HYP development BP or RIO

[88V8]

Rio is a rollercoaster bet on China.

Of the two, BP for me.
I also hold their Prefs BP.B

V8

[Breelander]

...I disagree with the formula that you need around 15 stocks and all big cap and all from different sectors ... I also disagree with the idea that you have to buy and hold forever ...So I also trade in and out of stocks depending on where the share price sits in my view of a cycle...

Then that makes this post OT for HYP - Practical, which is strictly moderated in line with the board guidance. Nothing wrong with your strategy, but the best place to discuss it would be the High Yield Share Strategies board. HYP'ers frequent both boards so you'll get the same audience, but the advice can be wider ranging.

For the HYP Practical board .. .At its simplest, it will have at least 15 holdings, none of which should be from the same sector. A long term buy and hold (LTBH) of these shares is envisaged...

...The High Yield Share Strategies board is intended for wide-ranging discussions of ways to obtain high yields from equities.

viewforum.php?f=31

[idpickering]

I agree with Breelander's post above, although I don't frequent the other board. I'm all for each to their own, but with respect to marktime1231, the opening post is off topic for this board IMHO. As for the two shares mentioned, I hold both in my HYP, and think they're both valid HYP purchases now. No offence is intended, all views are welcome here for discussion I guess. Welcome to the HYP Practical Board.

Ian.

[idpickering]

I agree with Breelander's post above. I'm all for each to their own, but with respect to marktime1231, the opening post is off topic for this board IMHO. As for the two shares mentioned, I hold both in my HYP, and think they're both valid HYP purchases now. No offence is intended, all views are welcome here for discussion I guess. Welcome to the HYP Practical Board.

Ian.

Fine.

If it helps I have just reported myself for being off topic.

That's a shame. I wonder if you'd be open to input in order that you are more on topic here? Be sad for you to just walk away.

Ian.

[idpickering]

Thanks I was enjoying the board but struggling with the guide eg the rules, not just a lack of understanding where to look and which is the right place to make whatever sort of comment, but a little bit of slack would be / would have been nice for my third post was it ... apparently I am in a queue behind other people who have already reported me.

No worries. Don't be a stranger, and I look forward to seeing more from you here.

Ian.

[Breelander]

Well I am new ... how amusing that the observations and musings on stocks might be fine, but for my confessing to not agreeing 100% with the philosophy "guidance" according to HYP Practical...

I'm afraid you have walked into a long-standing battle between those who strictly follow the HYP principles as set out by pyad back in 2001 on The Motley Fool, and those who'd question the principles. The 'flame wars' became almost 'religious' in their fervour.

To separate the warring factions the original TMF board was split into two, 'Practical' for the 'strict adherents' and 'Strategies' for the more 'laid back'. That same distinction was continued when the TMF boards closed and LMF was born.

[TUK020]

So I also trade in and out of stocks depending on where the share price sits in my view of a cycle ... usually retaining a core holding but not always when the sp runs away so, for examples, I am currently out of GSK and HGM. I like to buy in at depressed p/e, hoping I know better then everyone else, and target a yield of 6%+. Last year I managed 6.48% income (I think the total return was about 6.88% thanks to some lucky trades). This year hoping for better thanks to some even luckier trades and following the extreme dividend yields which have cropped up.

At the moment I am thinking of topping up what look to be cheap stocks for the long term eg BP and/or RIO, noting that the price is depressed for good reason. I am always scanning for low hanging fruit too, stocks which are approaching a big dividend but which are par value or better ... I have just looked at Hays, Smiths DS, BDEV and IGG. Businesess which are hopefully not too complicated nor subject to more variables than my small brain can handle, but which appear to offer potentially good value. But new ones are harder to get a feel of where they are in their cycle.

So which is the better long term HYP approach?

Or does it all come down to which looks best value on the day?

If I stick to my instincts BP and RIO are neck and neck but BP less exposed perhaps and more regular eg nearer return. So, BP then?

Probably more of a topic for HY Investment Strategies than the Practical board, as you are less likely to offend religious sensibilities there.

