Centrica Trading Statement

[idpickering]

Ian - I'm down over 32% on Centrica and nearly 25% on CLLN, but I'm not supposed to care.

And I thought I had issues! lol. Well done on your fortitude by hanging in there Bouleversee.

Ian.

[miner1000]

I agree with that and not only that but the electricity companies are being given plenty of timely warnings to get their PR departments and lobbyists up and running so I am quite relaxed about the so called price cap. On the subject though of Centrica it shows all the signs of being the weakest of the electricity companies. Instead, I hold and have held SSE for a very long time and National Grid more recently.

Dod

Dod may once again prove to be the investment Guru with regard to which Electrical utility is the best. I have not been able to fault him yet, although I am hoping my overweight in Lloyds will eventually overpower his HSBC over the long run.

Coming back to Centrica, it does depend a bit on your time horizon. I bought Centrica at 219p in August 2009 and since then it has been a fine HYP share. OK today it is below my purchase price, but not by so much and it has been a very good divi payer over the past 7 years. Who is to say it wont once again enjoy some time in the sun?

Cheers, Miner

[kempiejon]

I bought Centrica at 219p in August 2009 and since then it has been a fine HYP share. OK today it is below my purchase price, but not by so much and it has been a very good divi payer over the past 7 years.

Except that CNA have reduced their dividend in 2014, 2015 and held in 2016 and this years dividend is below that offered in 2010. http://www.dividenddata.co.uk/dividend- ... y?epic=CNA

[Dod1010]

I agree with that and not only that but the electricity companies are being given plenty of timely warnings to get their PR departments and lobbyists up and running so I am quite relaxed about the so called price cap. On the subject though of Centrica it shows all the signs of being the weakest of the electricity companies. Instead, I hold and have held SSE for a very long time and National Grid more recently.

Dod

Dod may once again prove to be the investment Guru with regard to which Electrical utility is the best. I have not been able to fault him yet, although I am hoping my overweight in Lloyds will eventually overpower his HSBC over the long run.

Coming back to Centrica, it does depend a bit on your time horizon. I bought Centrica at 219p in August 2009 and since then it has been a fine HYP share. OK today it is below my purchase price, but not by so much and it has been a very good divi payer over the past 7 years. Who is to say it wont once again enjoy some time in the sun?

Cheers, Miner

Thanks for your confidence in me but I am no investment guru and has been pointed out Centrica is not quite what you suggest. As a matter of fact, I sold Centrica on 7 December 2015 at £2.12 and bought Schroders N/V. On the capital front, Centrica was down a bit the last time I checked, and Schroders was up a bit but the real point is that I think the dividends are much more secure with Schroders.

Comparing Lloyds with HSBC is comparing the classic apple with an orange. You might hold both, the one for UK domestic exposure and the other for its international, particularly Emerging Markets exposure. Lloyds is said to be run well and conservatively but I really do not know it. I know that HSBC is well capitalised and conservatively run, earning mostly in US Dollars or currencies tied to the US Dollar, and has not in recent years anyway cancelled its dividend, although it did reduce it.

Dod

[miner1000]

Except that CNA have reduced their dividend in 2014, 2015 and held in 2016 and this years dividend is below that offered in 2010.

I am aware of the dividend history, however I think you will find that Centrica has always paid well in excess of 5% dividend on my purchase price sometimes much more than 5%. If only Tesco and Firstgroup were as good as this I would be delighted. Whilst a held or cut dividend is not ideal, it is something that we as HYPers should expect from time to time.

I have no plans to sell Centrica and may well add more in the coming months once the Tories decide their proposed policy is heresy.

Cheers, Miner

[Wizard]

... I think you will find that Centrica has always paid well in excess of 5% dividend on my purchase price sometimes much more than 5%.

Is that a meaningful metric though? IMHO once a share has been purchased the money spent buying a share has gone, what matters is what the shares are worth now and what the dividend is now.

Terry.

[miner1000]

miner1000 wrote:
... I think you will find that Centrica has always paid well in excess of 5% dividend on my purchase price sometimes much more than 5%.


