August 12th, 2018, 7:46 pm, edited 1 time in total.

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Re: International Shares as part of High Yield Portfolio

#159074

Postby XFool » August 12th, 2018, 7:45 pm

monabri wrote:If it is part of a high yield portfolio you might wish to consider

Henderson Far East ( HFEL) 5.7%

Currently offshore, so classed as foreign dividend... :) - (Though no witholding tax)

But shortly to be re-registered, only for tax purposes, on shore. Remaining located in Jersey.

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Re: International Shares as part of High Yield Portfolio

#159077

Postby PinkDalek » August 12th, 2018, 8:07 pm

ADrunkenMarcus wrote:If you've held Nestle for forty odd years then I'm sure you've received more in dividends (both in real and nominal terms) than the original cost of the shares! Do you mind me asking if you have any records about the performance, or the increase in share price over the period? ...


I've got plenty or records, in fact far more than I'm able to summarise this minute, and they are mainly in Sterling. I'm sure there's plenty out there which'll go into far greater detail ***. I don't bother with IRR etc and don't reinvest the dividends

Since original purchase I took up some rights issues and more recently I've been selling some every year or so, to use up my CGT allowance, depending on what other chargeable disposals I've had. The reason for the sales is I'm heavily overweight and, looking at my portfolios as a whole, one could say they are an Ostrich egg compared to the Wren eggs in the basket.

Having said that, my online portfolio is based on my, as adjusted for later rights and disposals, remaining March 1982 pool. It shows a total gain of what remains of some +5,653% over the 40 years or so. I'm sure someone can calculate the approximate capital return over, say, 40 years. The gross dividend yield when I bought was about 2.4% - now slightly higher at just under 3.0%. The gross sterling dividend in 2017/18 was about 1.7 times my remaining s.104 pool.

The only immediate comparison I have on the same basis is that for Imperial Brands. That shows +5,978% but it emanated from Hanson Trust Limited, which was bought even earlier than Nestle. Hanson had some rights issue and a compulsory conversion of CULS in 1985, so I'm not really comparing like with like. I also sold some Imperial and didn't take up the rights issue in 2008 or whenever it was.

*** Including Nestle's table here https://www.nestle.com/investors/shares ... /dividends re year end share prices and dividends payable the following year (in CHF). As you can see, they had a few dividend increases of 20, 15 and 10 cents from 2008 and have, in more recent years, increased the dividend by 5 cents from 2014. Thus the % increase per annum is diminishing slightly but still welcome. The annual dividend for 2017 was approved at the AGM on 12 April 2018 and the net dividend, as they always quaintly put it, from 18 April 2018. Mine arrived from the brokers on 25 April so the delay wasn't out of the ordinary.

I hope that's all some food for thought but I fully acknowledge it doesn't really cover your real and nominal; nor are they High Yield as such (at least for the UK) but I can't complain. Nor will the Chancellor of the day when he gets his IHT cut.

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Re: International Shares as part of High Yield Portfolio

#159084

Postby Charlottesquare » August 12th, 2018, 8:43 pm

XFool wrote:
Wizard wrote:Yes dividends are in US$, but IMHO that is no more of an issue than holding Shell, Vod or Unilever, all of which pay out in something other than £ Stering.

RDSB shares certainly pay out in UKP. I just checked my online ISA and the LSE ULVR and VOD both pay their UK dividends in UKP.

It's different with the NYSE listed Verizon.


You receive in sterling but re say Shell it is declared in dollars ($0.47 per share per quarter at present), whilst exchange movements therefore can vary your received sterling dividends year on year, personally, right now, I actually like the diversity away from sterling given our current economic challenges.

These days I either own mainly overseas invested investment trusts or a few shares that are not that dependent upon the UK economy and sterling, but this does of course run risks if sterling strengthens.
Last edited by Charlottesquare on August 12th, 2018, 8:51 pm, edited 1 time in total.

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Re: International Shares as part of High Yield Portfolio

#159085

Postby XFool » August 12th, 2018, 8:45 pm

PinkDalek wrote:Having said that, my online portfolio is based on my, as adjusted for later rights and disposals, remaining March 1982 pool. It shows a total gain of what remains of some +5,653% over the 40 years or so. I'm sure someone can calculate the approximate capital return over, say, 40 years.