Worth exploring back posts from a venerable contributor called TJH on his top p/top slice methodology, which is a systematic way of ratchting up income using the 'market noise'. TJH has kept detailed records of his investments for decades, and is happy to share his experience/data.
Terry (TJH) tends to favour a broader portfolio than 15 stocks, and has a disciplined method of top slicing anything that gets heavier than a certain multiple of his median value. He then tops up stocks according to a combination of yield (high) and holding weight (low), with vetos according to whether the stock provides more than a certain % of his total income, or whether the share has consumed more than a certain % of total investment value (this last prevents getting carried away with falling knives).
This method of relating everything to his median holding value is a very elegant way of correcting for overall market fluctuations, while at the same time arbitraging the movement, up or down, of individual stocks relative to the market mean. I am sure he can explain it more eloquently.

Also take a look at the HYPTUSS (High Yield Top Up SpreadSheet) that has been created by some jolly clever chaps over on the financial software board - very useful tool for this sort of thing

[seagles]

OK so this topic should be in the HY Shares and Strategies - General forum or the Investment Strategies forum or anywhere but HYP - Practical because I am not strict orthodox and some of what I wrote was too open ended ...

How do I shift it or bin it?

I have reported it for you. A moderator, hopefully, will pick it up and move it and remove these posts to clean it up.

[tjh290633]

Moderator Message:
I have moved this topic from the HYP Practical forum, as requested by several reports.

I have not deleted any posts, but will do so if requested.

Meanwhile marktime1234 is welcome to expound on his ideas here.

TJH

[Alaric]

anywhere but HYP - Practical because I am not strict orthodox and some of what I wrote was too open ended ...

It's one of the quirks of the Lemon Fool site that the abbreviation "HYP" has a life of its own and suggestions that high yield shares are also those whose share price has recently fallen (else why would they be high yield?) and might continue to do so are regarded as heresy on the "Practical" board, devoted as it is to discussing the share portfolios of the faithful.

[tjh290633]

It's one of the quirks of the Lemon Fool site that the abbreviation "HYP" has a life of its own and suggestions that high yield shares are also those whose share price has recently fallen (else why would they be high yield?) and might continue to do so are regarded as heresy on the "Practical" board, devoted as it is to discussing the share portfolios of the faithful.

You might like to look at the changes in price of the shares in my HYP since Jan 1st.

Epic   Change 
MARS    36.42%
SGRO    34.93%
TSCO    26.04%
CPG     23.70%
AZN     23.36%
BA.     22.30%
WMH     20.00%
ULVR    19.37%
TW.     17.65%
DGE     16.62%
SMDS    15.34%
GSK     14.00%
SSE     13.59%
NG.     13.57%
BATS    13.28%
RIO     10.94%
TATE    10.06%
UU.      7.42%
LGEN     6.41%
RB.      5.77%
BLND     5.55%
VOD      4.68%
ADM      4.35%
BHP      3.58%
AV.      3.38%
LLOY     3.24%
BP.      3.05%
IMI      1.33%
RDSB    -0.68%
KGF     -3.83%
PSON    -8.44%
IMB    -15.02%
S32    -22.07%
MKS    -24.56%
BT.A   -26.52%

There are surprisingly few falls among them.

TJH

[Alaric]

You might like to look at the changes in price of the shares in my HYP since Jan 1st.

You have Unilever and Diageo in there which true believers would sell as the yield is too low.

I look at the shares proposed for top ups on the "Practical" board and check the one and three year past performance. More often than not it's rubbish. I'm inclined to treat it as a list of stocks best avoided or at best considered for their recovery potential.

[IanTHughes]

You might like to look at the changes in price of the shares in my HYP since Jan 1st.

I look at the shares proposed for top ups on the "Practical" board and check the one and three year past performance. More often than not it's rubbish. I'm inclined to treat it as a list of stocks best avoided or at best considered for their recovery potential.

I do not propose any top-ups on the HYP Practical board but I do report the top-ups made to my own HYP. So far this year the following have been reported:

