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

[Dod101]

If ITH does not know of the several shares where the dividend is being held (or worse) he obviously has never heard of Shell, HSBC, SSE, AstraZeneca, Glaxo or Centrica amongst others. Avoiding these shares in a current HYP is almost inconceivable.

Dod

[IanTHughes]

If ITH does not know of the several shares where the dividend is being held (or worse) he obviously has never heard of Shell, HSBC, SSE, AstraZeneca, Glaxo or Centrica amongst others.

First of all, AstraZeneca PLC (AZN), with its yield of 3.53% is not in my view an HYP Candidate.

Secondly, is that all you can come up with? Only 5 that are suitable for HYP? Is that what you call "several"? Come on, show us the full list, please!

Avoiding these shares in a current HYP is almost inconceivable.

Nonsense! There are dozens of possible HYP candidates which would make it entirely possible to avoid all of the above if one wanted to.

Of course, personally, I would choose both Royal Dutch Shell (RDSB) and HSBC Group (HSBA) irregardless.


Ian

[AJC5001]

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.

Actually the quote you attribute to Itsallaguess is one from my post he is replying to.

"I excluded them because they didn't have the tick boxes for continuous five year dividend and no cuts."
But that isn't what the green ticks mean. https://www.dividenddata.co.uk/ftse-dividend-history.py?market=ftse100
Dividenddata say -
"Dividend History
This page shows the dividend history of FTSE 100 listed companies. The dividend history period analysed is from the year 2000 onwards." (My bold)
which is why the Consecutive Years of Dividend Growth shows maxima of 19+ or 20+.

So, for example, Legal and General which you excluded has only 9 years of consecutive dividend growth but this is still more than 5!

To answer my own question then, the missing 13 shares (In yield sequence to match Itsallaguess's list) are Taylor Wimpey, Aviva, Barratt Developments, ITV, Legal & General, Land Securities, Smith (DS), Smurfit Kappa Group, Mondi, Ferguson,Prudential, Ashtead Group and Rentokil. The top 9 have forecast yields above 4%, along with 6 from the original list of 26.


"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."
But your table didn't include any yield numbers, so how was one to know that. Itsallaguess added the Forecast yield in his table.

Adrian

[Charlottesquare]

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.

I suspect it would more increase with the increase in earnings rather than dividends, however if the entities each have their own fixed ratio of dividend cover I would agree with your argument.

For total return this is surely a function of profits and of course longer term dividends tend to be a function of profits( there are limits on borrowing to pay dividends or distributing all profits to pay dividends re impact on future profits)

The comparisons used above have a lower starting dividend which grows (B) ,with a higher starting dividend which remains static (A), it singularly misses out what the other profits not distributed ought to have done to earnings over the intervening ten years, so one really needs to evaluate not just the dividends over the ten years, comparing A with B. but also the increased earnings at year 10 which B has which are not being distributed but will, certeris paribus, figure in the share valuation of B at year 10.

[tlf67482]

I forgot to update the thread but so everyone can laugh at me I sold all my Utility sector holdings they are now all showing a around a 7% increase on my sale price. I also made the unusual mistake of not selling and immediately buying something with the proceeds so not only I sold low I am probably buying something else at a higher price than what it was. A double loss in my mind. Typical.

[Julian]

I forgot to update the thread but so everyone can laugh at me I sold all my Utility sector holdings they are now all showing a around a 7% increase on my sale price. I also made the unusual mistake of not selling and immediately buying something with the proceeds so not only I sold low I am probably buying something else at a higher price than what it was. A double loss in my mind. Typical.

Thanks for the update, and absolutely no laughing coming from my direction. "Those who live in glass houses should not throw stones" and believe me, there's plenty of glass in my house.

If it makes you feel any better I have broken far more glass in my time from, on quite a number of occasions, deciding to get out of something and then procrastinating for a week or more and taking horrible hits on what I was still holding as a result. On at least two of those occasions (one was Tesco, I forget the other) the hits were well into double-digit percentage drops before I finally sold for far less than I could have done had I been as decisive in my sales as you.

Your decisiveness in selling, although it resulted in a 7% hit in your case, is not in my view a misstep in any way. Look at it this way, who knows with the 7% rise whether you would now be sitting on those shares for another month and we get a 10% correction in a few weeks time. None of us have a crystal ball.

I will agree that in retrospect maybe the not-reinvesting the proceeds immediately is something to learn from. I've taken a mental note of that aspect of your experiences myself for future reference so a most useful update and again thanks for that.