Over 40 years I make it ~10.66% pa.

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Re: International Shares as part of High Yield Portfolio

#159099

Postby monabri » August 12th, 2018, 9:08 pm

XFool wrote:
monabri wrote:If it is part of a high yield portfolio you might wish to consider

Henderson Far East ( HFEL) 5.7%

Currently offshore, so classed as foreign dividend... :) - (Though no witholding tax)

But shortly to be re-registered, only for tax purposes, on shore. Remaining located in Jersey.


I hold in an ISA.

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Re: International Shares as part of High Yield Portfolio

#159100

Postby ADrunkenMarcus » August 12th, 2018, 9:09 pm

PinkDalek,

Thanks for your detailed response - I appreciate it very much.

A gain of about 5,653% is not to be sniffed it! When XFool calculates it to be c. 10.7% per annum (excluding dividends!) then it just goes to show how sustained, consistent, steady-but-not-shooting-the-lights-out growth can mount up over an investing lifetime. Theoretically, reinvesting dividends would boost this considerably but, in real life, and in earlier decades in particular, I can only imagine the erosion of capital caused by broker costs and stamp duty etc.

I am impressed Nestle have such a historic dividend record on their website. Many American firms do, too. The UK? Not so much. Short-termism?

Best wishes

Mark.

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Re: International Shares as part of High Yield Portfolio

#159224

Postby Pendrainllwyn » August 13th, 2018, 1:45 pm

SalvorHardin has provided an excellent response. Some of the LP's in the US are worth a mention. Some of the Alternative Asset Managers (Blackstone, Caryle Group, KKR, Oaktree etc) have good pay outs. Most of their pay outs fluctuate quarter to quarter although I think KKR has now started paying out a regular dividend. The K-1 tax forms might be an inconvenience. There are some quality companies in this group in my opinion. There are some Oil & Gas LP's that might be worth looking at. This is a bigger group and with more quality variability. I selected and have done very well with Enterprise Product Partners LP ($63.4BN Mkt Cap) which I bought earlier this year and it still yields 5.81%. It has some good reading materials on its investor relations site. I agree one needs to tread carefully with the REITs. I own Starwood Property Trust which has traded off recently since announcing an acquisition and yields 8.86%. Hopefully not one SalvorHardin was warning us off! I have mentioned CenturyLink on a previous post.

Hong Kong has some strong companies with good yields but HKD dividends may not be to everyones' liking.

Pendrainllwyn

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Re: International Shares as part of High Yield Portfolio

#159230

Postby SalvorHardin » August 13th, 2018, 2:07 pm

Pendrainllwyn wrote:I own Starwood Property Trust which has traded off recently since announcing an acquisition and yields 8.86%. Hopefully not one SalvorHardin was warning us off! I have mentioned CenturyLink on a previous post.

Starwood isn't on my list :D The REIT subgroup that concerns me is Mortgage REITs, most of which seem to be borrowing short-term to buy mortgage pools, effectively lending long-term whilst being very heavily geared. Too risky for me. There are plenty of conventional REITs yielding 6% or more which don't spook me.

The link below gives a good summary of Mortgage REITs and TI've also linked to a pretty good article from the US Fool.

https://www.reit.com/what-reit/types-re ... gage-reits

http://www.fool.com/investing/2018/02/0 ... er-bu.aspx

My US REIT is Lexington Realty Trust, currently yielding 8%, with properties all over the USA.

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Re: International Shares as part of High Yield Portfolio

#159277

Postby Pendrainllwyn » August 13th, 2018, 3:49 pm

Good! I don't hold Mortgage REITs. Will take a look at Lexington. Thanks

Pendrainllwyn

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Re: International Shares as part of High Yield Portfolio

#159282

Postby SalvorHardin » August 13th, 2018, 4:01 pm

Pendrainllwyn wrote:Good! I don't hold Mortgage REITs. Will take a look at Lexington.

