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The 2 stock portfolio.

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
Pastcaring
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Re: The 2 stock portfolio.

#221026

Postby Pastcaring » May 12th, 2019, 9:22 am

JamesMuenchen wrote:
Pastcaring wrote: Leave it alone for 30 years and reinvest all dividends.This gives around 6000 shares in each company after 30 years,that is variable,could be a few more ,could be a few less.

That implies a yield of ~6.5% being reinvested. Your MQG yield is ~4% which would compound to only 3118 shares. More than "a few less" in my book.

Pastcaring wrote:
MQG,as I said if I had to pick one stock that would be it,not a bad year$105 when I used it to explain the one day short strategy,closed at $132.80 today,throw in a $5 .35 dividend and around 31% return for the year.
...
CBA not so good,as I said bought at $ 72.5almomter a 3 ish year downward trend from $96, well added to the portfolio as I have held them since around 1991. Closed at $71.40 today,throw in a $4.31 dividend and 4.4% return for the year.

Across the two a 20% return for the year
...

Do a simple compounding calculation at various returns.Don' t dream that 20% annual will continue,it will not.

At 8% that is$1.79 million.

At 9% $ 2.38 million.

At 10% $3.43 million

I think your simple calculation is double counting the divi in both the return and the number of shares?

Otherwise your minimum expectation is 30 years of 8% share price appreciation +6.5% divi?


Made my day,wonderful,you did some thinking and cracked it

I' ll get back to you,busy at the moment.You are right.MQG is compounding at around 4% .

The double counting,slightly off,easy mistake.Growth in shareholding 6% annual.Growth in share price 6% annual.Whatever number you think is a fair compounding rate,you are in charge.

Thankyou for making me think,I am just so lazy.

The error for MQG occurred because I forgot they had a rights issue around 2015.They bought an aircraft leasing company,perhaps sold out of Thames water( UK ).

Last year the growth rate on the shares was 4.7%.The company web site will give you the info.

Started the year with 1000 shares,ended the year with 1047 shares.Started the year with a share price of $105, ended at around $130.Their year is 1 April until 31 March.Price has come down to around $125 now from the recent record of $136.Tomorrow the price goes down again,it goes XD,I think $3.20.I don' t look,too much work for me.The one day short.

I get a few extra shares,money into my bank account,then I wake up in August,CBA results come out.

CBA operate on 1 July to 30 june year.They have returned pretty much bang on 6% shareholding growth for the past year ,as of today.Wait until 30 June to calculate exact results.Start the year with 1000 shares,you now have 1059 shares and money carried forward to August.Share price as of today is around $75.40,no 6% growth.Check it on 30 June.

On long term from 1990 to now CBA should be $36 approx,calculating @ 6% compounding.If it was $36 I would be happy ,it did better than I thought it would.The shareholding grows at the same 6% compounding.Over 30 years 6000 shares.

6000 shares x $36 great growth.I got 6000 x $ 75, even better.I thought dividend would be around $3.Dividend is $ 4.31.

From listing until now CBA has roughly outperformed / performed the same as BRK.I am very happy with that,some going over 30 years almost.Issue price $ 5.40,I round that to $6.

MQG ,I think was listed in 1997.Around $7 I think,I didn' t buy any until they hit $60 in 2006.I thought it was a bubble the price was growing so fast.

From 2001 then the annual report for MQG gives a price of $22 on 31/3/01.Compound from that date at 4% shareholding growth,and 6% price growth for 30 years.Or do the same from my purchase price of $60 or last year at $105.I would think the law of big numbers will kick in.

MQG also spun out Sydney airport around 2015/16.So from that date on you would be running with shares in MQG and I think it is SYD.I sold my SYD as they had a sale facility.I have never looked at SYD but I think it has done well since then

Sorry for the error,I totally forgot about the rights issue and the SYD spin off.The rights issue skews the figures to just less than 6%. 4% is a much better figure to compound at.

Thanks again for making me think.Now for the rest of your life spend 1 minute per year checking on those two companies.That will probably be slightly more time than I will spend on them.

