Consolidation of High Yield SIPP

[yieldhog]

I'm in the process of simplifying my SIPP ahead of my wife taking over the account. Besides simplifying, I'm also trying to move away from single name exposures in favour of diversified ITs.

My current SIPP is as follows:

AEI, BATS, NCYF, HFEL, HINT, IMB, IAT, JEGI, LGEN, NAIT, PHNX, SMIF, SHRS, VOD, VSL.

VSL is liquidating, so that will eliminate that fund.
I can disperse some funds into existing high-yield ITs but the remaining single company names represent some of my best yielders.
I would like to start by eliminating one of the tobacco stocks i.e. BATS or IMB, and one of the insurance stocks i.e. LGEN or PHNX.
VOD has cut the dividend by half starting next year so that will need to go before the year end

Currently, the SIPP is projected to produce around 7.5% per annum, so ideally I need to stay with ITs yielding at least this sort of return.

I'm struggling to find any ITs with yields high enough to compensate for the loss of yield I will suffer if I sell some of these
single company exposures. It might also become very illiquid in the event of a real estate crisis.
So far the only new addition I've found is SERE ( Schroeder European Real Estate.) with a yield of 9.16%, but I don't much like the gearing of 41% and high expense figure of 3.72%.

I topped up AEI when it was yielding well over 8% so will not be adding more at this stage. I might add some funds to my two high yield fixed income ITs (NCYF and SMIF) on the basis that interest rates are more likely to fall in the months head rather than rise.

Any ideas welcome.

Y

[FoolishFilFive]

I'd be cautious about focusing so much on very high yielding single companies - I've found myself that the yield doesn't always last very long.

Maybe have a look at bonds - SEMB maybe - or investment trusts on five maybe six percent with a good record. If you're living off your SIPP in retirement it may need to last you a long time.

[Wasron]

I don’t have a view on which baccy to keep, but between LGEN and PHNX I’d certainly keep LGEN.

Regarding alternatives, would you consider infrastructure plays like Primary Healthcare Properties or Bluefield Solar Income Fund to be more acceptable from a risk perspective? Both have a 7ish% dividend yield at present

Wasron

[tacpot12]

There are lots of ITs yielding above 8%, but whether you would want to buy them is another matter. Have you looked at the theAIC.co.uk website? You can sort their list of Investment Trusts by yield.

The high yielding Investment Trust 'stars' of my retirement portfolio are as follows (the figure in brackets is their average yield over the last 5 years):
Invesco Bond Income Plus Ltd (7.0%)
European Asset Trust (6.0%)
Henderson High Income Trust (6.0%)

I would also recommend looking at this EFT: IUKD (5.7%)

All my other holdings are yielding 3-5% for an average portfolio return of 4.6%

[monabri]

Investment Trusts ( ordered from high to low yield)

https://www.dividenddata.co.uk/investme ... ld&order=1


Preferential Shares ( eg GACA, GACB, NWBD, ELLA,SAN,SANB)... fixed yield though!..?

[dealtn]

Any ideas welcome.

Y

I would ask, what is the yield (or income) you need, not can I match the yield I am already getting.

Are you expecting a change in lifestyle, or income need going forward? Why is your wife taking over?

[yieldhog]

I would ask, what is the yield (or income) you need, not can I match the yield I am already getting.

Are you expecting a change in lifestyle, or income need going forward? Why is your wife taking over?

Hi dealth, fair questions.

Yes, my circumstances/needs are changing. I'm going into hospital next week for blood cell genetic modification, which is a risky treatment for my blood cancer. The best outcome is that I might get a couple more years of remission. on top of the 6+years I have had already.

Initially, my wife will inherit the SIPP that over the past 15 years of drawdown has provided us with a modest supplemental income. But my wife has no investment expertise and only recently learned how to open and close my laptop. Hence, I am trying to produce a portfolio that will allow her to increase the current 4% or so monthly drawdown by 50% to 6% or so without risking depletion of the total fund.
The underlying dividend income of the SIPP is about 7.5%.

So my priorities are:
1. Maintain a dividend yield comfortably in excess of 6%.
2. Maintain a diversified portfolio composed of equities and fixed income funds spread over global markets.
3. Include a growth element to boost the value of the SIPP over a longer timeframe.
4. Eventually provide an ongoing potential income for each of our two sons who will eventually inherit the SIPP

I should add that my wife is in excellent health and could live for another30-years (she is almost 75 right now).
I should also add that the SIPP is not our only income source but could be a useful supplement to her UK and US government pensions. Plus we each have share and fixed income ISAs.

Regarding some of the previous comments on this thread, I appreciate the suggestions and apologise for not replying sooner but mention here a couple of comments.
IUKD is a decent ETF that I have owned off and on over the past 10 or more years. But it has always eventually disappointed me. I prefer to buy an equity income IT that I can buy at a discount at a time when it looks unusually good value e.g I averaged in to AEI recently when it was over a 10% discount to NAV and well over an 8% yield.
Infrastructure and green energy funds are of interest to me and I will be taking a closer look at some of these. In recent years I have owned FSFL, TRIG a a few others.

Thanks again for your comments.

Y

[tp33]

Dear Yieldhog,

I (and doubtless many others here) wish you all the best for your hospital procedure next week. Personally I have enjoyed and learned from your many contributions to Lemon Fool, and long may they continue.

Best wishes again to you, and to Mrs Y.

Tp

[tjh290633]

Sorry to hear about your problems. I wish you well. You might get some inspiration from my post viewtopic.php?p=662446#p662446 as a way of changing your portfolio. A further post just later in the thread adds a little more thought.

I hope that is some help.

TJH

[yieldhog]

Sorry to hear about your problems. I wish you well. You might get some inspiration from my post viewtopic.php?p=662446#p662446 as a way of changing your portfolio. A further post just later in the thread adds a little more thought.

I hope that is some help.

TJH

Dear Yieldhog,

I (and doubtless many others here) wish you all the best for your hospital procedure next week. Personally I have enjoyed and learned from your many contributions to Lemon Fool, and long may they continue.

Thank you for your kind thoughts. I expect to be in hospital until the end of May and must then stay within a short distance of the hospital for a further month before being free to return home. However, I intend to take my laptop with me and hope I will get the chance to do some more investment research.

Best wishes,
Y