A new share added: PNN

[Arborbridge]

Today I submitted to temptation and added Pennon to my HYP. OK, it's not the highest of yielders, but: a) I like the way dividends have been increasing b) I've been meaning to pair United Utilities for a long time c) I like what the company does.
The yield to March 2017 is 4.4% and to March 2018 4.7% - which is just shy of my normal desire to buy within about 10% of my HYP yield of 5.03% (after this addition).
At present this is a "half unit" addition due to the cash available in that particular broker account - I have three accounts which sometimes restricts what I can do according to how the cash is spread around. Hopefully the other half unit can be bought before the end of this ISA season.

After this new share, my HYP is now 38 shares, and the top of the table in top-up order looks like this:

Code: Select all

Ticker  Forecast Yield    Income %    Ov/under median    Cap % oncost
VOD     6.50%             2.58        0.76               1.89%
EMG     6.00%             2.56        0.81               2.55%
IRV     8.40%             4.40        1.00               1.88%
PSON    6.50%             3.31        0.97               3.45%
LLOY    5.40%             2.45        0.86               4.12%
PNN     4.40%             1.08        0.47               1.41%
SBRY    4.50%             1.69        0.71               3.05%
SL      5.70%             2.88        0.96               2.56%
CLLN    7.60%             4.27        1.07               3.78%
GNK     4.90%             2.20        0.86               1.89%

There are some interesting options around at present - even ignoring those with giddy yields. Greene King is looking tempting - except that I bought some in November! - Sainsburys and Man Group too. Man Group (EMG) may be favourite for a December top-up.

Arb.

[88V8]

OH bought GNK today.
Surprised you are tempted by MAN, given their history as a cutter.

V8

[Arborbridge]

Surprised you are tempted by MAN, given their history as a cutter.

Good point! I was only looking at what was in the table without looking beyond. However, I haven't always been bothered about whether something is a cutter or not provided they have served me reasonably well and aren't dead ducks. I think Man tends to be cyclical, so I had some success buying after they came through a bad time previously. There is an argument that they have no place in a HYP, but my idea originally was to add as a proxy to the "gambling" sector.

I believe TJH adds to cutters provided they have hope of rebuilding dividends.

Still, I will bear in mind what you have pointed out. AAMOI would you rather top up VOD, which isn't yet a cutter but has no dividend cover?

Arb.

[richfool]

Arb,I've been watching Pennon for a while. I too like what they do, a water utility and waste disposal company in one holding. Though I'm not sure what to make of the net debt having increased to 3.3% to £2.6Bn. I realise it's a utility and utilities have borrowings/debts. Should that be a concern?

Net debt has increased to 3.3% £2.6bn, however the average interest rate fell to 3.3%.

http://www.hl.co.uk/shares/shares-searc ... e-research

http://www.hl.co.uk/shares/shares-searc ... -ord-40.7p

[richfool]

I was pondering why the fall in Pennon's SP today, and came across this, from yesterday. Noted that "on the day" all 3 stocks rose by similar small amounts, so I don't know if that was the cause of today's fall or not:

http://www.londonstockexchange.com/exch ... 51000.html

Alliance News Detail

United Utilities And Severn Trent Promoted In Ofwat Information Rating
[ 30 Nov 2016 08:50 ]

LONDON (Alliance News) - UK water industry regulator Ofwat on Wednesday said UK-listed utilities moved up to the highest category in the watchdog's ranking of the quality of information and assurance provided to customers.

Ofwat said United Utilities Group PLC, Severn Trent PLC and South East Water all moved up to the Self-Assurance category. This means the companies met expectations in the majority of Ofwat's assessments and exceeded expectations in a number of areas.

South West Water, owned by mid-cap Pennon Group PLC, was demoted, however, to the Targeted category, along with Affinity Water. This means the companies did not meet the consistently high standards to be in the Self-Assurance category.

Yorkshire Water and Southern Water were moved to the Prescribed Assurance category, due to concerns about how these companies assure their data. They join Bristol Water and UK-listed Dee Valley Group PLC in this category.

"We expect companies to be transparent and have processes in place to ensure their information can be trusted. The ratings we have published today enable customers to compare their water company with others, which is important to help drive improvement," said Keith Mason, senior director at Ofwat.

