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Highest yielding shares underperformed FTSE 100 over five years

General discussions about equity high-yield income strategies
OhNoNotimAgain
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Highest yielding shares underperformed FTSE 100 over five years

#235784

Postby OhNoNotimAgain » July 11th, 2019, 9:35 am

It shows that if investors had picked the 10 highest-yielding shares on the FTSE 100 index five years ago, these shares would have underperformed the benchmark. Brewin Dolphin, the wealth manager which did the analysis, also carried out the same research over 10 and 15 years, with similar results, but the difference is particularly stark over the five-year period. Over that period the highest yielding shares would have underperformed the FTSE 100 index as a whole by 3 per cent.
https://www.ft.com/content/e35847ea-a24 ... f48f366f7d

Alaric
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Re: Highest yielding shares underperformed FTSE 100 over five years

#235790

Postby Alaric » July 11th, 2019, 9:45 am

The article is behind a pay wall, so is it possible to name the ten shares in question?

I don't think it's that much of a revelation. One way that shares get to have a high yield is because the share price collapses and that happens before a dividend cut. The share price downturn might either be cyclical or permanent, but if permanent it's going to have the effect mentioned.

I assume they remembered to use a total return index so as to capture the effect of higher dividends.

mike
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Re: Highest yielding shares underperformed FTSE 100 over five years

#235801

Postby mike » July 11th, 2019, 10:08 am

Alaric wrote:The article is behind a pay wall, so is it possible to name the ten shares in question?

Follow the first link, and you'll be able to read it all.

https://www.google.com/search?client=firefox-b-d&q=Highest+yielding+shares+underperformed+FTSE+100+over+five+years

As long a you can make a decent stab at the title of the article, going in by a google link will allow you to read the ft article.

SentimentRules
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Re: Highest yielding shares underperformed FTSE 100 over five years

#235806

Postby SentimentRules » July 11th, 2019, 10:23 am

Ohno

Are you daring to suggest that there might be a sustained and evidenced weakness in income chasing in the stock market? Brave man.

Howard
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Re: Highest yielding shares underperformed FTSE 100 over five years

#235808

Postby Howard » July 11th, 2019, 10:24 am

mike wrote:
Alaric wrote:The article is behind a pay wall, so is it possible to name the ten shares in question?

Follow the first link, and you'll be able to read it all.

https://www.google.com/search?client=firefox-b-d&q=Highest+yielding+shares+underperformed+FTSE+100+over+five+years

As long a you can make a decent stab at the title of the article, going in by a google link will allow you to read the ft article.


These links never seem to work for me. Maybe the FT puts a cookie on my computer which stops this approach working? Forgive me if this shows my ignorance of the workings of the net :? .

regards

Howard

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235812

Postby mike » July 11th, 2019, 10:28 am

Howard wrote:
mike wrote:
Alaric wrote:The article is behind a pay wall, so is it possible to name the ten shares in question?

Follow the first link, and you'll be able to read it all.

https://www.google.com/search?client=firefox-b-d&q=Highest+yielding+shares+underperformed+FTSE+100+over+five+years

As long a you can make a decent stab at the title of the article, going in by a google link will allow you to read the ft article.


These links never seem to work for me. Maybe the FT puts a cookie on my computer which stops this approach working? Forgive me if this shows my ignorance of the workings of the net :? .

regards

Howard


Try using "private" or "incognito" mode, this doesn't record cookies.

tjh290633
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Re: Highest yielding shares underperformed FTSE 100 over five years

#235828

Postby tjh290633 » July 11th, 2019, 10:52 am

Works fine for me. I hold 4 of them. SSE, VOD, GSK and TSCO. I held 30 others not in that list 5 years ago.

My top 10 by yield then were:

Admiral
SSE
Vodafone
Premier Farnell
Tesco
Glaxo Smith Kline
National Grid
BAE Systems
BP
Marston's

Apart from PFL which was taken over, I still hold them all.

The last few years have been poor for the higher yielding end of the market, as records of the FTSE350HY & FTSE350LY indices reveal. Look at it again in 10 years time.

