income for the year

[Arborbridge]

Well, I think there's only one more dividend for me left to come in this year - that's IMB.

I looks like the final result per unit will be, sadly, fully 5% down on last year. That's quite a poor result.
Note - I'm not talking about the HYP income dropping and being transferred to the ITs - this is in pence per unit which accounts for any changes of that sort.

Income per unit, 2023 6.85p; 2022 7.21p

I will, of course, report properly after the year end, when all is known.


Arb.

[monabri]

A better outcome than HYP1.

Reductions from ...
Miners
Admiral ( special dividends)
Persimmon
GSK

[Arborbridge]

A better outcome than HYP1.

Oh well, that's something! I hadn't noticed.

[kempiejon]

I have followed the trend. Dividends have declined in a few of my picks too and I commented on another thread that it looks like my income is about 6% adrift for this year. For the first 6 months of this year I had 3 months clocking in less than in the previous year and by June was 10% down compared to the first half of last year. I have The Renewables Infrastructure Group plus Imps to come in so I have adjusted for those amounts. I think last year was flattered by a few specials and from a quick glance some of the cuts have come from miners and Admiral.

[chris]

Biggest special in mine was Tate & Lyle, which was almost £3k more than the previous year's £946. I sold immediately afterwards as they said they were going to become a growth company and that was not something I wanted in my HYP.

[kempiejon]

Biggest special in mine was Tate & Lyle, which was almost £3k more than the previous year's £946. I sold immediately afterwards as they said they were going to become a growth company and that was not something I wanted in my HYP.

Ah, good pointer, TATE is one of mine so that would have impacted my y-o-y income comparison. I apply the hold forever philosophy so hopefully my income from Tate will now grow from this reset.

[Dod101]

I will be up slightly on the year against last year, despite the Special in 2022 from Caledonia which was not repeated. I was helped by the reintroduction of quarterly dividends from HSBC, and although I have not looked in detail yet, most of my holdings seem to have modestly increased their dividend for 2023.

Dod

[Steveam]

I’m amazed people don’t exclude “specials” in their comparisons. There can be some complexity here as some companies pay regular special dividends which drives me to make an assessment.

My year ends with the tax year so no figures to contribute.

Best wishes,

Steve

[Dod101]

I’m amazed people don’t exclude “specials” in their comparisons. There can be some complexity here as some companies pay regular special dividends which drives me to make an assessment.

My year ends with the tax year so no figures to contribute.

Best wishes,

Steve

A special is still a dividend in my book but if I exclude the Special for 2022 then my dividends will be up about 6% on the year with no new money added.

Dod

[daveh]

I’m amazed people don’t exclude “specials” in their comparisons. There can be some complexity here as some companies pay regular special dividends which drives me to make an assessment.

My year ends with the tax year so no figures to contribute.

Best wishes,

Steve

A special is still a dividend in my book but if I exclude the Special for 2022 them my dividends will be up about 6% on the year with no new money added.

Dod

I was unsure for a while about what to do with specials. Now I have a rule, if they come with a share consolidation they are a capital return and don't count as income, if they don't then they are income. This year it looks like my cash dividends will be around 7% ahead of last year. Dividends per accumulation unit will be slightly ahead of last year but dividends per income unit will be slightly down. I won't quite no the full figures until early next year as I have three fx dividends due last thing in December and will have to wait to see what I get in sterling terms.

[Steveam]

A special is still a dividend in my book but if I exclude the Special for 2022 them my dividends will be up about 6% on the year with no new money added.

Dod

I was unsure for a while about what to do with specials. Now I have a rule, if they come with a share consolidation they are a capital return and don't count as income, if they don't then they are income. This year it looks like my cash dividends will be around 7% ahead of last year. Dividends per accumulation unit will be slightly ahead of last year but dividends per income unit will be slightly down. I won't quite no the full figures until early next year as I have three fx dividends due last thing in December and will have to wait to see what I get in sterling terms.

Thanks Dave,

I’m not sure what rules one should use but i aim is to decide, on a case by case basis, whether it’s really a dividend or a disguised return of capital (all too common) and the, if it’s a dividend is it really that special or unusual with some review to try to make year on year sensibly comparable.

This will be quite close to your approach but not quite so rules based.

A couple of examples:
Tesco gave a special and consolidated - this was really a return of capital.
RIO gave a special and it was exactly that.
Caledonia IT gave a special (they do so every few years) but it’s irregular enough for me to see it as a special.
BHP gave a special in kind (Woodside) - it’s a special.
Taylor Wimpey used to pay regular specials and I saw these as normal dividends.
HSBC is selling its Canadian subsidiary and talking of paying a special - although no consolation I see this as a return of capital.

IIRC Gengulphus wrote something pretty good on this back in Motley Fool days. Mind like a steel trap - used to see right through to the key issues. Sadly missed.