DATE       |  EPIC  |  BUY PRICE   |  TODAY       |  +/- (%)
10-Jan-19  |  BATS  |  2,486.0644  |  2,832.0000  |   13.91%
10-Jan-19  |  MARS  |    101.0788  |    128.3000  |   26.93%
11-Feb-19  |  MARS  |     94.2125  |    128.3000  |   36.18%
11-Feb-19  |  VOD   |    139.6778  |    160.0600  |   14.59%
11-Mar-19  |  VOD   |    137.5733  |    160.0600  |   16.35%
10-Apr-19  |  MARS  |    100.9200  |    128.3000  |   27.13%
10-Apr-19  |  VOD   |    140.8400  |    160.0600  |   13.65%
10-May-19  |  IMB   |  2,211.0052  |  2,020.0000  |   -8.64%
10-May-19  |  MARS  |    100.3045  |    128.3000  |   27.91%
10-May-19  |  NRR   |    234.3536  |    187.4000  |  -20.04%
10-May-19  |  SLA   |    267.5970  |    273.8000  |    2.32%
10-May-19  |  VOD   |    138.5000  |    160.0600  |   15.57%
10-Jun-19  |  IMB   |  2,081.0000  |  2,020.0000  |   -2.93%
10-Jun-19  |  SLA   |    275.2500  |    273.8000  |   -0.53%
10-Jul-19  |  IMB   |  2,000.3943  |  2,020.0000  |    0.98%
10-Jul-19  |  ITV   |    110.5453  |    126.4000  |   14.34%
12-Aug-19  |  ITV   |    107.9730  |    126.4000  |   17.07%

So far, only Vodafone Group (VOD) has reduced the dividend.

Maybe I should use your labels of "rubbish" and "best avoided" as recommendations!



Ian

[Alaric]

Maybe I should use your labels of "rubbish" and "best avoided" as recommendations!

On a one year view, ITV has a total return of minus 11.7%. On a three year view, it's minus 6.16%

My preference is to avoid such shares.

You could argue recovery and that can be a valid strategy. High risk though.

http://tools.morningstar.co.uk/uk/stock ... E%24%24ALL

[IanTHughes]

Maybe I should use your labels of "rubbish" and "best avoided" as recommendations!

On a one year view, ITV has a total return of minus 11.7%. On a three year view, it's minus 6.16%

So what! I only bought in July and August of this year, after the price had dropped sufficiently to make the yield attractive, not a year ago, when I suspect the price was too high!


Ian

[Alaric]

after the price had dropped sufficiently to make the yield attractive,

The key point is that you don't just look at the running dividend yield. After all, if the investor's objective is to reinvest dividends, it's the market value after they have reinvested that should be the key metric. So a dividend yield of 10% coupled with a capital loss of 20% loses 10% rather than gains 10%. A really desperate income seeker for dividends to spend might be able to live with that, but it's pointless if the dividend income is just used for reinvestment.

But equally holding cash, even at a zero return, is preferable to investing and losing 10%. Deliberately buying cum div for the income is just as pointless if looking to reinvest.

[IanTHughes]

after the price had dropped sufficiently to make the yield attractive,

The key point is that you don't just look at the running dividend yield.

Of course not, that is why the I follow the HYP Strategy!

After all, if the investor's objective is to reinvest dividends, it's the market value after they have reinvested that should be the key metric.

The objective of HYP is an increasing income from the received dividends. It therefore follows that the key metric is the level of that dividend, irrespective of the market value of the portfolio. Furthermore, if the investor is re-investing the dividends received rather than drawing the income, lower prices would also result in more shares being purchased with that dividend amount.


Ian

[Itsallaguess]

I look at the shares proposed for top ups on the "Practical" board and check the one and three year past performance.

More often than not it's rubbish.

I'm inclined to treat it as a list of stocks best avoided or at best considered for their recovery potential.

Isn't that a slightly flawed analysis?

If something is being invested in after it's poor one and three year performance, and that's led to a high enough yield to warrant a top-up, then that doesn't necessarily make it a poor investment at that point....

Surely any valid analysis would need to look at one and three year performances after they've been promoted as good options for HYP top-ups?

Have you carried out any investigations regarding that aspect at all?

Cheers,

Itsallaguess

[Steveam]

Thx TJH for yr table. I’ve recently been topping-up South 32 ...

Best wishes,

Steve

[tjh290633]

You might like to look at the changes in price of the shares in my HYP since Jan 1st.

You have Unilever and Diageo in there which true believers would sell as the yield is too low.

I look at the shares proposed for top ups on the "Practical" board and check the one and three year past performance. More often than not it's rubbish. I'm inclined to treat it as a list of stocks best avoided or at best considered for their recovery potential.

The lower yield shares were all bought when their yields were above that of the market at the time.

I have sold shares in the past when their yield had fallen to an unacceptably low level, or dividends had been stopped with little prospect of an imminent resumption. BG., WTB and INDV come immediately to mind. However as HYP is essentially an LTBH strategy, I am happy to continue holding shares with lower yields as long as those dividends continue to rise acceptably.

True believers, as you put it, would only sell in extremis.

TJH