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UK regulators considering allowing banks to restart paying dividends

MDW1954
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Re: UK regulators considering allowing banks to restart paying dividends

#365043

Postby MDW1954 » December 11th, 2020, 10:36 am

I have been buying into HSBC over the past few weeks, starting at 300p and 303p in early October.

I intend to carry on buying.

MDW1954

dealtn
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Re: UK regulators considering allowing banks to restart paying dividends

#365044

Postby dealtn » December 11th, 2020, 10:40 am

Dod101 wrote:
dealtn wrote:
Arborbridge wrote:
Strange, then, that the price ever reacts to news about the dividend.


Not at all!

Prices react all the time to all sorts of news events, of which dividend information is one. But it is the news not the event.

If the news is that a dividend is cancelled but there is no underlying change in the business than all that has happened is a change in a cash flow event. There is no valuation news.

If there is a cancellation or change in a dividend policy because the company is performing better, or worse, than market expectations a change in the share price would be expected.

A regulator saying cash can't be paid out but must be retained, in itself isn't information that affects a valuation, nor would its reinstatement.

The vast majority of dividend announcements across all companies are accompanied by trading updates or other information regarding the company, and it is this that drives the movement in the share price.


I suspect that this exchange is not going to get us far but the fact is that it depends on what you mean by ' a valuation'. It is in any case subjective at best but some would say that the value is whatever the market assigns to it, ie the share price, and that is often affected by a dividend announcement. I suggest that you are being too 'purist' and not looking at the valuation for the point of view of the average shareholder.

Dod


I suspect we have different opinions on what constitutes "the average shareholder" that determines the market price. By valuation I mean the market's valuation ie the share price. My own valuation is something different.

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Re: UK regulators considering allowing banks to restart paying dividends

#365046

Postby pyad » December 11th, 2020, 10:49 am

Dod101 wrote:Good Heavens. We do not need pyad or anyone else trying to set further limits on what may be posted here or who may do the posting. It is quite restricted enough as it is.

I will make no attempt at forecasting what dividend HSBC or any other bank my declare or recommend when their final results for 2020 are announced in the new year but certainly the numbers mentioned by pyad are thoroughly depressing and I think would cause considerable disappointment in the market. Didn't know that pyad was into forecasting. What happened to Strategic Ignorance?

Dod

Yes the boards do need to be kept on track and if the "mods" won't do it then someone else ought to point it out. Keeping on topic is the whole point of dedicated boards. As I suggested this doesn't require excessive zeal, I'm not being pedantic about it, just commonsense to maintain the main point of which is HYP. But when it strays repeatedly too far away from that, and moreover the posters are clearly not HYPers, as I thought this particular thread had, then it's worth pointing out I think.

As for SI, you repeatedly refuse to understand what it is, and then straw man it to try and score points here by make fatuous condemnations which entirely miss the target you are trying to hit. Whether you really don't get it, although it is very simple, and then replace the fact with your own entirely incorrect understanding of it, or simply pretend to do so, I don't know. Either way it's rather sad.

I've always used forecast divs to get an idea of the likely immediate yield when considering HYP shares. This has nothing to do with SI. The fact that you appear not to know that shows that you don't know much about what I do. That's fine but don't criticise what you don't understand. Either take the trouble to find out or shut up.

Dod101
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Re: UK regulators considering allowing banks to restart paying dividends

#365054

Postby Dod101 » December 11th, 2020, 11:06 am

I am quite well aware that the average individual shareholder will have no influence in determining the share price; that will be mainly down to the demand from the average institution or at least the interplay from the many institutions in the market.

Dod

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Re: UK regulators considering allowing banks to restart paying dividends

#365055

Postby Charlottesquare » December 11th, 2020, 11:10 am

pyad wrote:
Dod101 wrote:Good Heavens. We do not need pyad or anyone else trying to set further limits on what may be posted here or who may do the posting. It is quite restricted enough as it is.