Best wishes,

Steve

[Dod101]

I was unsure for a while about what to do with specials. Now I have a rule, if they come with a share consolidation they are a capital return and don't count as income, if they don't then they are income. This year it looks like my cash dividends will be around 7% ahead of last year. Dividends per accumulation unit will be slightly ahead of last year but dividends per income unit will be slightly down. I won't quite no the full figures until early next year as I have three fx dividends due last thing in December and will have to wait to see what I get in sterling terms.

Thanks Dave,

I’m not sure what rules one should use but i aim is to decide, on a case by case basis, whether it’s really a dividend or a disguised return of capital (all too common) and the, if it’s a dividend is it really that special or unusual with some review to try to make year on year sensibly comparable.

This will be quite close to your approach but not quite so rules based.

A couple of examples:
Tesco gave a special and consolidated - this was really a return of capital.
RIO gave a special and it was exactly that.
Caledonia IT gave a special (they do so every few years) but it’s irregular enough for me to see it as a special.
BHP gave a special in kind (Woodside) - it’s a special.
Taylor Wimpey used to pay regular specials and I saw these as normal dividends.
HSBC is selling its Canadian subsidiary and talking of paying a special - although no consolation I see this as a return of capital.

IIRC Gengulphus wrote something pretty good on this back in Motley Fool days. Mind like a steel trap - used to see right through to the key issues. Sadly missed.

Best wishes,

Steve

I appreciate that it is Christmas where there is nothing better to do but does it really matter? I call all dividends although if it is a return of capital and there is an accompanying consolidation I will usually use the proceeds to buy a few more shares in the same company.

As for HSBC, I think they are now anxious to produce dividends, special or otherwise, to pacify their HK shareholders and restore their reputation as a reliable source of dividends. The special promised following the sale of their Canadian business is surely though really a return of capital but a modest one for them. In any case they are likely to have cash coming out their ears when they report their 2023 results.

Dod

[qwaszx]

Thanks Dave,

I’m not sure what rules one should use but i aim is to decide, on a case by case basis, whether it’s really a dividend or a disguised return of capital (all too common) and the, if it’s a dividend is it really that special or unusual with some review to try to make year on year sensibly comparable.

This will be quite close to your approach but not quite so rules based.

A couple of examples:
Tesco gave a special and consolidated - this was really a return of capital.
RIO gave a special and it was exactly that.
Caledonia IT gave a special (they do so every few years) but it’s irregular enough for me to see it as a special.
BHP gave a special in kind (Woodside) - it’s a special.
Taylor Wimpey used to pay regular specials and I saw these as normal dividends.
HSBC is selling its Canadian subsidiary and talking of paying a special - although no consolation I see this as a return of capital.

IIRC Gengulphus wrote something pretty good on this back in Motley Fool days. Mind like a steel trap - used to see right through to the key issues. Sadly missed.

Best wishes,

Steve

I appreciate that it is Christmas where there is nothing better to do but does it really matter? I call all dividends although if it is a return of capital and there is an accompanying consolidation I will usually use the proceeds to buy a few more shares in the same company.

As for HSBC, I think they are now anxious to produce dividends, special or otherwise, to pacify their HK shareholders and restore their reputation as a reliable source of dividends. The special promised following the sale of their Canadian business is surely though really a return of capital but a modest one for them. In any case they are likely to have cash coming out their ears when they report their 2023 results.

Dod

Wel, it may matter if you are giving sums “out of income” - i.e. outwith IHT - so it rather depends on how the taxman treats these specials. I imagine they are all considered to be income. Well, if they are in an unsheltered account, then they’d be treated as such, and not - however you argue it - as return of capital.

[scrumpyjack]

Well HMRC say that 'Income' (for gifts out of income purposes) is income for accountancy purposes, which may not match income for tax purposes. So you can do your accounting as you like and treat all specials 'income'. Use Cleverly Rigged Accounting Ploys as so many companies seem to do these days

[daveh]

I appreciate that it is Christmas where there is nothing better to do but does it really matter? I call all dividends although if it is a return of capital and there is an accompanying consolidation I will usually use the proceeds to buy a few more shares in the same company.

As for HSBC, I think they are now anxious to produce dividends, special or otherwise, to pacify their HK shareholders and restore their reputation as a reliable source of dividends. The special promised following the sale of their Canadian business is surely though really a return of capital but a modest one for them. In any case they are likely to have cash coming out their ears when they report their 2023 results.

Dod

Wel, it may matter if you are giving sums “out of income” - i.e. outwith IHT - so it rather depends on how the taxman treats these specials. I imagine they are all considered to be income. Well, if they are in an unsheltered account, then they’d be treated as such, and not - however you argue it - as return of capital.

