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moorfield HYP

A helpful place to also put any annual reports etc, of your own portfolios
moorfield
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moorfield HYP

#44061

Postby moorfield » April 6th, 2017, 1:48 pm

Hello All

A rare day working from home affords me time to complete some portfolio admin and provide an update on progress, which I'm moving here (from viewtopic.php?f=31&t=2123) alongside others for future reference. I will recap and adjust some of what was written previously but in future I will be briefer and publish just updates to the tables.


Objective (Building Phase)

I am aiming to grow my SIPP portfolio income by +7.2% per annum for the next 14 years through reinvestment of dividends. +7.2% was a semi-arbitrary choice inspired by the "rule of 72": ie. to double the income each decade. In practice it is intended to aim for the ballpark of "roughly what a higher rate tax payer earns" in retirement which would be quite satisfactory.

This table records actual vs. target portfolio income per unit. Following a top up of REA Holdings (RE.B) today, my "target date" for the year is reached, ie. when projected income for the year exceeds the target without needing further top ups and assuming that dividends remaining to be announced are not cut from the previous year's level. I should clarify which I didn't previously that all figures are stated using a "12 month trailing yield" convention.

Reaching my "target date" means I am now accumulating cash and monitoring company announcements for the rest of the year. I do not need to tinker with individual holdings or put more cash at risk while I remain on target. I am waiting for dividend announcements from Unilever, Whitbread, Sage, Centrica, Vodafone, SSE within the next two months so it is not unreasonable to anticipate that the actual income will finish higher at the end of the year, as it has done in all previous years.





Portfolio

Previously I published an amalgamated view of 1 SIPP, 2 ISAs, and VCT certificates which feels incongruous with a table that measures only SIPP income, so in future this table shows the position of only my SIPP holdings with capital and income splits.




I continue to make irregular top ups of ISA and (when possible) VCT holdings, so my broad diversification rules apply across all as well as the SIPP and ISA wrappers individually.

No more than 20 holdings.
No more than 10% capital or income allocated to one share, sector or subsector.
No more than 20% capital or income allocated to one industry.

Unless anything interesting or unexpected happens, my next update here will be in January. In the meantime, time to switch off and look forward to the summer (and not fret about Carillion!) ;)

M

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Re: moorfield HYP

#44077

Postby OLTB » April 6th, 2017, 2:15 pm

Hi Moorfield

A terrific post for me as we seem to be in similar positions although you have started your HYP journey earlier than myself. I really like the layout of your table and on my first HYP review in August, I will remember this post and try to emulate your targets and the way they have been set out.

My aim is to retire at age 62/63 with an income in mind which is in 14 years time so time horizons similar.

Cheers, OLTB

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Re: moorfield HYP

#44091

Postby ReformedCharacter » April 6th, 2017, 2:44 pm

moorfield wrote:Hello All

A rare day working from home affords me time to complete some portfolio admin and provide an update on progress, which I'm moving here (from viewtopic.php?f=31&t=2123) alongside others for future reference. I will recap and adjust some of what was written previously but in future I will be briefer and publish just updates to the tables.

M

Thank you very much for posting. I had a look at RE.B yesterday with the thought of a small purchase and remain undecided. You're braver than me though!

RC

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Re: moorfield HYP

#44407

Postby YeeWo » April 7th, 2017, 3:57 pm

moorfield wrote:No more than 20 holdings.
I'm very much wary of confirmation bias in this-investing-lark, however I completely agree with 20. https://www.youtube.com/watch?v=hU9GJjRMQHA So does Tim Bennett, relevant bit from 4.30mins........
moorfield wrote: more than 10% capital or income allocated to one share, sector or subsection........more than 20% capital or income allocated to one industry.
The criteria here seems unclear. Various companies straddle various economic activities. Does Geographical exposure form part of your thinking? Do you apply minimum criteria i.e. a stock cannot fall below (say) 2% of portfolio value?

