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Better alternatives to HYP

General discussions about equity high-yield income strategies
melonfool
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Re: Better alternatives to HYP

#100204

Postby melonfool » November 30th, 2017, 1:45 pm

Gengulphus wrote:
OhNoNotimAgain wrote:A bit like the knowledge gap between a fox and a hedgehog. The fox knows many things, but the hedgehog only needs to know one thing to survive; avoid the fox. ...

Pretty dreadful analogy, because hedgehogs need to know an awful lot more than that to survive - four off the top of my head are avoid badgers (more so than foxes), avoid busy roads, what's good to eat and where to find it.

Gengulphus


Don't eat slugs that have eaten slug poison; find Mel's garden and use the little hedgehog house to hibernate.....

Foxes have it easy!

Mel

JMN2
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Re: Better alternatives to HYP

#102653

Postby JMN2 » December 8th, 2017, 8:05 am

Dod101 wrote:...

I derive my income to live off from what I call my HYP (because that is what it is as far as I am concerned) It is not a HYP by the very restricted definition contained in the newly published rules for a HYP on the HYP Practical Board. I have just checked. Depending on how a sector is defined I seem to have 9 sectors containing 17 individual shares. The big question is the finance sector. I have only one bank, but several insurers in different guises and I double up in tobacco, utilities, land and pharmas, none of which conforms to the TLF HYP.

My HYP is made up of 17 individual shares of 79% of value, 4 ITs with 13% and 4 corporate bond funds with 8%

Individually, they are
Unilever 8.49%
Shell 7.38%
HSBC 7.28%
L & G 6.34%
Imperial Brands 5.80%
BAT 5.02%
SSE 4.86%
B Land 4.33%
Chesnara 4.02%
Phoenix 3.89%
Schroder N/V 3.25%
Nat Grid 3.12%
Astra Zeneca 3.09%
Vodaphone 2.37%
Glaxo 2.08%
Segro 1.86%
Admiral 1.83&

The ITs are
Edinburgh 4.03%
Murray International 4.09%
Murray Income 2.25%
Temple Bar 2.81%

These may not all add up to exactly 100% because there is a certain amount of rounding. The individual share are unbalance partly because of the big increase in Unilever this year but most because the size of the holdings reflect my feelings on each share although I wold not mind increasing Segro which I rather like. I think I already said but the only change this year has been buying Murray Income, Admiral and bit more PHP with the proceeds from London & St Lawrence when it was wound up. In all this High Yield Portfolio or a variation on it as served me well over at least the last ten years and I regard it as now fairly settled. It works for the real world.

I have another smaller portfolio for capital growth which contains more ITs and individual shares but hardly any income.

Hope it may be of some interest.

Dod


I recced this post earlier and then remembered Dod that you wrote somewhere along the lines that you like Temple Bar because they do things a bit differently. Could you explain that a bit further please?

I currently have Murray Intl and did rule out City earlier as you did, but would like to bring in one or two additional IT's to my portfolio.

Dod101
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Re: Better alternatives to HYP

#102694

Postby Dod101 » December 8th, 2017, 10:14 am

Temple Bar is managed by Alistair Mundy and he is a bit of a contrarian, holding the last time I looked shares like the supermarkets, Marks and Spencer and so on which I would never buy myself. It inevitably has its off times but has been doing quite well for the last year or two and its yield is around 3.2%. This time of year of course reports are well out of date for calendar year reporting.

I have not found many investment trusts which produce a decent income although you will see I hold Edinburgh for that reason. If you are not too bothered about income, then I would also suggest that you look at Finsbury Growth and Income, managed by Nick Train and RIT Capital Partners, which as I said on another thread yesterday holds stuff that the average individual might find difficult to hold directly. More of a wealth preserver but it has done well over say 5 years. These two though are not 'Better alternatives to HYP'!

HTH

Dod

Dod101
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Re: Better alternatives to HYP

#102712

Postby Dod101 » December 8th, 2017, 11:20 am

Contrarian is an expression widely used in the industry to denote someone who invests in shares that are out of favour or not pro tem at least, very popular, and thus investing contrary to what many of his fellow active managers are investing in.

Dod

Moderator Message:
edited as referenced post deleted so as to allow Dod to explain "contrarian" in context. Raptor.