You did the hard bit and thought about about the info presented.Seems a shame not to check it once a year.

Pastcaring
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Re: The 2 stock portfolio.

#221090

Postby Pastcaring » May 12th, 2019, 4:26 pm

Dug out annual reports for MQG.Thankfully they still give 10 years of history.You don' t want to know.I know it is volatile but this is ridiculous.I am glad I pay no attention to prices

31/3/2001 end price $27.63.Dividend 93 cents.

31/3/2006 end price $64.68.Dividend $2.15.

My $60 buy in 2006. Then the GFC dust up occurs.

31/3/ 2013 end price $37.15..Dividend $2.00.

No doubling in price over 12 years ,ah well.

31/3/2018 end price$102.90.Dividend $5.25.

Annual report comes within a week or two but from memory

31/3/2019 end price $130.00 ish.Dividend $5.45.
The volatility has been ridiculous,I wonder what I would have done if I had paid attention or listened to daily noise

My memory is ,bought at $60.Around 14 months later worth $90.What a genius I am. Crash comes ,around $17 in march 2009.What a fool I am,how did I get it so wrong.

Wallowed and range bound for a few years at between $30 to $60, then takes off again to the present price..

From the end price of $37.15 in 2013 by end price 2015 it has gone up to $76.67.I can' t remember that.Laziness rules.

In 2010 there are 344.5 million shares on issue,HSBC own 18.47% of them .J P Morgan own 14.58%. Top 20 shareholders own 62.08% of the company.In total there are 136,700 shareholders.Owned by pension funds,master wraps etc.

Annual report for 2018.HSBC now own 31.15. % of the company,( leave some shares for other people you greedy b$&%@- D's)J P Morgan own 16.7% of the company.Top 20 shareholders own 72.84% of the company (b@$&%# d pension funds).Total shareholders has reduced to 121,900 people.I can see why,so volatile.Shares on issue have reduced to 340.4 million,I like to see that.

Ah well ,back to fall asleep and let them get on with it.

gbjbaanb
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Re: The 2 stock portfolio.

#221109

Postby gbjbaanb » May 12th, 2019, 5:55 pm

Walkeia wrote:For fun, I'd go for Aquaventure holdings as I think desalination is already important globally and this trend will continue. I don't own, as I don't trade single names but have been tempted a few times because it's been difficult to find exposure to this theme.


Pictet Water fund will get you exposure to that (I expect) or others similar in nature. Has done well for me so far.

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Re: The 2 stock portfolio.

#221121

Postby BusyBumbleBee » May 12th, 2019, 7:30 pm

gbjbaanb wrote:
I think many people will not remember JimSusan and his one-stock portfolio that was Lloyds bank.

I certainly do and also lost a lot of money on that stock. However, unlike JimSusan (and PYAD) I was also aware that Lloyds was really a BankAssurer and had previously had a disastrous merger with Scottish Widows.

Lloyds had pulled in its horns and became a pretty focussed clearing bank intent on paying good dividends - boring but good and run by bankers. Most of the other banks were run by ex building society directors who thought they were bankers or investment bankers such as Fred the Shred

Most of us though either ignored or were unaware of the political risk. And lo and behold Mr Darling and Culpability Brown persuaded Lloyds to merge with HBOS - the old (and much loved) building society, the Halifax which had merged with Bank of Scotland). The merger terms were disastrous with HBOS shareholders getting too much of the pie and bringing with them (as it later emerged) loads and loads of PPI claims.

Nowadays I am very aware that political risk applies to every single investment and that government can, on a whim, turn your investment into total rubbish. Look at the retrospective changes they have made to VCT investments as an example and wonder if they couldn't do the same to the "guaranteed" FIT and ROC commitments made for 'green' investments.

Also look what big government (the EU and the USA) are looking to do with Google, Amazon etc : break them up to prevent undue competition with established businesses? a 2 share portfolio would be very dangerous - even a two sector portfolio would be too dangerous.

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Re: The 2 stock portfolio.

#221124

Postby Alaric » May 12th, 2019, 7:45 pm

BusyBumbleBee wrote: The merger terms were disastrous with HBOS shareholders getting too much of the pie and bringing with them (as it later emerged) loads and loads of PPI claims.


