Losing the faith - should I just sell and move to funds (Poor Performance / Renationalisation)

[IanTHughes]

You are assuming that all shares with high yields have prices that have collapsed. That is not the case.

Here is a list of my portfolio, ordered by yield:

Rank   EPIC   Yield 
   1   TW.    10.07%
   2   IMB     9.44%
   3   SSE     9.39%
   4   WMH     9.07%
   5   BT.A    7.85%

Take the top 5 by yield

TW. price 29 May 2018 201.2 , 24 May 2019 168.3
IMB price 2686 in 2018, now 2049
SSE 1375 to 1038
WMH 327 to 132.3
BT.A 206.25 to 196.26

If someone had started a HYP a year ago, would these shares have been suggested?

I cannot speak for "someone" but I can say that, in my case, they would only have been selected if they were both the highest yields available at the time and the dividend was considered sustainable. You appear to have investigated these shares which I did not so, did they pass those tests? Do let us know.

One further question springs to mind: would the above shares have been selected for your "Low Yield" Portfolio? Could you also please explain your answer for each one?

I do hope that you will give us the benefit of your undoubted experience, it would go a long way to explaining your "Low Yield" Strategy and who knows, maybe lead simple persons such as myself, out of the HYP induced darkness and into the light.


Ian

[monabri]

Perhaps we should have bought Reckitt Benck. at £80 a share for its reassuringly low yield (and subsequent falling share price)?


Unilever v HSBA

If one is convinced that both will pay a divi for the next 10 years (scenario assumes HSBA does NOT increase the dividend and ULVR continues to increase at 7.8% , the 10 year historic compound annual growth rate in divis). My money would be (is) on HSBA.

(the top line being HSBA, company 2)

[Dod101]

monabri's latest shows the effects of simple arithmetic on the yield. What the whole of this thread misses of course (and I thought that was the point that Alaric was going to make at some point) is the capital appreciation from a share price rise is or at least appears to be much more likely from the modest yielders than the higher yielders.

That surely was the point that the OP was making. He had got fed up of losing capital despite the income being OK.

I hold both Unilever and HSBC but on the showing of the last three years I know which share I would have wanted to hold if I were allowed only one and it would not have been HSBC, although I like them both.

Dod

[77ss]

...

Unilever v HSBA

If one is convinced that both will pay a divi for the next 10 years (scenario assumes HSBA does NOT increase the dividend and ULVR continues to increase at 7.8% , the 10 year historic compound annual growth rate in divis). My money would be (is) on HSBA.

(the top line being HSBA, company 2)

I don't understand your data. Something I am missing perhaps. I hold both ULVR and HSBA, so have no particular axe to grind (although I have to say that I am happier with ULVR), but if a yield of 3% is increased by 7.8% every year for 10 years then, assuming a static share price, does not the yield become 6.36%? Where does your 4.2% come from?

[Alaric]

You may have noticed that the FTSE100 has fallen from 7678 at 31st May 2018 to the present level of 7277, a fall of 5.2%.

Setting aside BT which just seems to be fluctuating, the top 4 yields are the top 4 not because they have substantially increased their dividends, but because their share prices have fallen. That's my point. A simple yield sort just pulls out the "distressed shares". It's not so different to Bonds in that respect. A sort by Redemption Yield downwards will list out what fixed interest specialists refer to as "distressed debt" and "junk bonds".

[AJC5001]

Interesting though thank you and it would be food to see the other 13 shares.

I used this data
https://www.dividenddata.co.uk/ftse-div ... et=ftse100

excluding those without ticks for both "Continuous dividend payments" and "Dividend Grown or Held".

The latter criterion may be a bit harsh. It's defined as

Dividend Held or Grown - indicates whether there has been a dividend cut during the analysed period. A ✘ indicates that the company has made at least one dividend cut since the year 2000 (or has forecast to make cuts to future dividends). Click the links to see cut details.

You originally said "According to the dividenddata site, there are 39 FTSE 100 shares with both at least a 5 year history of dividend increases and 5 year growth rates in excess of 6%"
You then listed 26 shares.
Dod asked you to list the other 13 shares, which you have not yet done.

Just so I can understand, are there really 39 such shares or only the 26 as listed?

If there are 39, then what are the other 13, and why did you exclude them?