I will make no attempt at forecasting what dividend HSBC or any other bank my declare or recommend when their final results for 2020 are announced in the new year but certainly the numbers mentioned by pyad are thoroughly depressing and I think would cause considerable disappointment in the market. Didn't know that pyad was into forecasting. What happened to Strategic Ignorance?

Dod

Yes the boards do need to be kept on track and if the "mods" won't do it then someone else ought to point it out. Keeping on topic is the whole point of dedicated boards. As I suggested this doesn't require excessive zeal, I'm not being pedantic about it, just commonsense to maintain the main point of which is HYP. But when it strays repeatedly too far away from that, and moreover the posters are clearly not HYPers, as I thought this particular thread had, then it's worth pointing out I think.

As for SI, you repeatedly refuse to understand what it is, and then straw man it to try and score points here by make fatuous condemnations which entirely miss the target you are trying to hit. Whether you really don't get it, although it is very simple, and then replace the fact with your own entirely incorrect understanding of it, or simply pretend to do so, I don't know. Either way it's rather sad.

I've always used forecast divs to get an idea of the likely immediate yield when considering HYP shares. This has nothing to do with SI. The fact that you appear not to know that shows that you don't know much about what I do. That's fine but don't criticise what you don't understand. Either take the trouble to find out or shut up.


How useful are forecast earnings, and therefore dividends, in a banking world facing future challenges from Fintech is possibly a worthy thought. They are presumably useful if one has taken the view that one wants to hold a bank re deciding which bank to hold but really the question first ought to be asked, does one want to hold a bank?

Dod101
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Re: UK regulators considering allowing banks to restart paying dividends

#365059

Postby Dod101 » December 11th, 2020, 11:18 am

Meanwhile, HSBC is now back below £4. The market obviously does not think much of the reinstatement of the dividends, under the strong influence of the PRA. I will wait until the results in February and then decide whether I will remain a long term shareholder.

Dod

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Re: UK regulators considering allowing banks to restart paying dividends

#365061

Postby scrumpyjack » December 11th, 2020, 11:20 am

No I don't, but I hold them, so for me it is a question of deciding the best time to get out! I do not think they are a reliable place for long term dividends (for an HYPer or anyone else)

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Re: UK regulators considering allowing banks to restart paying dividends

#365065

Postby Dod101 » December 11th, 2020, 11:24 am

scrumpyjack wrote:No I don't, but I hold them, so for me it is a question of deciding the best time to get out! I do not think they are a reliable place for long term dividends (for an HYPer or anyone else)


By coincidence, I have just posted on the Banking Sector Board that I will wait until the 2020 Results in February and decide then what to do about HSBC. Certainly if the regulator is intent on over regulating then HSBC is no place for me.

Dod

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Re: UK regulators considering allowing banks to restart paying dividends

#365069

Postby johnhemming » December 11th, 2020, 11:35 am

dealtn wrote:I suspect we have different opinions on what constitutes "the average shareholder" that determines the market price. By valuation I mean the market's valuation ie the share price. My own valuation is something different.

One difficulty is that some of the share transactions are driven by market wide sentiment rather than individual stock sentiment. Hence I don't think the concept of an average person making a decision is that useful.

What I tend to do is to look firstly at the figures and then try to identify reasons why the stock may be popular or unpopular. I then consider whether I feel that the reasons for the stock being popular or unpopular are ones I agree with.

However, in the end my objective is to work out situations where I think there is a bargain. That in a sense is a binary decision rather than something that can be done to the utmost precision.

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Re: UK regulators considering allowing banks to restart paying dividends

#365070

Postby funduffer » December 11th, 2020, 11:37 am

I just updated HYPTUSS.

HSBC and Lloyds have forecast yields of 1.6% and 1.3% respectively, although I doubt they have been updated yet based on today's news. Worth keeping a watch to see how they change in the next week or so - not sure how frequently they are updated?

I hold HSBC and Lloyds in my HYP, and I have no intention of doing anything with them - just hoping the dividends resume soon.

I remain strategically ignorant of today's news and what it means for bank dividends - so no forecasts from me!