Bad and possibly fraudulent loans as well. If HBOS from a retrospective viewpoint was worthless at the time of the merger, the HBOS shareholders avoided a complete wipe out at the expense of Lloyds ones. If relevant, individual "small" shareholders in HBOS may well have outnumbered those in Lloyds, by virtue of the demutualisation of Halifax.

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Re: The 2 stock portfolio.

#221155

Postby dealtn » May 12th, 2019, 10:19 pm

BusyBumbleBee wrote:
... with HBOS ...bringing with them (as it later emerged) loads and loads of PPI claims.



If you believe Lloyds PPI problems were as a result of its takeover of HBOS you should perhaps look at such evidence as the Parliamentary Commission on Banking Standards from June 2013.

In its written evidence Lloyds (whose contribution was one of the longest of the many banks asked to assist both Houses of Parliament) barely mentions the HBOS heritage, choosing to focus on single premium PPI products across the Lloyds heritage businesses.

Once again let's not let facts change common perception of that particular transaction.

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Re: The 2 stock portfolio.

#221223

Postby Pastcaring » May 13th, 2019, 9:23 am

The one day short strikes again.As I said MQG will drop today,goes XD.

They seem to have problems with the site at the ASX.The one day chart claims a small drop of 80 cents or so.The 5 day chart gives the correct picture,dropped around $4.50 today.

Clever people claim to see all kinds of risk.I see no risk at all.Sell it on Friday,buy it back today to deliver it back to the broker they were borrowed from.

Pocket money,philanthropy money,money to pay back debt,an individual choice.

Never let the facts spoil the illusions that the crowd create for themselves.

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Re: The 2 stock portfolio.

#221226

Postby Pastcaring » May 13th, 2019, 9:42 am

BrianL51 wrote:I used to be on the board of a US defence company. One of my colleagues was a retired US Navy Captain, then in his 70s. He had a one stock portfolio that he swore by and which wound up making him a lot of money. When he'd first had some spare cash to save, he'd started buying shares in GE (General Electric), and over the decades he'd never bought shares in any other company. I can't quote numbers because I never knew the details, but he was extremely happy with his outcome. Investing a lot in just one stock carries an obvious risk, but he had his civilian business success and his Navy pension so he was never going to be destitute. He sadly died a few years ago now, in his late 80s, never having wasted more than five minutes now and again on his 'portfolio'. Sometimes, when I've spent time messing about with diversifying and rebalancing my portfolio of ITs, ETFs, equities, bonds etc I think of him and wonder if I'd have done better to follow his example. Then again, knowing my luck I'd have invested in Woolworths.



I had a spare minute this morning before doing my daily bike ride.I checked the chart for GE,it gave a starting price of $1 in 1980. A price of $10 today.

The next obvious thing to look for is splits,US companies tend to do a lot of that.I take it the prices are split adjusted ,however 1000 shares in 1980 grows to approx 50,000 shares today.A very quick look was all it was,so could be error there .Reinvest dividends there,take up rights issues,the buy shares direct as some US companies do ,he did well.

I think 40 years is the ideal time period for investing and doing nothing.

I may dig deeper just to satisfy my curiosity,but ,95% certain I will not.I hate doing any work for investing.I have sent the money off to work for me,I leave it alone to get on with the job.

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Re: The 2 stock portfolio.

#221250

Postby BusyBumbleBee » May 13th, 2019, 11:11 am

dealtn wrote:
BusyBumbleBee wrote:... with HBOS ...bringing with them (as it later emerged) loads and loads of PPI claims.


If you believe Lloyds PPI problems were as a result of its takeover of HBOS you should perhaps look at such evidence as the Parliamentary Commission on Banking Standards from June 2013.

In its written evidence Lloyds (whose contribution was one of the longest of the many banks asked to assist both Houses of Parliament) barely mentions the HBOS heritage, choosing to focus on single premium PPI products across the Lloyds heritage businesses.

Once again let's not let facts change common perception of that particular transaction.