The Lexington Realty trust page on Seeking Alpha is a good place to start. Basically it's a fairly boring company where management is changing the mixture of office and industrial. It's not a big holding for me (mostly because it is a very high yielder, even though the dividend is reasonably well covered).

https://seekingalpha.com/symbol/LXP

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Re: International Shares as part of High Yield Portfolio

#159455

Postby flyer61 » August 14th, 2018, 10:49 am

Hold LXP!, STAG and STOR on the REIT front. The last two have been excellent performers, both by capital increase and dividends paid. I do hold AGNC on the mortgage REIT front, but not to much. As has been pointed out it is highly geared.

Here is a left field high(ish) yield punt. Daimler Ag (DAI) published yield of 6.3%, take a smidgen of with holding tax off and it should still be 5 odd %. I don't see the dividend being less than this years when it is declared in 2019. Share price is bombed out with a single digit PE on offer. What I like is I am buying a global iconic brand that has stood the test of time. I believe it has a bright future once it's electric car offerings etc are fully up and running. Not to much downside in my book.

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Re: International Shares as part of High Yield Portfolio

#159456

Postby flyer61 » August 14th, 2018, 10:50 am

SalvorHardin,

any particular authors on SA that you rate highly?

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Re: International Shares as part of High Yield Portfolio

#159470

Postby SalvorHardin » August 14th, 2018, 11:21 am

flyer61 wrote:SalvorHardin,

any particular authors on SA that you rate highly?

I don't really follow authors. A lot of what I get from Seeking Alpha is being exposed to a wide variety of views on companies in which I already hold shares (and their competitors). Seeking Alpha articles are written by people with a very wide range of expertise, from people who really don't know what they are talking about to industry experts and fund managers.

Sometimes I get a lot from an article written by someone who knows little about investing but knows a great deal about the company's products and markets, particularly when they're making a bearish case against a share that I own. it's a bit like the person I know offline who is great at assessing high street retail trends; they know little about investing but thanks to them I have avoided losing money in retail shares for over a decade.

The main exception is Brad Thomas. He is a professional real estate analyst. Amongst other things he writes a weekly column for Forbes about real estate. A few years ago I stumbled across Lexington Realty Trust thanks to one of his articles, and got in below $7. The market has a downer on the company, in part because its shares peaked at over $22 in 2006 when it was run in a less boring manner (as were many REITs back then). It's not a major holding for me though.

https://seekingalpha.com/author/brad-thomas/articles

The Heisenberg, a highly bearish poster, puts out some thought-provoking stuff

https://seekingalpha.com/author/the-heisenberg/articles

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Re: International Shares as part of High Yield Portfolio

#159516

Postby ap8889 » August 14th, 2018, 1:21 pm

Many of the companies named in this thread: Nestle, Kone etc are Fundsmith holdings.

Easy way to access: just buy Fundsmith. No hassles with withholding tax, and the guy that wrote the book on spotting dud accounts steering you towards the good stuff.

Selling units to generate an income is cheap with an OEIC.

For a lot of people, I think it makes sense.

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Re: International Shares as part of High Yield Portfolio

#159532

Postby Lootman » August 14th, 2018, 2:04 pm

PinkDalek wrote:As a warning to those who may wish to invest in, say, Nestle directly. The Swiss Tax authorities require 35% to be deducted from Nestle dividends paid to UK individuals. There's a long-winded process involved in eventually getting 20% of the gross dividend back from the Swiss Tax authorities but it has been slightly simplified in recent years. I've been submitting the forms each year, for nearly 40 years, but will eventually get too old to do it myself. I've managed to get the refunds each and every year but it is time-consuming. The remaining 15% is then claimed on my Income Tax Return. If you don't go through the process you are still restricted to that 15% (or 7.5% if basic rate or even less if part or all of the gross dividend is covered by the now reduced Dividend Allowance or even the Personal Allowance).

I have no idea whether that same 35% withholding tax applies to US investors or individuals but, if it does not, then an option could be for a UK individual to hold Nestle's US-listed ADRs. They would only suffer a 15% withholding and if someone is already holding US shares in their account anyway, then this would be simpler for currency issues as well.