Arborbridge
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Re: Better alternatives to HYP

#103056

Postby Arborbridge » December 9th, 2017, 11:21 pm

Dod101 wrote:I have not found many investment trusts which produce a decent income although you will see I hold Edinburgh for that reason.

Dod


Depends what you require as a "decent" income and how much capital you have. I guess you really mean a "decent yield", but then that is relative too. I'd say City of London (and several others) produce a decent income via a yield of around 4%.
And the dividend has risen for 50 years consecutively.

Arb.

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Re: Better alternatives to HYP

#103088

Postby Dod101 » December 10th, 2017, 8:31 am

I ruled out City of London because the yield seemed to me to come at too high a price in lack of capital appreciation, thus reducing the total return to unacceptable levels. See the thread on Caledonia Investments for the full story. By a decent income, I guess something over say 3.5% although with ITs I am more mindful of the total return with a good dividend as a bit of a bonus.

Were I truly looking for a better alternative to HYP as per the title to this thread I think it would be difficult.

Dod

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Re: Better alternatives to HYP

#103126

Postby idpickering » December 10th, 2017, 10:55 am

Dod101 wrote:
Were I truly looking for a better alternative to HYP as per the title to this thread I think it would be difficult.

Dod


An interesting comment Dod. I've never held an IT, but they do seem popular here. For me, as you may have realised, a HYP is the way to go. I look forward to seeing any further posts regarding other options though.

Ian.

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Re: Better alternatives to HYP

#103189

Postby pendas » December 10th, 2017, 12:54 pm

I first purchased City in Jan 2010 and have made subsequent top ups since and I've also sold and repurchased in a sheltered account producing an annualised return of 11.92% to last Friday's closing price taking account of all transaction costs.

My HYP portfolio of 30+ shares for the same period has produced 9.5% dampened by a significant loss in value of a number of shares.

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Re: Better alternatives to HYP

#103197

Postby Dod101 » December 10th, 2017, 1:09 pm

pendas wrote:I first purchased City in Jan 2010 and have made subsequent top ups since and I've also sold and repurchased in a sheltered account producing an annualised return of 11.92% to last Friday's closing price taking account of all transaction costs.

My HYP portfolio of 30+ shares for the same period has produced 9.5% dampened by a significant loss in value of a number of shares.


If you are into doing a bit of trading (and nothing wrong with that) you may be able to massage the total return but I think most of us here are thinking of LTBH. I have done just that with HSBC over the last couple of years but including trading gains (or losses) is not the norm in calculating total return I would have thought.

Dod

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Re: Better alternatives to HYP

#103905

Postby Arborbridge » December 13th, 2017, 1:23 pm

Dod101 wrote:I ruled out City of London because the yield seemed to me to come at too high a price in lack of capital appreciation, thus reducing the total return to unacceptable levels. See the thread on Caledonia Investments for the full story. By a decent income, I guess something over say 3.5% although with ITs I am more mindful of the total return with a good dividend as a bit of a bonus.

Were I truly looking for a better alternative to HYP as per the title to this thread I think it would be difficult.

Dod


That doesn't bother me too much, especially for something to replace HYP. The capital needs to increase, but a decent yield and increasing income are the criteria I look at, as with HYP. In CTY's case the capital appreciation is certainly good enough, (greater than RPI and greater than my HYP) and the yield of around 4% gives me the income I need to live off.
Like my HYP, I do not intend to realise the capital so this aspect can take a back seat. TR is nice to have, but not if a HYP substitute, or annuity substitute is your game.
I note Dod's priority is the opposite way round, with the income being a bit of a bonus - which is fair enough, whereas the question relatied to the search for something more like a HYP. Of course, there isnt anything available as a direct HYP substitute, but the results from CTY certainly commend themselves in this role, even though the method is rather different.
Many of the shares held are in common with HYP, though in different proportions.

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Re: Better alternatives to HYP

#104563

Postby JMN2 » December 16th, 2017, 3:41 pm

I already had Murray Intl but now have the funds in my ISA to start a small gathering of IT's, mainly because I didn't want to add new shares to my HYP and had no idea which ones to top up - Some companies I already had loads (Shell etc), some were on a naughty step (supermarket, utilities etc). So it was an easy decision to start an IT gathering. Increasingly I found it lately very difficult to direct paid divis to, often I just topped up MYI.