Adrian

[AJC5001]

I have gone through these and discounted those where the yield is under 4% (This is a High Yield Board after all)

My point though is that if you intend to re-invest the income, you could look for good performers in the dividend growth sense with yields below that of the FTSE average. It increasingly seems to me that screening on the basis of dividend yield just identifies Companies where the share price is in trouble.

What a shame that you will not consider making a selection of a virtual portfolio to test your idea more thoroughly. Without such a test and in the absence of any other evidence or mathematical proofs to back up your assertion about the benefits of your "Low Yield" alternative to HYP, one is forced to consider your ideas as completely unsubstantiated and without any foundation in reality. What a shame, you might have had something concrete there. Are you sure you cannot provide us all with a virtual portfolio to monitor?


Ian

I asked a similar question on 16th May https://www.lemonfool.co.uk/viewtopic.php?f=31&t=17614&p=222119#p222119.

I don't seem to have seen anything in reply.

Adrian

[IanTHughes]

You may have noticed that the FTSE100 has fallen from 7678 at 31st May 2018 to the present level of 7277, a fall of 5.2%.

Setting aside BT which just seems to be fluctuating, the top 4 yields are the top 4 not because they have substantially increased their dividends, but because their share prices have fallen. That's my point. A simple yield sort just pulls out the "distressed shares".

Do you have any evidence to prove that assertion or are you simply "thinking aloud", looking to others for confirmation? As I am sure you are aware, the HYP Strategy has been proved time and time again, with actual portfolios being constructed and followed, both "real" and "virtual". Can you provide any similar results from studies that you or others have undertaken, to back up your criticism of the HYP Strategy, clearly showing how it will inevitably fail by refuting the multitude of evidence in its favour? Or is it maybe just a "feeling" that you have? I am sure that I am not the only person frequenting these boards that would be grateful to know what prompts an experienced investor like yourself to make such strident warnings that more simple persons like myself just cannot see for ourselves.


Ian

[IanTHughes]

My point though is that if you intend to re-invest the income, you could look for good performers in the dividend growth sense with yields below that of the FTSE average. It increasingly seems to me that screening on the basis of dividend yield just identifies Companies where the share price is in trouble.

What a shame that you will not consider making a selection of a virtual portfolio to test your idea more thoroughly. Without such a test and in the absence of any other evidence or mathematical proofs to back up your assertion about the benefits of your "Low Yield" alternative to HYP, one is forced to consider your ideas as completely unsubstantiated and without any foundation in reality. What a shame, you might have had something concrete there. Are you sure you cannot provide us all with a virtual portfolio to monitor?n

I asked a similar question on 16th May https://www.lemonfool.co.uk/viewtopic.php?f=31&t=17614&p=222119#p222119.

I don't seem to have seen anything in reply.

I guess it would be advisable not to hold our breath!


Ian

[Itsallaguess]

You [Alaric] originally said "According to the dividenddata site, there are 39 FTSE 100 shares with both at least a 5 year history of dividend increases and 5 year growth rates in excess of 6%"

You then listed 26 shares.

Dod asked you to list the other 13 shares, which you have not yet done.

Just so I can understand, are there really 39 such shares or only the 26 as listed?

If there are 39, then what are the other 13, and why did you exclude them?

There are currently 39 shares on the dividenddata website listed as having at least a 5-year history of dividend increases in conjunction with a 5-year dividend growth-rate of at least 6%.

For interest, here they are along with the current Digital Look Forecast Yield data, sorted with the highest Forecast Yields at the top of the list -



Source - https://www.dividenddata.co.uk/ftse-dividend-history.py?market=ftse100

Cheers,

Itsallaguess

[monabri]

...

Unilever v HSBA

If one is convinced that both will pay a divi for the next 10 years (scenario assumes HSBA does NOT increase the dividend and ULVR continues to increase at 7.8% , the 10 year historic compound annual growth rate in divis). My money would be (is) on HSBA.

(the top line being HSBA, company 2)

I don't understand your data. Something I am missing perhaps. I hold both ULVR and HSBA, so have no particular axe to grind (although I have to say that I am happier with ULVR), but if a yield of 3% is increased by 7.8% every year for 10 years then, assuming a static share price, does not the yield become 6.36%? Where does your 4.2% come from?

It's the annual return of divis over the time period.

ULVR (1.502) ^(1/10)-1 equates to 4.2%

HSBA (1.791)^(1/10)-1 equates to 6.0%

[Alaric]

If there are 39, then what are the other 13, and why did you exclude them?