FD

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Re: UK regulators considering allowing banks to restart paying dividends

#365071

Postby IanTHughes » December 11th, 2020, 11:43 am

Dod101 wrote:Good Heavens. We do not need pyad or anyone else trying to set further limits on what may be posted here or who may do the posting. It is quite restricted enough as it is.

I will make no attempt at forecasting what dividend HSBC or any other bank my declare or recommend when their final results for 2020 are announced in the new year but certainly the numbers mentioned by pyad are thoroughly depressing and I think would cause considerable disappointment in the market. Didn't know that pyad was into forecasting. What happened to Strategic Ignorance?

Are you perhaps suggesting that pyad's concept of Strategic Ignorance means that an HYPer should not determine any view as to the expected dividend and therefore no idea as to the expected yield? Extraordinary!

The misunderstanding, of HYP in general as well as the concept of Strategic Ignorance in particular, is apparently limitless!


Ian

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Re: UK regulators considering allowing banks to restart paying dividends

#365072

Postby Dod101 » December 11th, 2020, 11:48 am

funduffer wrote:I just updated HYPTUSS.

HSBC and Lloyds have forecast yields of 1.6% and 1.3% respectively, although I doubt they have been updated yet based on today's news. Worth keeping a watch to see how they change in the next week or so - not sure how frequently they are updated?

I hold HSBC and Lloyds in my HYP, and I have no intention of doing anything with them - just hoping the dividends resume soon.

I remain strategically ignorant of today's news and what it means for bank dividends - so no forecasts from me!

FD


I have never used HYPTUSS. It can only be as good as its source. Where does it get these numbers from? IF these numbers were to come to pass that would be disastrous from the point of view of investor sentiment I would imagine because the imply a derisory dividend and no scope or not much for any rerating.

Dod

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Re: UK regulators considering allowing banks to restart paying dividends

#365084

Postby tjh290633 » December 11th, 2020, 12:02 pm

It's at times like this, and on topics like this, that I like to update my table of share price changes for the year to date:

Epic     Change    Yield
WMH 42.58% 0.00%
ADM 23.60% 5.17%
RIO 22.70% 5.38%
KGF 21.29% 0.00%
BHP 11.30% 4.64%
RB. 7.52% 2.65%
AZN 6.52% 2.67%
PSON 4.36% 2.93%
S32 3.60% 1.69%
ULVR 1.02% 3.31%
SGRO 0.80% 2.36%
SSE -1.25% 5.63%
UU. -1.36% 4.60%
IMI -2.12% 2.92%
SMDS -3.15% 3.22%
NG. -5.75% 5.51%
PHP -6.19% 4.14%
DGE -6.20% 2.33%
VOD -8.87% 6.07%
BA. -9.49% 4.54%
BATS -9.52% 7.20%
TSCO -9.64% 4.21%
TATE -13.65% 4.51%
IMB -15.68% 8.74%
LGEN -17.79% 7.05%
GSK -20.33% 5.64%
TW. -20.73% 0.00%
AV. -22.67% 6.49%
CPG -22.83% 0.00%
BLND -22.90% 3.41%
BT.A -29.48% 0.00%
MKS -35.95% 0.00%
RDSB -38.15% 3.61%
BP. -39.62% 7.10%
LLOY -42.93% 0.00%
MARS -50.20% 0.00%
Av.Chg -8.64% 3.55%

You will note that LLOY is at the bottom end. If you are looking for recovery situations, that is the place to look. The yields are historic, up to the last announcement by the company itself. Those that resume paying dividends are likely to be good candidates for recovery. Likewise those still paying dividends.

At the top you will find others of which investors are hopeful. Recovery already priced in. WMH is, of course, the subject of a bid. I am contemplating selling now, as it will not rise much, if anything above the bid price unless a counterbid comes out of the blue.