I did look at the report as a result of your post and the evidence submitted - and thanks for pointing me towards it. They certainly avoided the HBOS issue.

Pity I spoilt my contribution by giving a chance to miss the main points and concentrate on that. My point was very simple really : don't trust Government : they can change the ground rules very easily and wipe you out.

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Re: The 2 stock portfolio.

#221338

Postby Charlottesquare » May 13th, 2019, 4:44 pm

BusyBumbleBee wrote:
dealtn wrote:
BusyBumbleBee wrote:... with HBOS ...bringing with them (as it later emerged) loads and loads of PPI claims.


If you believe Lloyds PPI problems were as a result of its takeover of HBOS you should perhaps look at such evidence as the Parliamentary Commission on Banking Standards from June 2013.

In its written evidence Lloyds (whose contribution was one of the longest of the many banks asked to assist both Houses of Parliament) barely mentions the HBOS heritage, choosing to focus on single premium PPI products across the Lloyds heritage businesses.

Once again let's not let facts change common perception of that particular transaction.


I did look at the report as a result of your post and the evidence submitted - and thanks for pointing me towards it. They certainly avoided the HBOS issue.

Pity I spoilt my contribution by giving a chance to miss the main points and concentrate on that. My point was very simple really : don't trust Government : they can change the ground rules very easily and wipe you out.


Agreed, but you can retreat from so many sectors for one reason or another that reality is you probably need to invest in some of them, just spread the risk.

I avoid housebuilders (government meddling with money supply) , utilities (government meddling with who owns power/pricing policies) etc,Banks- lots of interefence and fines, catch is I still have oil (lots of governments interfering re transport).

Unilever is one that i hold feeling reasonably safe from state interference ( mind you, plastic bottles)

So, spread by type of business, spread by geography, try to derisk ,though Trump/China has a pretty big reach at present- last few days have not been that pleasant looking at daily drops, still, next purchase in June will at least likely be a bit cheaper.

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Re: The 2 stock portfolio.

#221377

Postby Eboli » May 13th, 2019, 6:53 pm

BusyBumbleBee said:
However, unlike JimSusan (and PYAD) I was also aware that Lloyds ...


This reminds me of the PYAD Lite - another two share portfolio. But I cannot remember the rules...
or how it performed...

Eb.

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Re: The 2 stock portfolio.

#223028

Postby Gadgeisbackagain » May 19th, 2019, 8:49 pm

The only reason to choose two stocks in individual equities is that you believe they will outperform the market and offer lower risk.

When I wanted no hassle/thought portfolio in real life for my young Grandsons, I chose Vanguard VWRL ETF.

If forced to choose two stocks, I would probably choose between PayPal and Mastercard in financials and between LVMH and Amazon for the second stock.

If buying ITs then it would be FGT and Fundsmith to do a UK and global pair without too much overlap.

Or Lindsell Train Global or Fundsmith plus PNL if I wanted to take a barbell approach on risk.

Gadge

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Re: The 2 stock portfolio. [Nestlé]

#224243

Postby PinkDalek » May 24th, 2019, 3:33 pm

Belatedly replying to:

Dod101 wrote:NESN (VX) = Nestle I assume. I wonder why you would choose that particular share? I have looked at it several times but although I see its attractions it would never be my one and only share.


Yes, Nestlé S.A.

I was kidding around with the ticker, given the OP didn't appear to name the Australian shares and I had you in mind when I wrote viewtopic.php?p=220475#p220475.

As this topic is about a 2 stock portfolio and included such comments as Leave it alone for 30 years and reinvest all dividends, I thought I'd mention one where I've done similarly, though the (now substantial) dividends are used for income, and I've held for about 40 years.

I think the gross yield at present is in the region of 2.45%, before 35% Swiss WHT, and is not high yield of course.

I don't calculate total returns or CAGR or whatever they are and I'm unsure I could. All I know is my portfolio reflects a total gain in the region of 7,000%. Taking up the 3 rights issues in the 1980s and 1990s. Since then I've attempted to reduce my holding over the last 5 years but, being of a type where I don't wish to pay 20% CGT, I've limited my disposals to match the annual exempt amount (when not otherwise allocated). I know full well that HMRC will pick up 40% on my death!

