Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Do you ever sell HYP low yielders?

For discussion of the practicalities of setting up and operating income-portfolios which follow the HYP Group Guidelines. READ Guidelines before posting
Forum rules
Tight HYP discussions only please - OT please discuss in strategies
Breelander
Lemon Quarter
Posts: 4179
Joined: November 4th, 2016, 9:42 pm
Has thanked: 1000 times
Been thanked: 1855 times

Re: Do you ever sell HYP low yielders?

#21656

Postby Breelander » January 9th, 2017, 7:10 pm

DiamondEcho wrote:
Breelander wrote:For me that was 11th March 2011. Bought ULVR on a historic yield of 3.9% at a time the Ftse All Share was yielding 3%.

Does the model HYP sift the All-share? I thought it had a base-line requirement for Market Captln? That [last time I checked] included the FTSE-100, and a short way into the top of the '250'.


No, but like the index itself, the dividend yield of the FTAS as calculated by the FT Actuaries is market cap. weighted - predominately it's the dividends from the 'big players'. The FTAS yield was always Luni's benchmark for defining 'zones' et. al.

HY? Higher than what? What benchmark do you use?

77ss
Lemon Quarter
Posts: 1271
Joined: November 4th, 2016, 10:42 am
Has thanked: 233 times
Been thanked: 414 times

Re: Do you ever sell HYP low yielders?

#21662

Postby 77ss » January 9th, 2017, 7:20 pm

DiamondEcho wrote:re: ULVR
77ss wrote: Never the highest of yields, but it has a place in my HYP. I have held it for 6 years now, and it is delivering an XIRR of 13.72%. I regard this as an acceptable outcome.


But future XIRR% post-purchase is not a criteria for a HYP purchase. I'm glad it's worked out for you; but I still find it a bit hard to understand how some HYPers are wedded to ULVR, even when at purchase it isn't a HYP stock. I wonder when it last qualified per the HYP sift-metrics? I'm not having a pop, pls don't think that, but I do sense some HYPers can make an exception for ULVR and it's not altogether clear to me the basis for that.


Fair question. Not sure what you mean by 'HYP sift-metrics', but I use my own criteria anyway. One of which is 'perceived solidity'. I also consider the overall yield of my portfolio as well as the yield of each and every constituent.

Like other responders, I first bought ULVR back in 2011, when it was offering 3.7% (historic). There are a few stocks that I would like to hold in my portfolio for 'solidity' reasons rather than for any particularly high yield; I just have to be patient and wait for the market to offer a reasonable entry point. As I did for RB (since sold entirely - when the yield fell below 2%), ULVR (getting close to top-slice point) and DGE (a recent purchase - once the prospective yield rose above 3%).

Right? Wrong? Who knows? Not a purist HYP approach perhaps, but I'm just answering your question.

DiamondEcho
Lemon Quarter
Posts: 3131
Joined: November 4th, 2016, 3:39 pm
Has thanked: 3060 times
Been thanked: 554 times

Re: Do you ever sell HYP low yielders?

#21672

Postby DiamondEcho » January 9th, 2017, 7:59 pm

Arborbridge wrote: How odd. I thought HYP was a question of buying and holding, and holding, and holding. The original description was full of ideas about self healing etc, nothing about selling ASAP on a cut.
The default for HYP is buying and leaving alone thereafter: you (and most of us) are running a variant. So although you are perfectly entitled to tinker in that way, you should imply that people who prefer to play by the original guidelines are not running a HYP but a "waiting room". I'd say, try telling that to Stephen Bland. Arb.


Odd indeed. Perhaps you weren't around when bright stars Marconi [in a UK HYP] or Enron [and several more 'ideal candidates' in a US one/late 90s, where the HYP strategy originated] incinerated all in the vicinity. I'm sure there are other former 'stalwarts' perhaps among the UK banks. 'Self-healing' is not how they worked out. Would you have held those all the way down into bankruptcy? There were HYPers [I shan't name] who did, and gave a running commentary, they never ever gave up hope on their way down - quite something, a faith, to behold.