Edit: Come to think of it I did dump all of my Centrica and SSE maybe a month ago. I haven't looked at the prices since but from what you're saying I probably could have got more by waiting as well but, for the reasons mentioned above, I have no regrets and am not going to even go and look at the prices now out of curiosity because there is nothing that I can do with that information.

- Julian

[88V8]

.....am not going to even go and look at the prices now out of curiosity because there is nothing that I can do with that information.

Twice now the CGT process of swapping a stock with OH has been derailed when she decided to improve the shining hour by waiting for the price to fall so as to eat the spread. But it didn't.
So then, after the 30 day quarantine one either decides to buy back in at a higher price or potentially lose a divi. Grrr.

However, leaving aside that special situation, the decision to sell something may be clear cut. But the question of what to buy may be shrouded in mist. So the sell/buy does not have to be simultaneous, by any means. Indeed, feeling that one must reinvest the proceeds, now, may lead to poor decisions.

As regards the optimum selllng price, that comes under the heading of Coulda Shoulda.
Never look back.

V8

[Julian]

...
However, leaving aside that special situation, the decision to sell something may be clear cut. But the question of what to buy may be shrouded in mist. So the sell/buy does not have to be simultaneous, by any means. Indeed, feeling that one must reinvest the proceeds, now, may lead to poor decisions.
...

I suppose that sometimes there are Wall Street Gordon Gecko "dump the stock" moments when an investor decides that they need to sell a specific holding at short notice and there I take your point but at least for my portfolio deciding what to sell involves planning, researching current yields, cover, prospects etc for the candidates to be sold, whether to sell a selection of holdings in order to reduce CGT liabilities, the resulting weightings in my portfolio etc and I am usually doing my research on what to re-invest the proceeds of a sale into in parallel with or even in advance of my analysis on what mix of shares to sell such that, when I do eventually fight my typical urge to procrastinate and actually am in front of the computer logging in to my broker accounts to execute the trades, I have a list not only of all the sell orders that I want to place but also all the buy orders.

I do usually leave actually executing the buy orders for a day or two after the sell orders because I (amateurishly I'm sure) never quite trust the alignment of cash in and out on a single T+3 settlement date to give me the proceeds on the day I place the buy orders but essentially I do now try to always be in a position to know exactly what I'm going to buy at the point I do the sells. Maybe that is made easier for me because all my transactions nowadays are of the form "sell HYP shares & reinvest the proceeds into either income ITs and/or passive trackers" (a mixed high-yield plus a top-slice-growth strategy to give me the income that I want each year) so perhaps the sort of investments that I am targeting for my re-investments are less dynamic in their behaviour so easier to research in advance.

- Julian

[Itsallaguess]

..and I am usually doing my research on what to re-invest the proceeds of a sale into in parallel with or even in advance of my analysis on what mix of shares to sell such that, when I do eventually fight my typical urge to procrastinate and actually am in front of the computer logging in to my broker accounts to execute the trades, I have a list not only of all the sell orders that I want to place but also all the buy orders.

I'm a great believer in trying not to mentally track (as much as is possible with what are often large-cap investments....) any sales that I carry out, so I've found that trying to make sure that any sales-proceeds can be re-invested as soon as possible helps me to carry out that plan, because I find that if I end up thinking about anything following such sale/re-invest processes, then it's usually my new investments that I'm interested in, much more than my old ones...

Maybe that is made easier for me because all my transactions nowadays are of the form "sell HYP shares & reinvest the proceeds into either income ITs and/or passive trackers" (a mixed high-yield plus a top-slice-growth strategy to give me the income that I want each year) so perhaps the sort of investments that I am targeting for my re-investments are less dynamic in their behaviour so easier to research in advance.

I've followed a similar trajectory in recent years, with capital almost exclusively heading towards collective income-investments rather than single-share holdings, and I've definitely found that it's like the rowdiest kids are eventually moving out, leaving the tidier, quieter ones staying behind and making life just that little bit more bearable at each phase...

Cheers,

Itsallaguess

[runnygum]

I have held Luni's B7 basket vs an ETF income basket (IDVY, IAPD, VHYL etc) coming on 3 years.

The ETF's are 2x the return of B7. Not to mention at least 1/2 the cost. Plus delivering a higher yield.
Sure maybe quite a bit is down to Brexit. (ETF are international, whereas B7 no doubt has quite a bit of UK bias)
But that in itself is an issue.

FWIW I would not be investing in Investment Trusts going forward, rather select ETF's

[noshow1]

Hi Runnygum,

Do you think you could list the EFTs you think are an alternative to the B7 or B8 ITs please ?

