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Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

General discussions about equity high-yield income strategies
OhNoNotimAgain
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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#223863

Postby OhNoNotimAgain » May 23rd, 2019, 8:43 am

tlf67482 wrote:
If anyone has any insights on "iShares Quality Dividend ETFs & What Are The GBP Based Equivalents" viewtopic.php?f=31&t=17742 it would be great as it may help me decide on what to invest in but I am just at a complete loss of what to do at the moment and dont want to make a rash decision.


No such thing as a quality dividend. It's just cash, either a lot or a little.

Any adjective applied to cash is just marketing tripe.

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#223931

Postby tlf67482 » May 23rd, 2019, 11:36 am

OhNoNotimAgain wrote:
tlf67482 wrote:
If anyone has any insights on "iShares Quality Dividend ETFs & What Are The GBP Based Equivalents" viewtopic.php?f=31&t=17742 it would be great as it may help me decide on what to invest in but I am just at a complete loss of what to do at the moment and dont want to make a rash decision.


No such thing as a quality dividend. It's just cash, either a lot or a little.

Any adjective applied to cash is just marketing tripe.


Can you provide more information on this I am not really sure what you are saying - it seems to be nothing to do with what I am asking? I am talking about the iShares Quality Dividend ETF that appears to try to pick better quality dividend paying shares over just a basic trawl of the highest yielding shares?

GoSeigen
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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#223968

Postby GoSeigen » May 23rd, 2019, 12:46 pm

tlf67482 wrote:
OhNoNotimAgain wrote:
tlf67482 wrote:
If anyone has any insights on "iShares Quality Dividend ETFs & What Are The GBP Based Equivalents" viewtopic.php?f=31&t=17742 it would be great as it may help me decide on what to invest in but I am just at a complete loss of what to do at the moment and dont want to make a rash decision.


No such thing as a quality dividend. It's just cash, either a lot or a little.

Any adjective applied to cash is just marketing tripe.


Can you provide more information on this I am not really sure what you are saying - it seems to be nothing to do with what I am asking? I am talking about the iShares Quality Dividend ETF that appears to try to pick better quality dividend paying shares over just a basic trawl of the highest yielding shares?


OhNoNotimAgain is a professional fund manager. If at all possible he'd like to subtly funnel you (and interested readers) towards his fund. Thus he has a vested interest in rubbishing the marketing or strategies of competing funds.

GS

MDW1954
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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224059

Postby MDW1954 » May 23rd, 2019, 5:14 pm

GoSeigen wrote:
tlf67482 wrote:
OhNoNotimAgain wrote:
No such thing as a quality dividend. It's just cash, either a lot or a little.

Any adjective applied to cash is just marketing tripe.


Can you provide more information on this I am not really sure what you are saying - it seems to be nothing to do with what I am asking? I am talking about the iShares Quality Dividend ETF that appears to try to pick better quality dividend paying shares over just a basic trawl of the highest yielding shares?


OhNoNotimAgain is a professional fund manager. If at all possible he'd like to subtly funnel you (and interested readers) towards his fund. Thus he has a vested interest in rubbishing the marketing or strategies of competing funds.

GS


He's also at variance with at least some investors' view of reality. Comparing two (hypothetical) companies and their historic dividend streams, I would ascribe a higher 'quality' to one that had (say) ten years unbroken growth at 7% per annum, versus one that had been held for several years and then re-based downwards.

MDW1954

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224086

Postby vrdiver » May 23rd, 2019, 8:07 pm

MDW1954 wrote:[
He's also at variance with at least some investors' view of reality. Comparing two (hypothetical) companies and their historic dividend streams, I would ascribe a higher 'quality' to one that had (say) ten years unbroken growth at 7% per annum, versus one that had been held for several years and then re-based downwards.

Indeed.

To be fair to OhNoNotimAgain, the word "quality" on its own, is fairly meaningless, and could well be marketing verbiage. Without looking at what the particular fund actually offers, along with its track record, we don't know. Even then, it may be down to personal interpretation as to whether it represents "quality", and if so, how much "quality" compared to any other fund.

I suspect that what the OP was after, rather than a slanging match, was some insight as to more experienced investors' views of the funds mentioned; sadly, I am not experienced enough to help answer that question, but hope some other Lemon Fool will rise to the challenge!

VRD

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224100

Postby MDW1954 » May 23rd, 2019, 9:43 pm

vrdiver wrote:
MDW1954 wrote:[
He's also at variance with at least some investors' view of reality. Comparing two (hypothetical) companies and their historic dividend streams, I would ascribe a higher 'quality' to one that had (say) ten years unbroken growth at 7% per annum, versus one that had been held for several years and then re-based downwards.