No Stephen Bland's HYP criteria IIRC don't address dealing with stocks that are no longer eligible. IIRC it only deals with top-slicing winners. But then it was a strategy borne from the late 90's when all were sure-winners, and having a failing stock was effectively un-imagined. That was an era before ready access to stock data, even home internet, no wonder it assumed a hands off approach. I'm not sure if following an arguably idealist strategy from that time, without any broader considerations, works for me in the current era.

DiamondEcho
Lemon Quarter
Posts: 3131
Joined: November 4th, 2016, 3:39 pm
Has thanked: 3060 times
Been thanked: 554 times

Re: Do you ever sell HYP low yielders?

#21678

Postby DiamondEcho » January 9th, 2017, 8:06 pm

77ss wrote:
DiamondEcho wrote:re: ULVR
77ss wrote: Never the highest of yields, but it has a place in my HYP. I have held it for 6 years now, and it is delivering an XIRR of 13.72%. I regard this as an acceptable outcome.


But future XIRR% post-purchase is not a criteria for a HYP purchase. I'm glad it's worked out for you; but I still find it a bit hard to understand how some HYPers are wedded to ULVR, even when at purchase it isn't a HYP stock. I wonder when it last qualified per the HYP sift-metrics? I'm not having a pop, pls don't think that, but I do sense some HYPers can make an exception for ULVR and it's not altogether clear to me the basis for that.


Fair question. Not sure what you mean by 'HYP sift-metrics', but I use my own criteria anyway. One of which is 'perceived solidity'. I also consider the overall yield of my portfolio as well as the yield of each and every constituent....


The 'sift-matrics'? That was the original criteria/thresholds a stock needed to surpass to be eligible for consideration for inclusion in a HYP.
A rough idea might be mirrored in this ancient file-note I have: Per 'HYP-52443' [post number], apparently.
Cost not to exceed 5% of the total portfolio cost;
Income contribution not to exceed 5% of the total portfolio income;
Weight after top-up not to exceed 1.5 times the median holding weight.
FTSE-100 AVG = 4.6% [at the time of file-note]
[For new share pick] Take top three highest yielding share in each sector, and sift via these criteria
Prospective yield >= 4%
Prospective P/E <= 10
Market cap >= 500m'
dividend cover >= 1.2+


Them were the rules :)

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: Do you ever sell HYP low yielders?

#21681

Postby Arborbridge » January 9th, 2017, 8:26 pm

Then it seems, Mr Echo, you would be happier contributing to another board, since this one clearly does not suit you.
I don't know if Marconi or Enron would ever have been HYP candidates, but even if they were, they would presumably be only a small part of a large portfolio. We've all had bloomers, but my HYP marches on thanks to the portfolio effect.

I seem to remember previously, that you are not a HYPer. Let's hope you are not a snYPer 8-)

Moderator Message:
Gentlemen, let's not get acrimonious

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: Do you ever sell HYP low yielders?

#21682

Postby Arborbridge » January 9th, 2017, 8:31 pm

Them were the rules :)


I don't recall seeing anything like that and I've read all of Stephen Blands original articles. Maybe I missed one; but it seems unlikely that he would have written "Take top three highest yielding share in each sector, and sift via these criteria ".

Arb.

Moderator Message:
Although I cannot find anything definitive on what the rules were there was a long running Market cap above £1000m, rising divi over 5 years and yield above FTSE100. However, there is, as far as I know, no "set in concrete" what a HYP share is. Each to his or her own and discussion on each persons criteria is welcome. No more sniping please. Raptor.

kempiejon
Lemon Quarter
Posts: 3488
Joined: November 5th, 2016, 10:30 am
Has thanked: 1 time
Been thanked: 1145 times

Re: Do you ever sell HYP low yielders?