Despite this, my holding in £ terms has continued to rise over the years (easily covering the disposals, as if they never happened). Similarly the annual only dividend increases, with all the known complications of reclaiming the excessive Swiss withholding tax via Berne.

The holding is actually close to 70% of my entire investment portfolio. Madness I know but there is something about running your winners (however so defined). My more recent share dealing, since first finding TMF in 2004 when all my holdings were in certificated form and I didn't have a broker, has been less than spectacular.

The only LTB&F shares I hold/held that are anywhere near that % are:

Young & Co.'s Brewery, P.L.C. 5,250% or so (Voting 5,600% and Non-voting 4,900% - from 1977)
Imperial Brands PLC 4,000% (Ex Hanson PLC and falling, haven't lost about 50% over the past 3 years, but sold a tranche in 1999 and didn't take up the 2002 and 2008 rights issues for personal reasons)

BP PLC sits at just 1,000% (From the 1st call in 1979 - having sold a few in 2000).

Nestlé is most certainly not a recommendation and nor is it the opposite but I named them in the spirit of the OP.

As we all know:

Past performance of shares is not an indication to their future performance. The value of shares or income from them may go down as well as up.

Exchange rates are also highly relevant.

Here's a random chart for Nestle SA (NESN) in GBP terms, which can be taken back to 1990:

https://www.youinvest.co.uk/market-research/SWX:NESN

I only wish I could see the chart post 2019. :D

I see you sold some of your Unilever. Good luck with whatever you chose/choose as a replacement but, as much as enjoy receiving and spending dividends, I don't really look for high yields. Not that I know what my Investment Strategy is. After 40 years or more of investing in equities, I've yet to decide upon one (or more) Strategy.

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Re: The 2 stock portfolio. [JimSusan]

#224247

Postby PinkDalek » May 24th, 2019, 3:51 pm

Belatedly again:

gbjbaanb wrote:I think many people will not remember JimSusan and his one-stock portfolio that was Lloyds bank. ...


Except I don't think that was the whole story by a long way. He enjoyed writing and entertained us. He had other investments.

Such as briefly recalled by:

ADrunkenMarcus wrote:
johnw11 wrote:Who remembers 'jimsusan' from the old TMF who had a totally disproportionate percentage held in LLOY shares.


Wasn't it the case that he was also invested in other assets such as property, so that it was a humungous amount of his equity holdings but not of his total investment income or assets? ...



Source: viewtopic.php?p=56427#p56427

With thanks to breelander, here are two of his gems:

breelander wrote:Here are a couple, for old times sake...


https://web.archive.org/web/20041213093 ... id=8935451
https://web.archive.org/web/20041213101 ... id=8940611

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Re: The 2 stock portfolio. [Nestlé]

#224252

Postby PinkDalek » May 24th, 2019, 4:01 pm

Correction:

PinkDalek wrote:Imperial Brands PLC 4,000% (Ex Hanson PLC and falling, haven't having lost about 50% over the past 3 years, but sold a tranche in 1999 and didn't take up the 2002 and 2008 rights issues for personal reasons)

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Re: The 2 stock portfolio.

#224257

Postby Dod101 » May 24th, 2019, 4:40 pm

Thanks PD. I wish I had bought Nestle when I thought about it but I was looking for more yield. Like you I have now gone off high yielders. I am thinking of buying Diageo with my Unilever top slicing. So there are two shares, Nestle and Unilever, although too alike maybe. I have done very well with Unilever although nothing like as good as your Nestle by the sound of it.

As I have always said, do not chase yield and currently that high yield is dearly bought; see the tobaccos.

Dod

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Re: The 2 stock portfolio.

#224502

Postby Bouleversee » May 26th, 2019, 12:46 pm

Dod101 wrote:Thanks PD. I wish I had bought Nestle when I thought about it but I was looking for more yield. Like you I have now gone off high yielders. I am thinking of buying Diageo with my Unilever top slicing. So there are two shares, Nestle and Unilever, although too alike maybe. I have done very well with Unilever although nothing like as good as your Nestle by the sound of it.