Is that a meaningful metric though?

It is for me. You run your HYP how you see fit and I will run mine in my way. I am not inclined to become a day trader. When I buy it is for the long term and I keep to that maxim unless there is a very good reason for selling. Centrica (unless I am missing something) have done nothing to suggest I should be offloading them in panic and casting about for greener pastures. I also hold NG and SSE and I am very happy with the overall performance of the Utilities in my HYP. Even Firstgroup and Tesco remain. As do Astrazeneca (Up 94%), BAE (up 104%) and Unilever (up 96%).

You have winners and losers in a HYP, but IMO, as long as the income keeps growing overall, there should be no urge to trade. Over a 10 year period time in the market has proved itself to be a good principle to me.

But to those who sell winners and losers alike... for whatever reason,...the very best of luck! It would be very uninteresting on these boards if we were all of the same mind>

Cheers, Miner

[tjh290633]

Back when CNA demerged from British Gas, my PEP provider had a list of shares which it would accept and, as CNA did not propose to pay dividends initially, it did not go on the list and the holding was sold. I have never felt the urge to buy them since. Lattice was later demerged and kept, until it was swallowed by National Grid, which I still hold. BG. itself was eventually disposed of in 2006, when the yield fell well below that of the market.

Meanwhile I had the Energy Group, spun out of Hanson, which was itself taken over a year later in 1998 and replaced by Scottish Power, also taken over and replaced with RDSB, SSE coming in a year or so later in the grand reorganisation after the 2008-9 debacle.

I still have no urge to go into CNA.

TJH

[Wizard]

miner1000 wrote:
... I think you will find that Centrica has always paid well in excess of 5% dividend on my purchase price sometimes much more than 5%.


Is that a meaningful metric though?

It is for me. You run your HYP how you see fit and I will run mine in my way. I am not inclined to become a day trader. When I buy it is for the long term and I keep to that maxim unless there is a very good reason for selling. Centrica (unless I am missing something) have done nothing to suggest I should be offloading them in panic and casting about for greener pastures. I also hold NG and SSE and I am very happy with the overall performance of the Utilities in my HYP. Even Firstgroup and Tesco remain. As do Astrazeneca (Up 94%), BAE (up 104%) and Unilever (up 96%).

You have winners and losers in a HYP, but IMO, as long as the income keeps growing overall, there should be no urge to trade. Over a 10 year period time in the market has proved itself to be a good principle to me.

But to those who sell winners and losers alike... for whatever reason,...the very best of luck! It would be very uninteresting on these boards if we were all of the same mind>

Cheers, Miner

My emphasis.

You seem to be in more than one mind all by yourself

First you suggest the investment has performed well because it has consistently paid a percentage versus purchase price, now you say you are happy if your income grows. So if every share in your portfolio keeps its dividend flat (and not growing) it will of course give you the same percentage return on your initial investment forever, but it sure won't be growing. So presumably you will be happy and not happy at the same time

As you say, we can all run our portfolios as we like, I am certainly not a day trader but I do like to understand the return I am receiving on the capital I have invested now, not what was invested years ago. Your portfolio, your choice of course.

Terry.

[Itsallaguess]

I think you will find that Centrica has always paid well in excess of 5% dividend on my purchase price sometimes much more than 5%.

Is that a meaningful metric though?

I've never thought that 'yield-on-cost' is anything more than a comfort-blanket figure, given that it doesn't take into account the real deliverable yield of the particular share at it's current price.

So long as everyone full understands that, then that's great, but the danger with discussing 'Yield-on-cost' without the necessary checks and reminders as to what it's actually telling us, is that anyone not familiar with the risks behind using such figures might go away thinking it's a great metric telling you more than it really does.

As long as we fully understand that it's telling us the yield based on the current dividend against the historical price paid for the share, then that's fine, we're all happy, but that share price normally can't be achieved today, so the only relevant figures today are the yield figures based on today's share price....