Lately I have paid attention to what Dod writes, I like his experience and contrarian attitute to some well-established investing "truths", caveat emptor, anyhow I have already bought Finsbury (FGT), Murray income (MUT) and Temple (TMPL) are on the list to buy.

These IT's holdings obviously overlap to a great extent but topping up should be less aggravating in the future.

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Re: Better alternatives to HYP

#104576

Postby BrummieDave » December 16th, 2017, 4:45 pm

When anyone picks an active investment rather than a passive on a TR basis, they are looking for something that beats its market average aka delivers alpha growth.

Strangely, when I'm choosing the next income generating IT to buy on a LTBH basis, I adopt an analogous approach. I use CTY as my UK benchmark and MYI for global, and measure against these accordingly. Consequently, if nothing looks like it will beat them, I have been known just to buy more. Not surprisingly they are now my two largest holdings, and I'm happy with that. Perhaps my approach is overs-simplistic, but I have friends with investments all over the place, and they don't generate as much income as my steady approach. It's a sort of active-passiveness (and for the pedants, spare us the posts saying it's active, you know what I mean).

OhNoNotimAgain
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Re: Better alternatives to HYP

#104672

Postby OhNoNotimAgain » December 17th, 2017, 10:04 am

BrummieDave wrote: Consequently, if nothing looks like it will beat them, ).


And what signal would tell you that?

tjh290633
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Re: Better alternatives to HYP

#107578

Postby tjh290633 » January 3rd, 2018, 9:17 am

1nv35t wrote:
vrdiver wrote:
BarrenWuffett wrote:Yield is just one aspect of the return from investments, the other main element being capital growth which is regarded as a side issue by hypers.

Can't speak for the other HYPers, but capital growth absolutely does matter, because without it dividend growth is unlikely to happen over any sensible time-frame!

I don't have the required tax efficient space such that dividends/regular income streams are taxable events, accordingly I opted as a matter of policy to target low/no dividends and top-slice my own 'dividend' out of capital gains. +42% pre-tax for calendar year 2017 (I treat XIV as a 5x long stock proxy and use a stock/gold barbell as a bond proxy for the remainder i.e. 20% XIV, 40% in each of BRK-B and gold). The large gain this year in XIV however (180%) will induce yet another large capital gain tax liability as most if not all will be sold (two good/great years in a row ... and pushing for a third feels like pushing luck). Haven't worked the figures out but something of the order of knocking that 42% down by around 7% to around +35% net.

As you say, without capital growth top slicing a DIY dividend would tend to see less dividend (or a higher 'dividend yield') being drawn. The two are linked, albeit in the case of HYP someone else decides when and how much dividend payments are.

Could you kindly explain what XIV is? It's not an EPIC that I am familiar with. I have looked back through two pages of posts, and it's not mentioned there. Apart from being 14 in Roman numerals, it conveys nothing, but I assume that it is an obscure ETF.

TJH

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Re: Better alternatives to HYP

#107588

Postby vrdiver » January 3rd, 2018, 9:37 am

tjh290633 wrote:Could you kindly explain what XIV is? It's not an EPIC that I am familiar with. I have looked back through two pages of posts, and it's not mentioned there. Apart from being 14 in Roman numerals, it conveys nothing, but I assume that it is an obscure ETF.

TJH


Hi Terry,
I found this: https://sixfigureinvesting.com/2014/05/ ... -xiv-work/ which, if relevant to the XIV mentioned by ******, is way above my HYP pay-grade.

Cheers
VRD


Moderator Message:
Poster ID and/or quote removed on request of poster. Raptor.

tjh290633
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Re: Better alternatives to HYP

#107591

Postby tjh290633 » January 3rd, 2018, 9:43 am

Thanks for that, vrdriver. I suspected that it would be one of these type of funds, which are more akin to betting.

TJH

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Re: Better alternatives to HYP

#107605

Postby vrdiver » January 3rd, 2018, 10:15 am

Moderator Message:
Poster ID and/or quote removed on request of poster. Raptor.


Not "valueless", just outside of the scope of HYP (as in HYP Practical, at least). I suspect there are HYP posters who hold BRK-A and if not gold, then a gold proxy, it's just that they don't talk about them when discussing HYP: a bit like you wouldn't talk about your roses whilst discussing wi-fi availability. It's simply not relevant.


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