As I have always said, do not chase yield and currently that high yield is dearly bought; see the tobaccos.

Dod


What a coincidence. I had just remarked to someone that I wish I had bought Diageo (which always seemed too expensive but continue to rise and increase divs.) ages ago but might do so now as recent events (including losses on tobacco shares) are likely to drive us all to drink, though they might also mean many can no longer afford to do so. The medical profession seem to be harping on more and more about the effects of alcohol and didn't I read that the young aren't drinking much or smoking these days? Perhaps Nestle would be safer (I keep reading that coffee is good for you) but 35% withholding tax? That's a bit of a turn off. Is none of it reclaimable?

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Re: The 2 stock portfolio. [Nestlé]

#224518

Postby PinkDalek » May 26th, 2019, 2:15 pm

Bouleversee wrote:Perhaps Nestle would be safer (I keep reading that coffee is good for you) but 35% withholding tax? That's a bit of a turn off. Is none of it reclaimable?


You may have missed my earlier Similarly the annual only dividend increases, with all the known complications of reclaiming the excessive Swiss withholding tax via Berne.

There was discussion about that aspect in a topic elsewhere viewtopic.php?p=158968#p158968 being part of a topic entitled International Shares as part of High Yield Portfolio on High Yield Shares & Strategies - general.

I wrote the following but it may an idea to read the entirety over there, as there are some comments from others both on the Swiss Tax and other international possibilities:

If I may and briefly, only in so far as the qualifying (including restricting it to the treaty rate, usually 15%) withholding tax doesn't exceed the UK Income Tax liability on each individual holding. From what you are saying, you are probably taxed at the basic rate on dividends of 7.5%, such that the excess WHT is lost and cannot be reclaimed (not talking about SIPPs/Pensions etc here).

That tax loss is something many are willing to bear, should we be investing directly into overseas shares, subject to our effective UK rate on those dividends. Higher and additional rate taxpayers should get full relief, at the treaty rate of WHT, against their respective Income Tax rates of 32.5% and 38.1%.

As a warning to those who may wish to invest in, say, Nestle directly. The Swiss Tax authorities require 35% to be deducted from Nestle dividends paid to UK individuals. There's a long-winded process involved in eventually getting 20% of the gross dividend back from the Swiss Tax authorities but it has been slightly simplified in recent years. I've been submitting the forms each year, for nearly 40 years, but will eventually get too old to do it myself. I've managed to get the refunds each and every year but it is time-consuming. The remaining 15% is then claimed on my Income Tax Return. If you don't go through the process you are still restricted to that 15% (or 7.5% if basic rate or even less if part or all of the gross dividend is covered by the now reduced Dividend Allowance or even the Personal Allowance).


I have a feeling you may well consider the entire procedure not to your liking. :)

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Re: The 2 stock portfolio.

#224529

Postby Bouleversee » May 26th, 2019, 3:02 pm

PinkDalek wrote:
Bouleversee wrote:Perhaps Nestle would be safer (I keep reading that coffee is good for you) but 35% withholding tax? That's a bit of a turn off. Is none of it reclaimable?


You may have missed my earlier Similarly the annual only dividend increases, with all the known complications of reclaiming the excessive Swiss withholding tax via Berne.

There was discussion about that aspect in a topic elsewhere viewtopic.php?p=158968#p158968 being part of a topic entitled International Shares as part of High Yield Portfolio on High Yield Shares & Strategies - general.

I wrote the following but it may an idea to read the entirety over there, as there are some comments from others both on the Swiss Tax and other international possibilities:

If I may and briefly, only in so far as the qualifying (including restricting it to the treaty rate, usually 15%) withholding tax doesn't exceed the UK Income Tax liability on each individual holding. From what you are saying, you are probably taxed at the basic rate on dividends of 7.5%, such that the excess WHT is lost and cannot be reclaimed (not talking about SIPPs/Pensions etc here).