Indeed.

To be fair to OhNoNotimAgain, the word "quality" on its own, is fairly meaningless, and could well be marketing verbiage. Without looking at what the particular fund actually offers, along with its track record, we don't know. Even then, it may be down to personal interpretation as to whether it represents "quality", and if so, how much "quality" compared to any other fund.

I suspect that what the OP was after, rather than a slanging match, was some insight as to more experienced investors' views of the funds mentioned; sadly, I am not experienced enough to help answer that question, but hope some other Lemon Fool will rise to the challenge!

VRD


Indeed. Couldn't agree more.

What I did want to register was my opposition to the view that "there's no such thing as a quality dividend".

That said, I'm cautious about funds reckoning to be able to recognise such quality. In my book, at least in this instance, active can beat passive.

So in the spirit of answering the OP's question, as you propose, may I suggest the following:

https://monevator.com/can-etfs-dependab ... -part-one/

Disclosure: as is no secret on these boards, I am the author of the article.

MDW1954

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224165

Postby daveh » May 24th, 2019, 9:44 am

MDW1954 wrote:Indeed. Couldn't agree more.

What I did want to register was my opposition to the view that "there's no such thing as a quality dividend".

That said, I'm cautious about funds reckoning to be able to recognise such quality. In my book, at least in this instance, active can beat passive.

So in the spirit of answering the OP's question, as you propose, may I suggest the following:

https://monevator.com/can-etfs-dependab ... -part-one/

Disclosure: as is no secret on these boards, I am the author of the article.

MDW1954


I had a look at Part 1 and Part 2 and note in Part 2 you went for a couple of demo portfolios using quite low yielding ETFs (eg the iShares demo port folio was ISF; IUE; IPXJ: IUSAA; IGLT SLXX. Can I ask why you didn't go for any of the yield income specific ETFs. For example from iShares you could have IAPD, IDVY, SEDY.

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224493

Postby EssDeeAitch » May 26th, 2019, 12:03 pm

Well, with regard to the original question, "should I just sell and move to funds", for me the answer is yes. I developed an entry level HYP portfolio at the end of Q3 last year with eight stocks and the intention of growing this through time (this HYP did not constitute a great part of my whole pf). Before I did buy into new sectors, the markets and my picks in particular dropped significantly wand so I just delayed any new buys.

Since then, I have spent an inordinate amount of time on the HYP and seen horrible capital depreciation with VOD, IMB, SLA and WPP to the fore as well as a dividend cut to VOD. I have now made the decision to sell out my winners (having already sold NG. due to political developments at a small profit ) and keep hold of my losers so as to at least harvest the dividends in the hope that the share price improves to a point where I can sell and reinvest.

Does this mean that HYP is to be avoided or that it was a wasted exercise? Certainly not; it's just that it did not suit me temperamentally (and my timing was unfortunate) and this post is not made to offer direction, only to relate my personal situation.

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224517

Postby tjh290633 » May 26th, 2019, 2:13 pm

Not at all. The market as a whole has gone down. My HYP has fallen more than the market in the last few weeks. Buying as the market falls is better than selling. You never completed the exercise, and you certainly didn't hold for long enough to make a judgement.

Just look and it is probable that any fund you might have bought has also fallen. Would you have sold that? Whatever you do, do not be panicked into the selling.

Maybe your temperament is better suited to storing fivers in a jam jar. Prices can rise and fall, often irrationally. It's a fact of life.

TJH

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224532

Postby EssDeeAitch » May 26th, 2019, 3:38 pm

tjh290633 wrote:Not at all. The market as a whole has gone down. My HYP has fallen more than the market in the last few weeks. Buying as the market falls is better than selling. You never completed the exercise, and you certainly didn't hold for long enough to make a judgement.

Just look and it is probable that any fund you might have bought has also fallen. Would you have sold that? Whatever you do, do not be panicked into the selling.

Maybe your temperament is better suited to storing fivers in a jam jar. Prices can rise and fall, often irrationally. It's a fact of life.

TJH




Of course I held for long enough to make a judgment - just because it is not a judgment you agree with does not make you right

As to your comment about "any fund that you would have bought", out of 10 fallers, seven are HYP with an average fall of 13.8%. The three funds have an average fall of 0.73% so you are wrong in your assumptions.

No, HYP is not for me, but I accept that it is for some.

