Bree's HYPish Portfolio - Christmas Review 2016

[JMN2]

Question: how do people achieve such racey increases in dividends?

...
Arb.

I wonder that too myself. The construction of my portfolio did not change, I only have dividend paying shares. Sold one or two (I think), bought some new and topped up old ones with paid dividends. Only Galliford Try bought with new money managed to pay a dividend. Previous year's change was 5.67% and before that 51% when the construction changed drastically and comparison can't be made.

[Arborbridge]

bought some new and topped up old ones with paid dividends. Only Galliford Try bought with new money managed to pay a dividend. Previous year's change was 5.67% and before that 51% when the construction changed drastically and comparison can't be made.

Well, that does rather confuse things - which is why I prefer to quote income per unit, so that comparison can be made on a level playing field, hopefully.

Even so, if you take my dividend income including re-investment, the increase is only around 7%. I've put more capital in which probably accounts for most of that increase in dividends - so the underlying increase has been essentially zero.
It could be that more mature HYPs collect more dead wood like BLT or Tesco, but then I've had quite good increases from some companies too.

Do you have a link to your HYP components?

Arb.

[JMN2]

...

Do you have a link to your HYP components?

Arb.

No but: AZN
BA
BATS
BLND
BLT
CLLN
CNA
DCG
GFRD
GSK
HSBA
IMB
LGEN
MARS
MKS
NG
PSON
RDSB
SBRY
SGRO
SSE
TATE
ULVR
UU
VOD

[SalvorHardin]

Question: how do people achieve such racey increases in dividends?

It's primarily because the fall in sterling against the Euro and the US Dollar has increased the value of foreign currency dividends. A good example is Unilever, whose dividend is declared in Euros, where there has been a dramatic increase.

Unilever's most recent four dividends (i.e. one year's worth, 2015Q4 to 2016Q3) total 104.35p

In contrast the previous set of four dividends (2014Q4 to 2015Q3) come to 87.26p

That's an increase of 19.6%, in line with the fall in Sterling against the Euro.

There are other HYP shares where the currency effects would be similarly strong (e.g. BP and Shell, whose dividends are in US dollars).

[Arborbridge]

SalvorHardin:
Well, those shares are common in many HYPs including my own. The effect is diluted unless you happen to have invested almost entirely in those shares. If people are getting outsized increases due to that, then they are probably not running a balanced portfolio - or have been skillful/lucky enough to get in those shares at the right time.

JMN
Nothing unusual about your HYP compared with mine - you even have BLT as I do. I does not look radically different, although the distribution may be.

I've just noticed that the income per share from my ITs baskets is down compared with 2015, so a neutral or a small increase/decrease looks about right for a HYP. A mature HYP might be expected to be somewhat like a mature income IT.


Arb.

[funduffer]

I've just noticed that the income per share from my ITs baskets is down compared with 2015, so a neutral or a small increase/decrease looks about right for a HYP. A mature HYP might be expected to be somewhat like a mature income IT.

My HYP shows an increase in income per unit of 4.9% for 2016, which I am happy with, as inflation is lower than this. (Actual income is up 9.4%, because I have added some new money and reinvested most dividends).

Pluses: GSK special, exchange rate conversions (ULVR, HSBA, RDSB)
Minuses: BLT, AMFW dividend cuts and a few that stayed flat.

Without the pound devaluation I think I would have been flat or negative overall.

I'll do my full HYP review on it's 3rd anniversary in Feb 2017.

FD

[tjh290633]

Question: how do people achieve such racey increases in dividends?

Bree's 6% odd is excellent and reasonable, but increases of the order of 11%-12% seem astonishing. Looking down a list of typical HYP shares, such an increase must show a great knack or luck at the investment game.

Arb.

I don't know the answer, Arb, but with 6 dividends to declare, my total for 16-17 is currently 10.2% above 15-16, excluding special dividends.

Looking at the changes in the portfolio this year, I think that I can attribute the increase to an injection of capital, the departure of Rexam and Premier Farnell and the introduction of Carillion, Rio Tinto and Legal and General, plus judicious topping up from accumulated dividends. Looking at the unitised version, my Income unit dividend is down -11.7% on 15-16, itself down -9.2% on 14-15, but the actual cash received has risen in both years. The number of units is up by about 9% so far, which has to be taken into account.

TJH

[Arborbridge]

TJH wrote:

Looking at the unitised version, my Income unit dividend is down -11.7% on 15-16, itself down -9.2% on 14-15, but the actual cash received has risen in both years.

Well, that's quite interesting as it seems to be nearer to my experience, perhaps even worse. So for a mature HYP (I'll count mine as mature, too) well diversified, it looks as though a rising dividend per unit in 2016 may not have been so easy to achieve. Those who happened to be unbalanced with excesses in oil etc, might have achieved slightly more. Those who added capital but haven't unitised are not comparing on the same basis and can be excluded for this purpose.

Funduffer: an interesting question as to whether to include special or not since this can make quite a difference. In the past I've usually been careful to exclude all such distortions (and returns of capital, of course) with the exception of Admiral where specials are a regular phenomenon.


Arb.

[tramrider]

Question: how do people achieve such racey increases in dividends?

Bree's 6% odd is excellent and reasonable, but increases of the order of 11%-12% seem astonishing. Looking down a list of typical HYP shares, such an increase must show a great knack or luck at the investment game.

OK, sour grapes here, because it looks as though my income per unit may have barely increased at all, and may even have declined My result is as yet unaudited, so I'm hoping to find some errors on the right side!

My total dividend income has increased, but that's not the same as income per unit, naturally.

Arb.