"We assess large water companies each year on the quality of their information. The top performers will have less involvement from us. Where we're concerned by the quality of this information, we will intervene to make sure they improve," he added.

United Utilities shares were up 0.6% at 908.78 pence on Wednesday, while Severn Trent shares were up 0.3% at 2,227.00p. Pennon shares were up 0.2% at 830.50p, while Dee Valley, which is set to be acquire by Severn Trent, were untraded.

[tjh290633]

I believe TJH adds to cutters provided they have hope of rebuilding dividends.

Arb.

As long as they still have an acceptable yield, yes I do. I'm buying income, don't forget.

TJH

[Arborbridge]

TJH,

As long as they still have an acceptable yield, yes I do. I'm buying income, don't forget.

I think you and I might be out on a limb there. It seems many HYPers adhere to the "rule" that if a company has cut its dividend, it should be put on the back burner for a while.
In my case, I have certainly topped up cutters - but this is sometimes due to my slackness in realising that the company has cut! Other times, I just feel things will come right eventually and I take advantage of a low price, with half the market being scared off. I doesn't always work, that's the downside! But with my self imposed limit on capital invested, it prevents me from getting too exposed to any one disaster which develops.


Arb.

[88V8]

I believe TJH adds to cutters provided they have hope of rebuilding dividends.

As long as they still have an acceptable yield, yes I do. I'm buying income, don't forget.

Me too. But I never did have a stomach for the roller coaster.
Cuttist. That's me.

VOD? No, ta very.

V8

[idpickering]

Today I submitted to temptation and added Pennon to my HYP. OK, it's not the highest of yielders, but: a) I like the way dividends have been increasing b) I've been meaning to pair United Utilities for a long time c) I like what the company does.
The yield to March 2017 is 4.4% and to March 2018 4.7% - which is just shy of my normal desire to buy within about 10% of my HYP yield of 5.03% (after this addition).
At present this is a "half unit" addition due to the cash available in that particular broker account - I have three accounts which sometimes restricts what I can do according to how the cash is spread around. Hopefully the other half unit can be bought before the end of this ISA season.



Arb.

All this talk has resurrected my interest in bringing united utilies on board my hyp? Hmm

Ian

[Arborbridge]

Ian,

I don't recall whether you already have PNN, but I think if I had my time again, I would probably go for that first.
However, having said that, UU was one of my first HYP purchase (entirely on yield basis) and it's contribution to income has been fine, as has its total return (about on my median, XIRR10% at present).

The slight doubt about UU is that people remember that it cut its dividend and had a rights issue - both black marks. Maybe I've been lucky in that I bought as it was rebuilding its dividend. Luni used to express the opinion that it was the sort of company that overpays it's dividend and once in a while has to cut and/or have a rights issue. I've no idea if he is correct, but I'm sure that type of view colours people's attitude and why UU has a slight smell about it. It may be unjustified: I wouldn't know. However, it is still generally a very frequent income stock in various funds.

My HYP is still based on "pairing" - rightly or wrongly - and I've always wanted a pair for UU, thus, buying Pennon. The perception is that Pennon is a steadier payer at a lower yield - but as we know, that can all change with a bad set of results.

Arb.

[idpickering]

Ian,

I don't recall whether you already have PNN, but I think if I had my time again, I would probably go for that first.
However, having said that, UU was one of my first HYP purchase (entirely on yield basis) and it's contribution to income has been fine, as has its total return (about on my median, XIRR10% at present).

The slight doubt about UU is that people remember that it cut its dividend and had a rights issue - both black marks. Maybe I've been lucky in that I bought as it was rebuilding its dividend. Luni used to express the opinion that it was the sort of company that overpays it's dividend and once in a while has to cut and/or have a rights issue. I've no idea if he is correct, but I'm sure that type of view colours people's attitude and why UU has a slight smell about it. It may be unjustified: I wouldn't know. However, it is still generally a very frequent income stock in various funds.

My HYP is still based on "pairing" - rightly or wrongly - and I've always wanted a pair for UU, thus, buying Pennon. The perception is that Pennon is a steadier payer at a lower yield - but as we know, that can all change with a bad set of results.

Arb.

Thank you for your in depth reply Arb. No I've never held Pennon. I did have UU for a time but found then unreliable. Not a buy and forget share. I'll mull it over dome more. Don't want to hijack this thread .

Ian