Moderator Message:
RS: Edited to remove unnecessary personal remarks

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224541

Postby Dod101 » May 26th, 2019, 4:40 pm

EssDeeAitch wrote:Well, with regard to the original question, "should I just sell and move to funds", for me the answer is yes. I developed an entry level HYP portfolio at the end of Q3 last year with eight stocks and the intention of growing this through time (this HYP did not constitute a great part of my whole pf). Before I did buy into new sectors, the markets and my picks in particular dropped significantly wand so I just delayed any new buys.


End of Q3 last year means at the end of September 2018, if you are referring to the calendar year. That is 8 months ago give or take a few days. That is in most investor's opinion I would think, much too short a time to judge anything. Certainly I would be looking at about five years before judging a strategy. Furthermore, your choices of HYP shares were not what I would have chosen at that time; in fact I hold none of them. Bear in mind also that the last few years have been very poor for capital values of many HYP shares, partly because of dividend cuts and sometimes no increases and of course the tobaccos have been particularly badly hit despite continued increases in dividends.

I guess that is what TJH was referring to. The mantra with a HYP is of course that capital values are of secondary importance and should usually be ignored. I do not go along with that which is why I am very careful about what I buy and what I hold, although like many others I have been caught out by the tobacco shares. OTOH I have held them for over 20 years and so am still well in the money. Like others, I am finding some ITs are giving me a decent yield and more geographical spread, although of course many/most of the FTSE100 shares have very international businesses behind them.

It is a very personal decision of course and we must all do as we feel is right, but please, whatever strategy you adopt you will need to judge it over a rather longer period than 8 months.

Dod

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224566

Postby SalvorHardin » May 26th, 2019, 6:51 pm

MDW1954 wrote:What I did want to register was my opposition to the view that "there's no such thing as a quality dividend"

Me too. Such things do exist.

The Association of Investment Companies publishes a list every year of investment trusts which have raised their dividends in each of the last twenty years (and longer). Examples are Bankers, City of London, Witan, Temple Bar and Caledonia Investments.

https://www.moneyobserver.com/news/inve ... wo-decades

In America they have a subset of the S&P 500, the S&P 500 Dividend Aristocrats. This index consists of S&P 500 companies which have increased their dividends in each if the past 25 years. There are American funds which specifically invest in only dividend aristocrats - the problem is that American tax law is not kind to British investors in American funds (try to find non-American domiciled equivalents). Beware of UK dividend aristocrats - the term over here seems to be used as a substitute for "high yield".

https://en.m.wikipedia.org/wiki/S%26P_5 ... ristocrats

A good example is Procter & Gamble. It has paid a dividend in every year since 1891 and has increased its dividend in each of the last 63 years. But it's not for the HYP purists because it's one of those "foreign" shares and yields only 2.6%. It's an interesting way to diversify a bit away from Unilever.

The problem is that "quality" costs. As we've seen recently, when a share yields close to double the yield on the FTSE100 there's probably something seriously wrong with it.

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224601

Postby Alaric » May 26th, 2019, 8:36 pm

SalvorHardin wrote:The problem is that "quality" costs. As we've seen recently, when a share yields close to double the yield on the FTSE100 there's probably something seriously wrong with it.


As the Proctor & Gamble example illustrates, stocks which show a consistent history of dividend increases appear in demand. Thus the share price will have increased so that the current running dividend yield is below the average for other stocks in the market.

Horses for courses perhaps, but if you are investing today to give yourself a future retirement income, a low but increasing level of income is just as suitable, if not more so, than an income which starts high, but barely increases. If you want an income now, the deferral implicit in a "grower" might not be suitable. But there are also the bonds and preference share markets.

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224607

Postby Dod101 » May 26th, 2019, 8:57 pm

Alaric wrote:As the Proctor & Gamble example illustrates, stocks which show a consistent history of dividend increases appear in demand. .


Unless of course they are tobacco shares.

I take the general point though. I am well into retirement and live off my dividends. It is a real dilemma. I am in the fortunate position that I can afford not to have to chase the highest yields, and am reasonably happy with my current holdings. As I said I will probably top up HFEL and maybe buy Diageo after top slicing Unilever which is now around 10% of my HYPish portfolio.

Dod

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224609

Postby IanTHughes » May 26th, 2019, 9:10 pm

Alaric wrote:
SalvorHardin wrote:The problem is that "quality" costs. As we've seen recently, when a share yields close to double the yield on the FTSE100 there's probably something seriously wrong with it.


As the Proctor & Gamble example illustrates, stocks which show a consistent history of dividend increases appear in demand. Thus the share price will have increased so that the current running dividend yield is below the average for other stocks in the market.

Horses for courses perhaps, but if you are investing today to give yourself a future retirement income, a low but increasing level of income is just as suitable, if not more so, than an income which starts high, but barely increases. If you want an income now, the deferral implicit in a "grower" might not be suitable. But there are also the bonds and preference share markets.