#21685

Postby kempiejon » January 9th, 2017, 8:34 pm

I have said before (on TMF) that to my view people (and this isn't intended as a dig at DE or others, just my view) who use yield as purchase and sell signals are running a (slow) trading strategy, perhaps a value strategy using yield as an indicator, as a strategy if that works fairy nuff. The strategy as I first understood it is a buy once income strategy, modifications like I have made to include monthly buys rather than the one hit still use yield as a buy only indicator. Those smarter or luckier than me can move in and out of shares for ever increasing capital profit are welcome to, I'm not sure I have that ability so I stick with buying for income and that appears to work for me. There are obviously variations on that HYP theme that developed like tinkering away cutters, top slicing and danger zones. How this relates to ULVR? well I bought in that above average yield window in 2009, that gave me I think 3.3% historic and more on forecast, actual was 4.15% on cost over the next 12 months. My income from them has been increasing my income ever since so I'm more than happy with that.

Dod1010
Lemon Quarter
Posts: 1058
Joined: November 4th, 2016, 10:18 am
Has thanked: 19 times
Been thanked: 164 times

Re: Do you ever sell HYP low yielders?

#21695

Postby Dod1010 » January 9th, 2017, 9:34 pm

Arb

I think you are being a little disingenuous. You know very well that many if not most on these Boards will tinker, and that includes selling a cutter. This has been discussed many times. Only true disciples will never ever sell.

As to Unilever, whilst I would not buy today for a HYP, I have held it for more than 20 years and have not bought or sold any in that time. It has a place by special invitation in my HYP and will stay there.

Dod

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: Do you ever sell HYP low yielders?

#21706

Postby Arborbridge » January 9th, 2017, 10:20 pm

Moderator Message:
Removed comments as everyone has their opinions. Personal attacks are not allowed. Raptor.

tjh290633
Lemon Half
Posts: 8209
Joined: November 4th, 2016, 11:20 am
Has thanked: 913 times
Been thanked: 4097 times

Re: Do you ever sell HYP low yielders?

#21713

Postby tjh290633 » January 9th, 2017, 10:58 pm

I don't know if Marconi or Enron would ever have been HYP candidates, but even if they were, they would presumably be only a small part of a large portfolio. We've all had bloomers, but my HYP marches on thanks to the portfolio effect.


Arb, you forget that Marconi was once GEC, where there was a vast horde of cash, waiting for Arnold Weinstock to buy something. I bought in 1992 at 272p, with a yield of 3.4%. I see that I trimmed back twice, in 1999 after the change to Marconi and the split off of BAE Systems, at 979p and again in 2000 at 1183p, and then the tower came tumbling down and I escaped at 22p in 2002. The dividend peaked at about 13p in 1997.

You can't always expect crooks to get in charge of the company.

TJH

Gengulphus
Lemon Quarter
Posts: 4255
Joined: November 4th, 2016, 1:17 am
Been thanked: 2628 times

Re: Do you ever sell HYP low yielders?

#21740

Postby Gengulphus » January 10th, 2017, 2:04 am

DiamondEcho wrote:The 'sift-matrics'? That was the original criteria/thresholds a stock needed to surpass to be eligible for consideration for inclusion in a HYP.
A rough idea might be mirrored in this ancient file-note I have: Per 'HYP-52443' [post number], apparently.
Cost not to exceed 5% of the total portfolio cost;
Income contribution not to exceed 5% of the total portfolio income;
Weight after top-up not to exceed 1.5 times the median holding weight.
FTSE-100 AVG = 4.6% [at the time of file-note]
[For new share pick] Take top three highest yielding share in each sector, and sift via these criteria
Prospective yield >= 4%
Prospective P/E <= 10
Market cap >= 500m'
dividend cover >= 1.2+

The reference to 'HYP-52443' looks as though it means http://boards.fool.co.uk/added-to-tate-13090776.aspx, and the first three lines are a verbatim copy of part of that TMF post. The fourth line looks like information you added from some data source, rather than being any sort of 'sift-metric'.