That tax loss is something many are willing to bear, should we be investing directly into overseas shares, subject to our effective UK rate on those dividends. Higher and additional rate taxpayers should get full relief, at the treaty rate of WHT, against their respective Income Tax rates of 32.5% and 38.1%.

As a warning to those who may wish to invest in, say, Nestle directly. The Swiss Tax authorities require 35% to be deducted from Nestle dividends paid to UK individuals. There's a long-winded process involved in eventually getting 20% of the gross dividend back from the Swiss Tax authorities but it has been slightly simplified in recent years. I've been submitting the forms each year, for nearly 40 years, but will eventually get too old to do it myself. I've managed to get the refunds each and every year but it is time-consuming. The remaining 15% is then claimed on my Income Tax Return. If you don't go through the process you are still restricted to that 15% (or 7.5% if basic rate or even less if part or all of the gross dividend is covered by the now reduced Dividend Allowance or even the Personal Allowance).


I have a feeling you may well consider the entire procedure not to your liking. :)


I wouldn't relish it, that's for sure. No time for all that. However, any future share purchases will be in ISAs, either mine or those of my family. What happens about the WHT then. Do the ISA managers reclaim it for you and is any tax paid on foreign divs. in ISAs?

PinkDalek
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Re: The 2 stock portfolio. [Nestlé]

#224722

Postby PinkDalek » May 27th, 2019, 1:16 pm

Bouleversee wrote:I wouldn't relish it, that's for sure. No time for all that. However, any future share purchases will be in ISAs, either mine or those of my family. What happens about the WHT then. Do the ISA managers reclaim it for you and is any tax paid on foreign divs. in ISAs?


On the latter, yes, withholding tax may be deducted on foreign dividends paid into ISAs. The tax benefits of ISAs not being recognised overseas.

For USA and Canadian holdings, forms such as the W-8BEN for the USA can be submitted such that the treaty rate (15%) can be applied before receipt as against the standard 30% (from memory). Some brokers support this in taxable accounts (I've no idea if they do in ISAs) and some don't. For example, tThis is what A J Bell say generally https://www.youinvest.co.uk/faq/do-you- ... -dividends No, we do not offer a foreign withholding tax reclaim service .... Maybe your broker(s) has a similar page.

I've no idea if ISA brokers can reclaim any excess deducted prior to submission of a valid W-8BEN. There's probably been discussion of this elsewhere at TLF but I've never been down that route and do not hold any foreign shares in my ISA.

As for Swiss withholding tax. I'm not aware of a similar procedure. Such that the 35% will be deducted in the first instance. It may then be down to the holder (as against the broker) to go down the route I've briefly outlined. The first stumbling block would be to get the ISA provider to come up with a tax certificate of deduction that satisfies the Swiss authorities. I know, from bitter experience, that these a difficult to obtain from some transaction only brokers in a taxable account. Historically I was able, with some difficulty, to obtain them from Barclays Stockbrokers as was. This year I'm struggling with my replacement broker. They can provide a separate certificate but appear unable to come up with the precise confirmatory form of words required by the Swiss Authorities (their form R189), which certifies that the withholding Tax has been deducted by them or their intermediaries and has been remitted to the Swiss Authorities.

If not reclaimable/reduced in an ISA then the ISA will obviously suffer the full Swiss 35% without relief. That needs to be weighed up against the non taxability of any potential chargeable gains (nor relief for any capital losses).

Quoting from the other thread I mentioned viewtopic.php?p=159016#p159016:

ADrunkenMarcus wrote:
XFool wrote:Core! Sounds more trouble than it's worth to me...


I dunno.

Nestle has made great returns for its shareholders over four decades, regardless of dividend tax. I'm not sure there was a UK equivalent giving the same sort of international exposure and product lines, although Unilever had similarities.


Edit: Here's another view, this time from viewtopic.php?p=220305#p220305 at How Do I Invest:

Urbandreamer wrote:A word of warning, foreign shares can cause problems. It's my understanding that using an ISA overcomes many of these. However as I understand it people often find it easier to pay the full dividend "withholding" tax on the likes of Nestle because the Swiss paperwork is so difficult.


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