TJH

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Re: UK regulators considering allowing banks to restart paying dividends

#365086

Postby scrumpyjack » December 11th, 2020, 12:03 pm

Yes, if I look back at my decision to buy builders (BDEV and PSN) back in 2008, the market was catastrophically pessimistic about them for 2 reasons. Firstly that their balance sheets were very weak and they might go bust, and secondly that their profits were collapsing because they had bought land at higher prices and the fall in the housing market meant they could only sell houses for much less than they had expected.
On the first point BDEV was much closer to insolvency than PSN, but I thought both would be given enough leeway by their bankers (at a price!) to pull through. On the second point in the longer term the price of their raw material (land) would fall back to a level that made housebuilding profitable again. Indeed some industries prepare their accounts on a replacement cost basis (Oil cos) and on that basis builders accounts would look much better. I took the view that there would be a strong continued demand for their product.
So I bought BDEV at 91p and PSN at about 420p (in reasonable quantity) and waited. The result has been incredible!

I really can’t see any such situation for banks. The negatives will be there indefinitely as far as I can see so in the long term I do not want to hold them. It is simply a question of timing the exit.

If anyone can explain why the factors that have dogged banks for 13 years are temporary and all will be rosy at some foreseeable point in the future, it would be good to hear why?

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Re: UK regulators considering allowing banks to restart paying dividends

#365090

Postby absolutezero » December 11th, 2020, 12:06 pm

MDW1954 wrote:More detail on the FT website, for those with access:

https://www.ft.com/content/8d9e5eae-83d ... 16d6af32a9

MDW1954

Or just google the headline and click through if you don't have a FT sub.
Very easy to circumvent their paywall.

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Re: UK regulators considering allowing banks to restart paying dividends

#365092

Postby dealtn » December 11th, 2020, 12:07 pm

CryptoPlankton wrote:This exchange of views is all very interesting. If it gets reported as off topic and/or deemed so by a mod (preferably not), could I request it gets moved somewhere rather than simply being deleted?

FWIW, I am happy to retain my holdings in Lloyds and HSBC as I find it hard to believe they won't perform better in time.


Precisely.

There is a thread on the Banking Sector board with exactly the same title. Most of the comments in this thread are more suited, and should be made, over there!

Whether that is laziness or unfamiliarity, or something else I don't know, but the number of "off-topic" replies will ensure a thread about "practical" aspects will descend into cries of off-topic and spoil it for those whose only concerns are HYP.

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Re: UK regulators considering allowing banks to restart paying dividends

#365094

Postby dealtn » December 11th, 2020, 12:14 pm

scrumpyjack wrote:
If anyone can explain why the factors that have dogged banks for 13 years are temporary and all will be rosy at some foreseeable point in the future, it would be good to hear why?


Do you think PPI will still be the issue it has been, and on the same scale, for the next 13 years?

Do you think interest rates close to zero, and the effective squeeze on margins, will continue for the next 13 years?

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Re: UK regulators considering allowing banks to restart paying dividends

#365096

Postby johnhemming » December 11th, 2020, 12:21 pm

dealtn wrote:Do you think interest rates close to zero, and the effective squeeze on margins, will continue for the next 13 years?

Lloyds NIM was if I remember rightly around the 2.5% mark.

I don't know what these were when interest rates were higher.

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Re: UK regulators considering allowing banks to restart paying dividends

#365106

Postby scrumpyjack » December 11th, 2020, 12:58 pm

Obviously PPI is out of the way but I have no confidence they won't shoot themselves in both feet again in some other way. Meanwhile it looks like interest rates will stay low indefinitely so severely affecting their NIM. They are saddled with huge overheads and must be a prime target for disruptors to look to eat their lunch eventually. So, no their business model does not fill me with confidence as one that can recover from a little local difficulty.

Obviously I may be wrong and if so I wish you good luck with them!!

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Re: UK regulators considering allowing banks to restart paying dividends

#365110

Postby johnhemming » December 11th, 2020, 1:05 pm

scrumpyjack wrote:Obviously PPI is out of the way but I have no confidence they won't shoot themselves in both feet again in some other way. Meanwhile it looks like interest rates will stay low indefinitely so severely affecting their NIM.

What, however, were NIMs in prior days (say around 2003) does anyone have any idea?


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