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Re: moorfield HYP

#44435

Postby moorfield » April 7th, 2017, 5:16 pm

YeeWo wrote:The criteria here seems unclear. Various companies straddle various economic activities. Does Geographical exposure form part of your thinking? Do you apply minimum criteria i.e. a stock cannot fall below (say) 2% of portfolio value?


YeeWo

I use the ICB classifications to apply my criteria – at Industry and Sector level, replacing Sector with Subsector to differentiate companies with clearly different activities. My utilities holdings are the best example of how this applies.



I judge CNA, SVT to have clearly different activities and replace their Sector classifications with Subsector when applying my 10% sector limit. Many people judge CNA, SSE to have similar activities, but I am happy to hold both under different sectors up to my 10% sector limit. My 20% industry limit applies to all three collectively. I do not apply any minimum criteria.

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Re: moorfield HYP

#44508

Postby moorfield » April 7th, 2017, 11:01 pm

I was rushing to catch my train earlier, and wanted to tie up some loose ends from the previous post.

I judge CNA, SVT to have clearly different activities and replace their Sector classifications with Subsector when applying my 10% sector limit.


should read

I judge CNA, SVT to have clearly different activities and replace their Sector classifications - Gas, Water & Multiutilities - with Subsector when applying my 10% sector limit.


And another example, my banks holdings have duplicate sector classifications so I apply the 10% limit to both collectively.



I have contemplated merging these two by selling one and buying t'other to reduce my holdings (across all wrappers) to 19, preserving industry/sector weightings and freeing up space for a new holding. However, while I do not need to tinker as I mentioned in the OP, the transaction costs deter me from doing so.

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Re: moorfield HYP

#51580

Postby moorfield » May 6th, 2017, 9:29 am

Hello All

An update to the table on my OP I've been intending to add and now have numbers to hand. I've added a column showing the running yield ie. actual income on portfolio value(*) at the end of each year (and while I'm doing it a correction to the 2031 target income and update to the 2017 projected income).

In the main it shows the portfolio yield has been fluctuating between 4-5%.



(*)excluding cash float

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Re: moorfield HYP - Carillion

#66182

Postby moorfield » July 10th, 2017, 8:10 pm

Carillion (CLLN)

An interim update following Carillion's suspension of its dividend, and a tidying up/clarification of how I compute "income" (or "running income") in these tables.

"Projected" or "Running" income is computed by multiplying number of shares held by either (i) last two dividends paid or (ii) last dividend paid and next dividend announced. (In some years that may differ slightly from the cash income received due to the timing of top ups, however I use this method to be consistent with how running yields are often reported. Special dividends are excluded.)

On that basis Carillion's income for 2017 drops from 18.45p (last two divdends paid) to 12.65p (last dividend paid and suspended dividend announced) - the impact of which is the portfolio's current projected income for the year now falls short of target, having already been provisionally reached on 6 April.



This doesn't necessitate an immediate sale however. Dividends accumulated since 6 April are on hand for top ups elsewhere to redress that deficit (probably SSE before ex-dividend), plus a slew of dividend updates from AZN, IMI, BATS, ULVR, INF are due later in the year.

The income to be used for 2018 and until further notice, clearly, will be (zero) 0p. The need to sell may not manifest itself until mid/late next year, depending how well dividends and top ups elsewhere perform against the overall target.

I appreciate "retirees" may not see any merit in continuing to hold Carillion. As a "builder", I have adopted this approach to try and strip out as much emotional or irrational thinking as possible from the decision to sell whilst working towards a long term target, until the numbers in front of me suggest otherwise.

M

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Re: moorfield HYP

#66427

Postby John » July 11th, 2017, 2:19 pm

I was contemplating a small (initial) purchase of Carillion as a recovery play after a very large further fall today.

Clearly there will be no dividend for a while.

Too risky?

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Re: moorfield HYP

#66467

Postby richfool » July 11th, 2017, 4:46 pm

Sounds like a "strategy" to me and a risky one at that!!