I prefer to go High Yield with the HYP Strategy and get a good income growth rate. The Income per Dividend Unit for my HYP has grown as follows:

Year Ending  |  Unit Div  |  3 Years  |  5 Years
01-Jan-13 | 0.4768 | |
01-Jan-14 | 0.5289 | |
01-Jan-15 | 0.5324 | |
01-Jan-16 | 0.6099 | 8.55% |
01-Jan-17 | 0.6300 | 6.00% |
01-Jan-18 | 0.7349 | 11.34% | 9.04%
01-Jan-19 | 0.7305 | 6.20% | 6.67%

Surely you must know by now that the HYP Strategy specifically seeks out both a High Yield AND a Growing Dividend.

Of course even the best Income Strategy may well be de-railed if one "Buys High only to Sell Low" within 8 months!


Ian

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224611

Postby MDW1954 » May 26th, 2019, 9:21 pm

SalvorHardin wrote:
MDW1954 wrote:What I did want to register was my opposition to the view that "there's no such thing as a quality dividend"

Me too. Such things do exist.

The Association of Investment Companies publishes a list every year of investment trusts which have raised their dividends in each of the last twenty years (and longer). Examples are Bankers, City of London, Witan, Temple Bar and Caledonia Investments.

https://www.moneyobserver.com/news/inve ... wo-decades

In America they have a subset of the S&P 500, the S&P 500 Dividend Aristocrats. This index consists of S&P 500 companies which have increased their dividends in each if the past 25 years. There are American funds which specifically invest in only dividend aristocrats - the problem is that American tax law is not kind to British investors in American funds (try to find non-American domiciled equivalents). Beware of UK dividend aristocrats - the term over here seems to be used as a substitute for "high yield".

https://en.m.wikipedia.org/wiki/S%26P_5 ... ristocrats

A good example is Procter & Gamble. It has paid a dividend in every year since 1891 and has increased its dividend in each of the last 63 years. But it's not for the HYP purists because it's one of those "foreign" shares and yields only 2.6%. It's an interesting way to diversify a bit away from Unilever.

The problem is that "quality" costs. As we've seen recently, when a share yields close to double the yield on the FTSE100 there's probably something seriously wrong with it.


I agree with every word of this. Yes, I like a high yield. But more importantly, I like a quality dividend. (As I have posted earlier in this thread, in response to another non-issue, vide Greggs etc etc.)

MDW1954

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224683

Postby Alaric » May 27th, 2019, 11:07 am

IanTHughes wrote:Surely you must know by now that the HYP Strategy specifically seeks out
both a High Yield AND a Growing Dividend.


Other than hope and prayer what's the mechanism for "specifically" seeking out "Growing Dividend"?

Shares with such a performance historically have a tendency to get noticed and their dividend yield falls as their price increases.

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224689

Postby tjh290633 » May 27th, 2019, 11:15 am

Alaric wrote:
IanTHughes wrote:
Alaric wrote:S

Surely you must know by now that the HYP Strategy specifically seeks out
both a High Yield AND a Growing Dividend.


Other than hope and prayer what's the mechanism for "specifically" seeking out "Growing Dividend"?

Shares with such a performance historically have a tendency to get noticed and their dividend yield falls as their price increases.

That's why you buy them when their yield is at an acceptable level, before the price has risen. There are always some that fit the specification.

TJH

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224691

Postby Alaric » May 27th, 2019, 11:21 am

tjh290633 wrote:That's why you buy them when their yield is at an acceptable level, before the price has risen. There are always some that fit the specification.


Shouldn't you then be looking at shares with average or below average dividend yields?

Do you think there are any shares fitting the description of "acceptable level, before the price has risen" out there at the moment. If you ask "why" for a high dividend yield, it's invariably because the price has collapsed.

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Re: Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

#224692

Postby IanTHughes » May 27th, 2019, 11:27 am

Alaric wrote:
IanTHughes wrote:Surely you must know by now that the HYP Strategy specifically seeks out both a High Yield AND a Growing Dividend.


Other than hope and prayer what's the mechanism for "specifically" seeking out "Growing Dividend"?

The HYP Strategy recommends selecting "High Yield" candidates that have a history of rising dividends. It is of course backward-looking but no more so than your suggestion of selecting "Low Yield" candidates that have a history of rising dividends.

Alaric wrote:Shares with such a performance historically have a tendency to get noticed and their dividend yield falls as their price increases.

Which is why the HYP Strategy recommends buying them only when they are "High Yield", before they have been "noticed". I would have thought that much would have been obvious!


Ian


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