By way of a clear explanation, consider this -

1. We buy a share 10 years ago for 100p, and it paid 4p dividend then. The yield at the time was therefore 4p/100p = 4%

2. Fast forward 10 years, and the share price is now 800p, and it's paying a 15p dividend. The yield now is 15p/800p = 1.875%

3. The 'Yield on Cost', for those interested, is 15p/100p = 15%. (Sounds great, doesn't it.....)

4. The Current Yield, however, is 1.875%......(Not so good compared with any possible higher-yielding alternative we may wish to consider....)

Like I say, it's all good so long as we're clear as to the risks of placing too much emphasis on such historical metrics, and we all understand what it's telling us, why it's telling us this, and what it's not telling us....

What interests me is how my capital is performing today against possible alternatives to where it might work better for me, not how it's performing today compared to when I committed it all those years ago....

Cheers,

Itsallaguess

[Bouleversee]

It's all a guess said:

"What interests me is how my capital is performing today against possible alternatives to where it might work better for me, not how it's performing today compared to when I committed it all those years ago...."

Isn't there more to performance than the dividend yield? How about a yield of 3% 15 years ago and an increase in s.p. of l600% over that period, at the end of which the dividend is still 3% on the current s.p. Would you really sacrifice that continuous outperformance for a higher % dividend from a possible alternative which might work better for you in terms of increasing your current income or might get axed because it was unsustainably high and lose you a large chunk of your capital? So far as I am concerned, it's the overall picture that counts and where I have had large gains, I do take note of the % I am getting in dividends on my original investment.

As for Centrica, it's the other way round and with the capital going (gone in my case) the other way, I wouldn't see any comfort in their dividend record, especially as I think it likely that it will be cut before long. I am seriously wondering whether to sell and swallow the large loss.

[Itsallaguess]

Isn't there more to performance than the dividend yield?

How about a yield of 3% 15 years ago and an increase in s.p. of l600% over that period, at the end of which the dividend is still 3% on the current s.p.

Would you really sacrifice that continuous out-performance for a higher % dividend from a possible alternative which might work better for you in terms of increasing your current income or might get axed because it was unsustainably high and lose you a large chunk of your capital?

I've no problem at all with the example-share that you've given Bouleversee, where a 'Yield-on-Cost' of 3% is maintained, along with some capital growth, so that some years later there's been an increase in the share-price and a corresponding increase in the dividend payouts to still give a current-yield of 3% as well.

The danger is where that doesn't necessarily happen in tandem, and you end up with a situation as shown in my example, where the dividend increases don't keep up, and the current yield drops off sharply, yet people may be warmed by keeping an eye on their (often much higher) 'Yield-on-cost' figures only, which can deceive you into thinking that your investments are currently working hard for you still, when in reality they may well not be, as I've hoped to make clear in my example shown...

The difference is important, I think, and it's something to bear in mind when using these types of historical metrics.

Cheers,

Itsallaguess

[miner1000]

First you suggest the investment has performed well because it has consistently paid a percentage versus purchase price, now you say you are happy if your income grows.

Er..., not quite. What I am saying (just to be very clear) is that as long as the overall HYP income is growing I am happy. Quite clearly, the stand alone income from Centrica has not continued to grow in the past three years. Likewise the income from Tesco and Firstgroup has stopped in the past few years. However my overall income from my HYP has grown nicely for 9 consecutive years. when you are living off your HYP income (as I am) this is a fair result.

Some would sell Tesco, Firstgroup and maybe Centrica. But not me. The only share I have sold in anger was BP back in the Macondo era, and I immediately bought Shell with the proceeds.

If you are building a HYP whilst living off a separate source of income, I think it may be quite reasonable to sell some shares, since after all you dont need the income. But as someone in the drawdown phase, I dont feel the urge to sell a share just because someone thinks it might become a dog. Centrica continues to yield over 6% on current price. If they cut the dividend by 20% it will still be yielding over 4%. I can always be wrong but I am not inclined to sell and I may buy more. Time will tell if I am right or wrong.
Miner