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Re: moorfield HYP

#66605

Postby dspp » July 12th, 2017, 9:06 am

Whatever it is, it would not be HYP. Bottom fishing maybe. I have no opinion on that as a strategy, or Carillion as a stock, but do think it worth segregating out from your HYP so that you can compare your performance.
regards, dspp

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Re: moorfield HYP

#66912

Postby Hariseldon58 » July 13th, 2017, 9:43 am

I appreciate that this is basically an HYP approach for income in future years and I have pursued a broadly similar approach for many years, until around 2010/11 or so, albeit mainly with Investment Trusts , of recent years I have a very wide geographical approach using mainly passive ETF's.

The concentration of income seeking can become a less obviously great idea as the portfolio grows was my experience. I looked for an after tax income of around £30k pa ( for a couple) yet over the last 5 years my portfolio has provided this income and around £1m in capital gains. Thats an excess of 5+ years "income" generated per year...

Because I retained dividend income generated in tax sheltered accounts, within the same accounts, I gave up the thought of 'spending just the dividends' and just spent what was required from cash in accounts, taxable dividend income, capital gains etc treating all the money as fungible.

Everyone will have a different view but I find my assets spread among thousands of companies in many different countries.....I find this more reassuring than say 20 HYP stocks on the UK markets, where perhaps a less friendly future government might jeopardise your income flow,

In addition the more general approach has allowed me to take advantage of opportunities that appeared 'cheap'

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Re: moorfield HYP

#75410

Postby moorfield » August 18th, 2017, 12:44 pm

I've completed some portfolio tinkering to deal with the loss of CLLN's next interim dividend, which had been expected in November.

(i) topped up SSE
(ii) replaced Informa (INF) with higher yield/higher market cap WPP (WPP) in the Consumer Services/Media sector
(iii) replaced Severn Trent (SVT) with higher yield/higher market cap Unitied Utilities (UU.) in the Utilities/Water sector

I've also disposed of Northern 2 (NTV) - a secondary market VCT holding and historical anomaly dating from 2012/13 that didn't really make sense inside a SIPP wrapper.



That brings the running income back on target, however the effect of the CLLN dividend cut will continue to drag on next year's target. A full update to the tables to be published in January.

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Re: moorfield HYP - 2017 Update / 2018 Forecast

#109317

Postby moorfield » January 10th, 2018, 9:16 pm

2017 Update / 2018 Forecast

Overall income remained on target last year, despite the collapse of Carillion's share price and dividend (the 2017 result includes 12.65p paid, the 2018 forecast assumes 0p), ie. guesstimated present value of 2031 target income exceeds the higher rate income tax threshold. Initial forecast income includes dividends already announced and top ups done today.




( "Units" are accumulation units which has been constant since 2009 and is not expected to change often, ie. a convenient way of redacting the income being rolled up. )


Turnover & Costs

Three holdings were replaced with higher yield/higher market cap from the same sectors (INF with WPP, SVT with UU., AV.A prefs with LGEN ords), and a secondary market VCT (NTV) was sold. Total expense ratio (TER %) is calculated as annual costs (dealing, custody, stamp duty) per average portfolio value between year start and end.





Portfolio (10 January)

Accumulated cash at year end was equivalent to 14 months of target income, most of which has been used today for top ups of SSE, VOD, LGEN, UU. and WPP. Despite some pickering, CNA has also been topped up and what remains of CLLN will be held unless some corporate action trades it. BATS, ULVR, IMI, WTB, JMAT, SGE, CLLN all yield below the top up benchmark (CTY, 3.7%) and RDSB is at the 10% per sector income limit.





Preference Shares

Preference shares are excluded from HYP as defined by pyad and the HYP board guidance. They are used in this portfolio to contribute high(er) yielding and fixed income towards an overall target increasing annually, have been bought or topped up at yields exceeding ~8%, and will be replaced with higher yielding ordinary shares from the same sectors when opportunities arise.



The portfolio will be left alone now to accumulate increasing dividends (hopefully), and unless anything interesting or unexpected happens, the next update here will be in August.

Happy New Year 2018 to All, and Thankyou to Mods for keeping LF running.

M


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