On a casual reading this indicates to me that Swiss withholding tax for US ADRs may be only 15%:

"Chile, Switzerland and France all have established tax treaties with both countries, so instead of the higher withholding rates listed above, U.S. and Canadian citizens only have to withhold a maximum of 15%."

http://www.dividend.com/how-to-invest/h ... investors/

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Re: International Shares as part of High Yield Portfolio

#159551

Postby PinkDalek » August 14th, 2018, 3:04 pm

Lootman wrote:
PinkDalek wrote:As a warning to those who may wish to invest in, say, Nestle directly. The Swiss Tax authorities require 35% to be deducted from Nestle dividends paid to UK individuals. There's a long-winded process involved in eventually getting 20% of the gross dividend back ...


I have no idea whether that same 35% withholding tax applies to US investors or individuals but, if it does not, then an option could be for a UK individual to hold Nestle's US-listed ADRs. They would only suffer a 15% withholding and if someone is already holding US shares in their account anyway, then this would be simpler for currency issues as well.

On a casual reading this indicates to me that Swiss withholding tax for US ADRs may be only 15%: ...


Thanks and I seem to recall you mentioned this before. I'm therefore bookmarking your link and this at Nestle https://www.nestle.com/investors/faqs/adrs-faqs and will study at a later stage.

Dividend.com does say dividends would be paid in dollars and ADR share prices carry foreign currency risk depending on the movement of the US dollar against the Swiss franc (and Sterling!) which I'd have to get my head around.

Plus Most ADR holders are US residents and are entitled to a favorable withholding tax rate. I'm also unsure if this involves 35%, as before, with a claim needed to reduce it to 15% annually, especially as your link includes In this scenario, the ADR custodian may reduce the dividend payment by the foreign domestic withholding tax, which looks like the full 35%.

They also say However, to qualify for the 15% tax treaty rate, investors must file paperwork with the Swiss government beforehand or be subject to the full 35%.. I've never seen that as a possibility but, as before, will have to study further.

Maybe even emailing the Swiss Tax Authorities in Bern might be an idea for me.

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Re: International Shares as part of High Yield Portfolio

#159792

Postby flyer61 » August 15th, 2018, 11:17 am

Many of the companies named in this thread: Nestle, Kone etc are Fundsmith holdings.

Easy way to access: just buy Fundsmith. No hassles with withholding tax, and the guy that wrote the book on spotting dud accounts steering you towards the good stuff.

Selling units to generate an income is cheap with an OEIC.

For a lot of people, I think it makes sense.


I have come to the same conclusion myself (and it hurts). No doubt at his next shareholder fest TS will mention this bloke 'Flyer61' who has been replicating his holdings with direct purchases. He will then go onto explain with charts etc why I would be better off continually buying his fund and selling a little when I need an income. Costs that spring to mind are HL currency transfer costs, dealing charges, witholding tax etc etc.

You have a point ap8889

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Re: International Shares as part of High Yield Portfolio

#160151

Postby LeMoss » August 16th, 2018, 3:37 pm

Fundsmith no longer holds Nestle. He sold out a couple of months ago - apparently not happy with the Starbucks deal and the capital allocation it showed.

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Re: International Shares as part of High Yield Portfolio

#160199

Postby Walrus » August 16th, 2018, 6:50 pm

flyer61 wrote:Hold LXP!, STAG and STOR on the REIT front. The last two have been excellent performers, both by capital increase and dividends paid. I do hold AGNC on the mortgage REIT front, but not to much. As has been pointed out it is highly geared.

Here is a left field high(ish) yield punt. Daimler Ag (DAI) published yield of 6.3%, take a smidgen of with holding tax off and it should still be 5 odd %. I don't see the dividend being less than this years when it is declared in 2019. Share price is bombed out with a single digit PE on offer. What I like is I am buying a global iconic brand that has stood the test of time. I believe it has a bright future once it's electric car offerings etc are fully up and running. Not to much downside in my book.



Thankyou for this one. Not on my radar at all. Taken a look and like what I see. Will research over the weekend but very likely I pull the trigger on this one. Anymore where this came from? :)


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