That is one reason why I have been moving more to a Low Yield Portfolio (LYP
![Very Happy :D](./images/smilies/icon_e_biggrin.gif)
Thanks to Anonymous,bruncher,niord,gvonge,Shelford, for Donating to support the site
monabri wrote:Where would one invest...in the stagnant UK market or elsewhere? There might be a flow of money out of UK companies and into other markets.
DrFfybes wrote: The issue with that approach is the low divi investments tend to grow so you end up shuffling for CGT.
scrumpyjack wrote:DrFfybes wrote: The issue with that approach is the low divi investments tend to grow so you end up shuffling for CGT.
That is the expectation and I would rather pay 20% CGT than 60% income tax.
I have been increasing my holding of Monks as I like their portfolio, they are on a large discount (probably because BG is out of favour) and the yield is a juicy 0.3%
simoan wrote:Perhaps I’m talking out of turn here, but buying shares just because they have a low dividend yield is every bit as stupid as buying shares just because they have a high dividend yield. Buy good companies with strong balance sheets, avoid bad companies with weak balance sheets would be my advice. The dividend yield shouldn’t really matter as a justification for holding in itself. Generally, good companies can re-invest cashflow at good internal rates of return (high ROCE/ROE) to grow future profits and do not pay out a large amount as dividends. As others have said, making investment decisions with tax at the forefront of your mind is a strange way to go. If I was worried about possible future government intervention, I’d personally be much more concerned about holding shares in regulated industries which covers just about any UK listed High Yielding share you care to mention.
All the best, Si
scrumpyjack wrote:I agree a Labour government is likely to raise the tax on dividends..........
Dod101 wrote:As always it depends what the objective of the portfolio is. Tax wagging the dog's tail and all that. I live off my dividend income and currently generate rather more than I need to. I could look at transferring some holdings, not so much into a low income portfolio, but hopefully into a growth portfolio, rather harder to do in my experience. In any case at least with a relatively high income share, you have a good chance of getting a return even if it is taxed, with a possible bonus of a growth in the share price. The same can hardly be said for a low income share as you are already precluded from one source of return.
Dod
scrumpyjack wrote:8.75%! You ain't seen nothing yet. Under Healey it got to 98% and over 100% in one year due to a retrospective surcharge
Dod101 wrote:Before 1nvest gets too carried away, we were not talking about all of that. Apart from anything else, in the times he writes about there were no ISAs for instance and currently at least, Starmer and co, assuming that they get a mandate, show no signs of reverting to those politics of envy. Meanwhile it is of course sensible for everyone to take what defensive measures they feel are necessary.
Dod
simoan wrote:Dod101 wrote:Before 1nvest gets too carried away, we were not talking about all of that. Apart from anything else, in the times he writes about there were no ISAs for instance and currently at least, Starmer and co, assuming that they get a mandate, show no signs of reverting to those politics of envy. Meanwhile it is of course sensible for everyone to take what defensive measures they feel are necessary.
Dod
It's just common sense though isn't it? Unless the OP does not have access to tax free accounts for some reason, then it's just common sense to hold any shares which are subject to higher taxation (be that income or capital gains) within those wrappers, and the one's that don't in taxable accounts. That's not an investment strategy though, and doesn't necessarily mean you end up with a Low Yield Portfolio (across all accounts) either depending on your financial circumstances.
All the best, Si
vand wrote:I'm sure "low yield portfolio" is overthinking it.
A HYP is by definition an active stratetgy; if you don't trust it, either because you are trying to position yourself for a tax policy that may or may not happen, or because you view it as a better overall strategy regardless, then just flip back to the default passive strategy, which is a global index tracker.
Anyway, believe it or not, companies aren't stupid 'y'know, and generally have a good idea of the tax code in which they operate. If dividend payments become more disadvantageous they will allocate their capital differently, pay out less dividend and do more buybacks and reinvestment.
simoan wrote:Perhaps I’m talking out of turn here, but buying shares just because they have a low dividend yield is every bit as stupid as buying shares just because they have a high dividend yield. Buy good companies with strong balance sheets, avoid bad companies with weak balance sheets would be my advice.
All the best, Si
Return to “Investment Strategies”
Users browsing this forum: No registered users and 15 guests