Thanks in advance

Steve

[runnygum]

My list is
VHYL
IAPD
EMDV
EUDV
GBDV
EEI

Best as of today is EUDV +42% vs B7 best BNKR os 42% so things look ok right, well not so fast. Worst ETF is IAPD +14.6%
Whereas we have PLI IT at -25% Two IT's are negative. Whereas no ETF are.

Overall IT B7 basket is +13% vs ETF portfolio of +26%

Usual YMMV and past performance etc, etc.

[noshow1]

Hi Runnygum,

Thanks for posting your list, I'll look into the ETFs mentioned.

I have most of the B7 & B8 ITs and i do not like anything in negative territory and i have that in Edinburgh and PLI both in the red.

Thanks again

Steve

[mrbrightside]

My main current concerns are I have United Utilities showing a 10% loss and SSE a 2% loss and National Grid showing a 55% profit. My gut feeling is get rid of UU and SSE and keep a very close eye on NG am I mad? Should I be ignoring the current political environment?

Am I better off just converting to IUKD UK Dividend and IDVY Euro Dividend iShares to reduce the worry a bit and spread the risk a bit more but then again apart from the specific shares above it is not all bad and income is quite healthy.

I have 22 shares, 18 sectors (16 if SSE/UU are sold with the sector names I use).

Like you, I was relatively happy with the 'technical performance' of the portfolio at a 'high-level', but I simply could not shake off the issues I had at 'component-level', where individual holdings either came to actual blows for one reason or another in an income or capital perspective, or came under a high level of volatility and 'market scrutiny', similar to your SSE/UU issues here.

Such were the issues that I had with a 'pure HYP' approach, it came to the point where I was seriously considering getting out of equity-investments altogether, thinking that I simply wasn't ''mentally cut out' for being able to deal with the inherent volatility in such financial dealings.

Itsallaguess

I consolidated multiple pensions into a SIPP into 2003. I adopted a 'pure HYP' approach - not because I was buying an annuity replacement (PYAD's original core requirement) but, primarily, because I wanted to evaluate the HYP strategy with my pot of money.

I am also incredibly lazy so the hands-off, 'set and forget' approach appealed and I certainly didn't know better than the men in grey suits. Also, the low fees of a self managed SIPP compared with my previously actively managed pension funds were also very attractive.

I'm 56 and remain in the accumulation or build phase and simply reinvest all dividends largely guided by HYPTUSS and the standard heuristics. From my spreadsheet, I know is that my HYP has delivered an income that increases year on year (with the exception of 2009). My portfolio analyzer claims my SIPP has return a TR% of 4.91% versus FTSE TR of 3.07%.

I'm not saying I'm entirely convinced and would back this strategy 100% when I come to eventually draw on the income and continue to run ETF trackers in my ISA and also hold a company pension (for the employer contributions).

Although, I follow this thread with interest and an toying with a similar partial shift to IT's although my current provider AJ Bell my annual charges would increase significantly (8 fold) which deters me somewhat.

However if you are torturing yourself over individual shares that have fallen significantly without balancing them against those that have risen significantly, then that isn't what I would call 'pure HYP' which was 'Buy and hold for eternity'.

All the best - Andy

[mrbrightside]

I know is that my HYP has delivered an income that increases year on year (with the exception of 2009).

Apologies due here. As I added another pension pot in 2014, my analysis was rather flawed. After the swingeing dividend cuts of 2008, it took my HYP a full six years to return to those annual income figures.

This was rather surprising to me and continues to give me much food for thought (even today when I evaluate alternative strategies) but illustrates the value of such an 'experiment' over a long period of time.

[Alaric]

Although, I follow this thread with interest and an toying with a similar partial shift to IT's although my current provider AJ Bell my annual charges would increase significantly (8 fold) which deters me somewhat.

I don't think that's quite correct. As usual with Brokers, there's no difference in charges between holding shares directly and holding Investment Trusts. That's because when you hold Investment Trusts you are buying shares quoted on Stock markets. OEICs (Open ended Investment Companies) are another matter entirely. Most posters are talking of the shift to Investment Trusts.

[mrbrightside]

Although, I follow this thread with interest and an toying with a similar partial shift to IT's although my current provider AJ Bell my annual charges would increase significantly (8 fold) which deters me somewhat.

I don't think that's quite correct. As usual with Brokers, there's no difference in charges between holding shares directly and holding Investment Trusts. That's because when you hold Investment Trusts you are buying shares quoted on Stock markets. OEICs (Open ended Investment Companies) are another matter entirely. Most posters are talking of the shift to Investment Trusts.

I am happy to stand corrected. Many thanks.