I excluded them because they didn't have the tick boxes for continuous five year dividend and no cuts.

The point of the table is to add together dividend yield and dividend growth which brings back the 2% yields such as Compass and Diageo that have done well for those who purchased them years ago.

Right at the foot of the list for dividend yield, there's Halma whose share price five years ago was 592 and is now 1820.5. Back in 2000, it was around the 100 mark.

[77ss]

...

Unilever v HSBA

If one is convinced that both will pay a divi for the next 10 years (scenario assumes HSBA does NOT increase the dividend and ULVR continues to increase at 7.8% , the 10 year historic compound annual growth rate in divis). My money would be (is) on HSBA.

(the top line being HSBA, company 2)

I don't understand your data. Something I am missing perhaps. I hold both ULVR and HSBA, so have no particular axe to grind (although I have to say that I am happier with ULVR), but if a yield of 3% is increased by 7.8% every year for 10 years then, assuming a static share price, does not the yield become 6.36%? Where does your 4.2% come from?

It's the annual return of divis over the time period.

ULVR (1.502) ^(1/10)-1 equates to 4.2%

HSBA (1.791)^(1/10)-1 equates to 6.0%

Thanks for that clarification - I obviously misunderstood what was meant by Annual Dividend Return.

[Alaric]

but if a yield of 3% is increased by 7.8% every year for 10 years then, assuming a static share price

It's an immensely pessimistic assumption to assume no change in share price. If the market maintains a 3% yield, the share price would increase with the increase in dividend so Unilever would increase in value and HSBC wouldn't. The more appropriate comparison is to compare holding Unilever over ten years, selling it and then buying HSBC with holding HSBC throughout.

[Dod101]

But wealth/value derives not just from the dividend but also from share price appreciation. If one has a static dividend (as with many shares at the moment including HSBC) it is unlikely that there is going to be much share price appreciation. I have always been at least as much interested in capital appreciation as in the dividend. In fact my original thought like many I suspect, was to invest for capital appreciation and the dividend was a nice side benefit.

It is all very well to show as monabri has what will happen if...........That is pure arithmetic but in the meantime as I said earlier, the Unilever share price has grown by 50% since early 2017. That is more than 10 years of dividend in about two years. Who would not rather have that than the static share price and a bigger dividend from HSBC? Dedication to dividends is simply a nonsense.

Dod

[IanTHughes]

But wealth/value derives not just from the dividend but also from share price appreciation. If one has a static dividend (as with many shares at the moment including HSBC)

No, not many shares at all, at least not in my HYP. Perhaps you would provide a list of HYP shares with held dividends. You must have such a list easily to hand to have made such a statement, or did you just state it without any research?

Who would not rather have that than the static share price and a bigger dividend from HSBC? Dedication to dividends is simply a nonsense.

The nonsense is your assertion of there being "many held dividends" for HYP Shares. Or will you now produce a list to prove your point?


Ian

[Alaric]

No, not many shares at all, at least not in my HYP. Perhaps you would provide a list of HYP shares with held dividends.

Take a look at
https://www.dividenddata.co.uk/ftse-div ... et=ftse100
and the highest cap
https://www.dividenddata.co.uk/dividend ... ?epic=HSBA

Also
https://www.dividenddata.co.uk/dividend ... ?epic=RDSB



Where Companies express their dividends in US dollars or Euros, the sterling amount will fluctuate

[IanTHughes]

No, not many shares at all, at least not in my HYP. Perhaps you would provide a list of HYP shares with held dividends.

Take a look at
https://www.dividenddata.co.uk/ftse-div ... et=ftse100
and the highest cap
https://www.dividenddata.co.uk/dividend ... ?epic=HSBA

Also
https://www.dividenddata.co.uk/dividend ... ?epic=RDSB

And the list of HYP Shares with held dividends is where exactly?

Or is this your long-awaited virtual portfolio? It does appear rather large


Ian

[Alaric]

And the list of HYP Shares with held dividends is where exactly?

Work it out for yourself. The dividenddata site gives a list of the shares in the FTSE 350 tabulated with current dividend yield, 5 and 10 year growth rates and tick boxes indicating where the dividend has been reduced or passed.

[IanTHughes]

And the list of HYP Shares with held dividends is where exactly?

Work it out for yourself.

I have already worked it out for myself.

You have just provided proof that there are very few HYP-suitable shares that have held dividends.

Ok?


Ian