TJH

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235875

Postby Breelander » July 11th, 2019, 12:43 pm

OhNoNotimAgain wrote:... Brewin Dolphin, the wealth manager which did the analysis, also carried out the same research over 10 and 15 years, with similar results, but the difference is particularly stark over the five-year period. Over that period the highest yielding shares would have underperformed the FTSE 100 index as a whole by 3 per cent.



Yes, my HYP's chart of Income Unit price vs. Ftse100 shows a similar result. But choose another five-year period and I can 'prove' the exact opposite. The fact is that the capital performance of a high yield portfolio against the Ftse 100 fluctuates, five years ago today it was doing particularly well against the Ftse, today it is under par. Had this analysis been done at the end of December 2016 then it would have shown (as my HYP does) an outperformance of just over 3%. In the really long term, does it matter? It's not as if I intend to draw on the capital any time soon.

Image
Last edited by Breelander on July 11th, 2019, 12:55 pm, edited 3 times in total.

88V8
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Re: Highest yielding shares underperformed FTSE 100 over five years

#235878

Postby 88V8 » July 11th, 2019, 12:54 pm

And I dare say it depends how 'high' one goes.
Luni always said to eschew shares with yields exceeding 160% of the FTSE. They represent his Danger Zone.

But what does one do when a held share starts as a Goldilocks then drifts into the DZ.

Anyway, we're back to TR. Zzzzzz.

V8

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235879

Postby monabri » July 11th, 2019, 1:00 pm

Using my browser in incognito mode ( didn't work in non incognito mode) the shares discussed are:

Antofagasta
Friends Life
Wm Morrison
Fresnillo
SSE
Vodafone
Centrica
J Sainsbury
GlaxoSmithKline
Tesco.

Dod101
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Re: Highest yielding shares underperformed FTSE 100 over five years

#235880

Postby Dod101 » July 11th, 2019, 1:04 pm

88V8 wrote:But what does one do when a held share starts as a Goldilocks then drifts into the DZ.


See if you can divine the reason for the drift in to the Danger Zone. Do not just ignore it or you may find yourself with a cutter on your hands. Usually it will indicate the danger of a dividend cut, but not always; the tobaccos being a contrary example.

Dod

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235881

Postby Dod101 » July 11th, 2019, 1:06 pm

monabri wrote:Using my browser in incognito mode ( didn't work in non incognito mode) the shares discussed are:

Antofagasta
Friends Life
Wm Morrison
Fresnillo
SSE
Vodafone
Centrica
J Sainsbury
GlaxoSmithKline
Tesco.


All share with a bit of a chequered history. Friends Life was taken over by Aviva; did that not help the price?

Dod

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235882

Postby Alaric » July 11th, 2019, 1:09 pm

monabri wrote:Antofagasta
Friends Life
Wm Morrison
Fresnillo
SSE
Vodafone
Centrica
J Sainsbury
GlaxoSmithKline
Tesco.


So a three supermarkets, a couple of miners, a pair of gas/electricity utilities, a drugs company, a mobile phone operator and a life insurer/fund manager. Are/were Antofagasta and Fresnillo ever FTSE 100 constituents?

SentimentRules
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Re: Highest yielding shares underperformed FTSE 100 over five years

#235883

Postby SentimentRules » July 11th, 2019, 1:13 pm

Basically what your saying guys is that income chasing is no different to most other forms of market participation 're

Make the right choices great. If not, bad.

Right timing.. good. Bad timing, bad.

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235885

Postby monabri » July 11th, 2019, 1:16 pm

Alaric wrote:
monabri wrote:Antofagasta
Friends Life
Wm Morrison
Fresnillo
SSE
Vodafone
Centrica
J Sainsbury
GlaxoSmithKline
Tesco.


So a three supermarkets, a couple of miners, a pair of gas/electricity utilities, a drugs company, a mobile phone operator and a life insurer/fund manager. Are/were Antofagasta and Fresnillo ever FTSE 100 constituents?



