moorfield wrote:Dod101 wrote:Imperial Brands is a prime example of the folly of ignoring capital. There is no point whatever in getting a nice yield and increasing cash dividends if the share price itself tanks.
Another illustration of how adopting a "yield ceiling" as a simple selection criterion might help HYPsters curb their predelictions for pretty yields. IMB (like VOD earlier this year) has run consistently above twice*FTSE100 yield for the last few months, which has automatically excluded them for me. But I might top up now though if a cut comes
![Smile :)](./images/smilies/icon_e_smile.gif)
(as I did VOD after its dividend cut).
An idea that gets routinely panned when I dare to raise it over on
HYP Practical.
I am monitoring the portfolio selected by
pyad earlier this year which I have named the "PYAD Stockopedia Drawdown Portfolio" the reports on which can be seen here:
viewtopic.php?p=225865#p225865A quick look at the Capital Profit/Loss for the constituents of this portfolio, sorted by the Yield at the date of purchase, shows the following:
EPIC | Buy Yield | P/L (£) | Total Div (£) | Overall +/- (£) | Overall +/- (%)
VOD | 9.00% | 1,408.89 | 375.37 | 1,784.26 | 11.90%
IGG | 8.61% | 1,870.98 | 835.22 | 2,706.20 | 18.04%
SLA | 7.97% | 537.32 | 1,188.63 | 1,725.95 | 11.51%
AV | 7.32% | -631.84 | 1,100.18 | 468.34 | 3.12%
IMB | 7.16% | -4,250.18 | 355.34 | -3,894.84 | -25.99%
WPP | 7.13% | 2,617.33 | 663.94 | 3,281.27 | 21.88%
HSBA | 6.32% | 109.48 | 384.85 | 494.33 | 3.30%
ITV | 6.25% | -434.08 | 629.20 | 195.12 | 1.30%
RDSB | 6.00% | -198.53 | 231.68 | 33.15 | 0.44%
BP | 5.63% | -516.57 | 221.08 | -295.49 | -3.94%
LAND | 5.33% | -510.20 | 190.17 | -320.03 | -4.27%
BLND | 5.26% | -174.49 | 98.65 | -75.84 | -1.01%
BHP | 5.11% | -364.38 | 528.19 | 163.81 | 1.09%
GSK | 5.05% | 1,099.26 | 357.58 | 1,456.84 | 9.71%
GNK | 5.05% | 4,161.98 | 552.90 | 4,714.88 | 31.44%
BA | 4.53% | 2,471.62 | 401.67 | 2,873.29 | 19.16%
SMDS | 4.34% | -11.24 | 224.12 | 212.88 | 1.42%
CCL | 3.84% | -1,236.43 | 312.16 | -924.27 | -6.17%
IBST | 3.73% | -1,230.92 | 859.79 | -371.13 | -2.47%
As one can see, the three shares bought at the three highest yields at purchase have all experienced capital gains, two quite substantial. Which of these three would you say should have been excluded from the portfolio, simply because of the high yield? Meanwhile, the three shares bought at the three lowest yields at purchase have all experienced capital losses, two quite substantial.
Now, this portfolio is quite new and I am not going to suggest for one minute that such evidence "proves" that investing in high yielders will produce the biggest capital gains - I leave that kind of "knee jerk reaction" to the less experienced amongst us - for one thing, the rest of the table shows different results.
However, I am curious as to the evidence you yourself must have trawled through in order to make your claim that HYPers should be
"adopting a "yield ceiling" as a simple selection criterion" in order to improve capital outcomes. Would you be kind enough to share such evidence with the board?
Ian