Actually if the company sets up the special as a capital return it can be classed as a capital return for tax. Usually done via a B share scheme. What the company can no longer do is set up the scheme so the shareholder has a choice of taking it as capital or income. If that is attempted the return is automatically income.

[simoan]

I never understand threads like this. It shows a basic misunderstanding of the definition of the capital of a business. All dividends are paid from capital! You can kid yourself if you wish, but at least acknowledge that’s what you’re doing. The fact a share consolidation takes place is neither here nor there.

[Dod101]

I never understand threads like this. It shows a basic misunderstanding of the definition of the capital of a business. All dividends are paid from capital! You can kid yourself if you wish, but at least acknowledge that’s what you’re doing. The fact a share consolidation takes place is neither here nor there.

I suppose it is fundamentally true that revenue is capital in one sense but generally revenue is revenue and capital is capital and that is recognised in company law in that a company is not allowed to distribute its capital as a dividend; it has to come from accumulated revenue.

Dod

[simoan]

I never understand threads like this. It shows a basic misunderstanding of the definition of the capital of a business. All dividends are paid from capital! You can kid yourself if you wish, but at least acknowledge that’s what you’re doing. The fact a share consolidation takes place is neither here nor there.

I suppose it is fundamentally true that revenue is capital in one sense but generally revenue is revenue and capital is capital and that is recognised in company law in that a company is not allowed to distribute its capital as a dividend; it has to come from accumulated revenue.

Dod

I don’t understand the relevance of revenue? It sounds like you’re thinking about an Investment Trust rather than a normal operating company. The latter pays a dividend from cash but no-one generally cares where the cash came from, Shell and BP funded their dividends from asset sales for years and yet no-one considers that a return of capital. Similarly. WM Morrison paid an uncovered dividend for years whilst debt increased - that’s a return of capital too.

[Dod101]

I suppose it is fundamentally true that revenue is capital in one sense but generally revenue is revenue and capital is capital and that is recognised in company law in that a company is not allowed to distribute its capital as a dividend; it has to come from accumulated revenue.

Dod

I don’t understand the relevance of revenue? It sounds like you’re thinking about an Investment Trust rather than a normal operating company. The latter pays a dividend from cash but no-one generally cares where the cash came from, Shell and BP funded their dividends from asset sales for years and yet no-one considers that a return of capital. Similarly. WM Morrison paid an uncovered dividend for years whilst debt increased - that’s a return of capital too.

As I understand it a company may only pay dividends from realised profits. Does not matter if it is an investment trust or any other trading company. I think you are confusing cash available for distribution and the accounting niceties. Indeed Shell and BP may well have funded their dividends from asset sales but they had to have realised profits in their accounts in order to do so. They cannot distribute capital as dividends. Do not confuse cash with accounting requirements. To be clear, they could and no doubt did have lots of realised profits on their Balance Sheets but that does not mean that they had the cash available to pay a dividend. They might have used it to buy a new oil refinery. They could always borrow to pay the dividend of course which many of those companies owned by private equity do (and often get themselves in a real mess by doing so, see Thames Water)

Dod

[simoan]

I don’t understand the relevance of revenue? It sounds like you’re thinking about an Investment Trust rather than a normal operating company. The latter pays a dividend from cash but no-one generally cares where the cash came from, Shell and BP funded their dividends from asset sales for years and yet no-one considers that a return of capital. Similarly. WM Morrison paid an uncovered dividend for years whilst debt increased - that’s a return of capital too.

As I understand it a company may only pay dividends from realised profits. Does not matter if it is an investment trust or any other trading company. I think you are confusing cash available for distribution and the accounting niceties. Indeed Shell and BP may well have funded their dividends from asset sales but they had to have realised profits in their accounts in order to do so. They cannot distribute capital as dividends. Do not confuse cash with accounting requirements. To be clear, they could and no doubt did have lots of realised profits on their Balance Sheets but that does not mean that they had the cash available to pay a dividend. They might have used it to buy a new oil refinery. They could always borrow to pay the dividend of course which many of those companies owned by private equity do (and often get themselves in a real mess by doing so, see Thames Water)

Dod

You only mentioned revenue (not profits) in your previous post. Revenue is irrelevant. Lots of companies have revenue but are loss making. One way of making distributable profits is to sell assets to generate cash from which dividends can be paid. BP and Shell did this for years before they ultimately ran out of assets to sell and had to slash their dividends.

Anyway, this isn’t a discussion I really want to get further involved with. Total Return is the only thing I am interested in - it totally avoids having to make silly arbitrary choices about the source of income.

Moderator Message:
Please note Total Return has absolutely nothing to do with HYP as loosely defined in this board's guidelines. If you wish to discuss this please do it elsewhere. Thanks. Chris