I'm just citing the shares quoted in the article. One can very easily write such an article based on selected shares ( Carillion, Interserve , Provident Financial....but "forget" to consider say LGEN or HSBA ).

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235886

Postby Alaric » July 11th, 2019, 1:22 pm

SentimentRules wrote:
Make the right choices great. If not, bad.

Right timing.. good. Bad timing, bad.


The special case with "HYP" investing is that selecting shares by choosing the highest yield also acts as a filter for shares with fallen share prices. Perhaps the prices are going to recover, perhaps they aren't. Perhaps the price will stabilise at or above the current level and the dividends be maintained or even increased. How can the investor tell?

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235896

Postby IanTHughes » July 11th, 2019, 1:45 pm

Alaric wrote:
SentimentRules wrote:Make the right choices great. If not, bad.

Right timing.. good. Bad timing, bad.

The special case with "HYP" investing is that selecting shares by choosing the highest yield also acts as a filter for shares with fallen share prices.

Your understanding of the HYP Strategy is once again incorrect! The HYP Strategy does not recommend simply choosing the highest yield. Either you are being deliberately misleading, or you seriously do not yet know, despite being told several dozen times, that the HYP Strategy strongly advocates both Diversification across Business Sectors and only selecting high yield shares where the dividend is believed to be sustainable. Deliberately misleading? Ignorance of HYP Strategy? Only you can provide the answer to that!


Ian

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235914

Postby Alaric » July 11th, 2019, 3:01 pm

IanTHughes wrote:Your understanding of the HYP Strategy is once again incorrect.
Ian


I couldn't really care. The tactics of the HYP strategy identifies shares where the price has fallen in recent times and for all I know will continue to fall. I see no point in buying for an 8% yield and incurring a 10% or more capital loss as a consequence.

ITV has just been topped up. Why doesn't the recent price performance put such investors off? Anyone buying this time last year would have seen the price drop from 177 to around 110. It might turn around, there again it might not. They might maintain their dividend, but if they are experiencing poor trading conditions they might not be able to afford to.

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235915

Postby SentimentRules » July 11th, 2019, 3:13 pm

IanTHughes wrote:
Alaric wrote:
SentimentRules wrote:Make the right choices great. If not, bad.

Right timing.. good. Bad timing, bad.

The special case with "HYP" investing is that selecting shares by choosing the highest yield also acts as a filter for shares with fallen share prices.

Your understanding of the HYP Strategy is once again incorrect! The HYP Strategy does not recommend simply choosing the highest yield. Either you are being deliberately misleading, or you seriously do not yet know, despite being told several dozen times, that the HYP Strategy strongly advocates both Diversification across Business Sectors and only selecting high yield shares where the dividend is believed to be sustainable. Deliberately misleading? Ignorance of HYP Strategy? Only you can provide the answer to that!


Ian


HYP has many known forms. From buy and hold forever to quarterly adjustments. Read a few financial tags across the globe. You will see howcmsny variations there are. Mid yields classed by some as safe higher yields etc etc

I don't think any of us are wrong so to speak. We just all interpret things differently.

Bottom line is, don't buy 10% yield in a dog. And lets face it, most 8-10% yielders are dogs when your at the high of a long run bull market. No yield will recover it for years in a crash. Lloyds buyers of 1999 are still suffering.

I don't think it's misleading to suggest alternatives or variations being used in the markets today. Because the market has about 50 variations in it (and uses none of them)

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Re: Highest yielding shares underperformed FTSE 100 over five years

#235916

Postby SentimentRules » July 11th, 2019, 3:14 pm

"Your understanding of the HYP Strategy is once again incorrect! The HYP Strategy does not recommend simply choosing the highest yield. Either you are being deliberately misleading, or you seriously do not yet know, despite being told several dozen times, that the............### HYP Strategy strongly advocates both Diversification across Business Sectors and only selecting high yield shares ......?###where the dividend is believed to be sustainable."

So yeah. Just high yield.

The clue is in the name. Hard to be a high yield portfolio if many small to mid are diluting it.


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