In my SIPP, the dividends per unit have increased by 8.8% in this calendar year. Amongst the general shares, the risers such as Kier have exceeded the cutters such as AMFW. Glaxo gave a special in April. But the main benefit has come from the dollar dividend shares, such as HSBA, RDSB, as the currency exchange rate has improved by about 17%, providing a similar boost in the dividends received. When/if the dollar rate goes back, then they will look like cutters, through no fault of their own.

Tramrider

[tjh290633]

One point, I exclude special dividends from my figures of dividend per unit.

TJH

[funduffer]

Funduffer: an interesting question as to whether to include special or not since this can make quite a difference. In the past I've usually been careful to exclude all such distortions (and returns of capital, of course) with the exception of Admiral where specials are a regular phenomenon.
.

If I leave out the GSK special, I end up at -1% income per unit for 2016, which is more in line with yourself and TJH I guess.

If the exchange rate flips the other way next year, we could be in trouble.

FD

[MDW1954]

JMN2,

Did you ever see my reply to you, here:

viewtopic.php?f=27&t=227

MDW1954

(Apologies for going off-topic, but I'm quite keen to follow this topic up, and it's been several weeks!)

[JMN2]

JMN2,

Did you ever see my reply to you, here:

viewtopic.php?f=27&t=227

MDW1954

(Apologies for going off-topic, but I'm quite keen to follow this topic up, and it's been several weeks!)

I did see but assumed your comment was directed at that other fella as he posted before you and mentioned he had some code available.

[Dod1010]

Were it not for the exchange rate I doubt that many would be seeing very big increases in dividend between 2015 and 2016. I can look at stalwarts like the utilities, in my case SSE and National Grid. Very modest increases. Phoenix and Chesnara, both produced good yields but only a very modest increase by Chesnara. In the case of Phoenix the dividend was held. Glaxo dividend held but for the special.

Imperial Brands and Legal & General were the exception to the trend, both with big increases but they were few and far between and of course we lost Amlin last year. I think I have a modest increase in dividends overall but by very little and only because of the exchange rate effect on Shell, HSBC and Unilever. Shell held its dividend in US Dollars, HSBC had a very modest increase and Unilever was fine.

So Arb, I doubt that you are alone in looking at modest increases and I doubt the substantial increases quoted, except by reinvesting dividends or adding dollops of new cash. My only sale this year was Cobham and that was after it cut its dividend paid in the Autumn.

[Breelander]

... I doubt the substantial increases quoted, except by reinvesting dividends or adding dollops of new cash...

My increased dividend had nothing to do with re/new investments (no activity at all this year). I did include 'specials' though, on the principle that I only exclude 'specials' if they are truly a 'return of capital' that's accompanied by a share consolidation - none of mine were this year.

Surprisingly, my more significant increased dividends were not from the dollar-denominated dividend-payers (though they were near the top of my my 'done well' list). No, the top two contributors to my increased dividends were recovering 'Financials', RSA and Lloyds in that order.

This calendar year RSA paid me 118% more than in 2015. Lloyds was up 57% on calendar year 2015 - and that's before including the Lloyds 'special', it's 90% if you include that. Dollar/euro payers were 'only' up in the low 'teens'.

[Dod1010]

Having had years of nothing from Lloyds, I guess it is about time that you got some reward so good for you. But for these particular recovery shares, I think on the whole that my comments would still stand though. I do not think many of the established HYP shares (and really at least Lloyds and probably RSA as well do not qualify as HYP shares) have done much this year, except for the exchange rate.

I will be looking in detail ayt my portfolio tomorrow but I doubt that I will be doing much with it.

[Breelander]

I do not think many of the established HYP shares ... have done much this year, except for the exchange rate.

And there I'd agree with you, it's the point I wanted to get across this year. Measured in euros the ftse100 has done little or nothing this year. It's the same index, the same constituents, and with the same weightings - it's down 2.4% on the year.

Friday, December 30, 2016 6,494.40
Wednesday, December 30, 2015 6,652.60

http://markets.ft.com/data/indices/tear ... ?s=UKX:FSI

[Dod1010]

Bree

Surely you are mixing commentary on capital with commentary on income/dividends? I appreciate that the one usually reflects the other and maybe that is the point. But you have made an interesting point nevertheless and I expect my capital will show much the same; that this has not been a very good year for capital growth or income, except because of the depreciated pound. At least it shows the value of an internationally exposed portfolio, and those people relying on UK pensions are about to be hit unless of course they have inflation protection built in to their pension.

[Arborbridge]

On the basis of money in the bank and actual payment dates the gross dividend/unit for 2016 was 5.957p

Bree,

I assume your income per unit is calculated on the (total cash received in 12 months/current number of units)?

I've just noticed a distortion in that I had a buying splurge towards the end of this year, so my units have increased with few dividends being paid from them. This will drag down the inc per unit, naturally. In tandem, I calculate the income using descrete quarters which when totalled are quite different to the annual figure. That's only to be expected, but this year the difference is quite large - difference turns "growth" into "negative growth".

Arb.

[Breelander]

Surely you are mixing commentary on capital with commentary on income/dividends? I appreciate that the one usually reflects the other and maybe that is the point. But you have made an interesting point nevertheless and I expect my capital will show much the same; that this has not been a very good year for capital growth or income, except because of the depreciated pound. At least it shows the value of an internationally exposed portfolio...

Capital and earnings are two sides of the same coin IMHO - market cap reflecting the market's opinion of the value of future earnings, be they retained for growth or distributed as dividends. Both show the same response to exchange rates. It's a fortunate 'hedge' that much of the ftse100 is international in nature.

I assume your income per unit is calculated on the (total cash received in 12 months/current number of units)?
I've just noticed a distortion in that I had a buying splurge towards the end of this year...

Yes, "the gross dividend/unit for 2016 was 5.957p" - that's actual cash received / number of units (which were unchanged this year).