I haven't tracked down the rest, but I'm not going to bother trying: there's enough there to say that at best, it's the original criteria/thresholds a stock needed to surpass to be eligible for consideration for inclusion in tjh290633's HYP, and I suspect much more likely some sort of combination of his criteria and one or more other people's (tjh290633 is strongly in favour of using historical data, so the use of "prospective" in the part I haven't tracked down doesn't look like him). They're not the corresponding criteria for anyone else's HYP, except by coincidence or because someone is deliberately copying tjh290633. In particular, they're not the corresponding criteria for HYP1 - a fully-invested portfolio cannot satisfy the "Cost not to exceed 5% of the total portfolio cost" criterion without containing at least 100%/5% = 20 holdings, and HYP1 is a fully-invested 15-holding portfolio... (Furthermore, we do have an article that gives at least some of its original construction criteria - see http://news.fool.co.uk//news/foolseyeview/2000/fev001113c.htm.)

DiamondEcho wrote:Them were the rules :)

Correction: Them were somebody's rules - at best!

Gengulphus

Gengulphus
Lemon Quarter
Posts: 4255
Joined: November 4th, 2016, 1:17 am
Been thanked: 2628 times

Re: Do you ever sell HYP low yielders?

#21742

Postby Gengulphus » January 10th, 2017, 2:26 am

kempiejon wrote:I have said before (on TMF) that to my view people (and this isn't intended as a dig at DE or others, just my view) who use yield as purchase and sell signals are running a (slow) trading strategy, ...

Yes, that's a way of looking at it - but so are those who only use yield as a purchase signal, with sells only signalled by someone mounting a successful takeover bid. For example, HYP1 has so far had to trade away six of its original fifteen holdings (and has chosen to trade away a seventh to avoid being left holding a foreign share by a takeover).

Basically, it isn't possible to invest in shares without running a slow trading strategy, because you can be forced to sell by takeovers if nothing else. So the real issue is how slow... The answer on TMF was slow enough to make the average holding period "several years to decades": essentially, the "several years" lower end of that is to avoid making realised capital gains or losses a clearly more significant part of the returns than the dividends, which would be incompatible with it being an income-oriented strategy, and the "decades" upper end is a very rough estimate of the minimum trading rate imposed by takeovers.

Not saying that TMF answer is the only one or the best one - but I haven't yet seen anything better.

Gengulphus

Minesadouble
2 Lemon pips
Posts: 148
Joined: November 4th, 2016, 10:20 am
Has thanked: 13 times
Been thanked: 13 times

Re: Do you ever sell HYP low yielders?

#21756

Postby Minesadouble » January 10th, 2017, 7:15 am

Minesadouble wrote:That seems an eminently sensible way forward and I had reached the same conclusion.

Monday will see me 'top slice' REL and CPG and redeploy resulting funds into VOD, SSE, IMB and HSBA.

Thanks everyone for responding.


Just to update this, all executed yesterday, as I indicated above.
Compass and RELX downweighted/top sliced and now represent 2.2% and 2.1% of my portfolio.
Imperial up to 4.1%, SSE 4.2%, Vodafone 4.9% and HSBC 5.0%.
In my HYP, my only outlier (<5%) is RDSB which sits at 7.1%, but I'm comfortable managing this down by considering this position, as well as around eight or nine others, as 'closed' and topping up other shares.
Again thanks to those who responded.
This redeployment provides a fairly significant boost to my overall Dividend stream.

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: Do you ever sell HYP low yielders?

#21757

Postby Arborbridge » January 10th, 2017, 7:18 am

Arb, you forget that Marconi was once GEC,
You can't always expect crooks to get in charge of the company. TJH


No, I didn't forget. GEC was one of my biggest customers and although Marconi was subsequently, there were so many changes that it became very difficult.

However, you and I agree that DE's point is hardly valid, because his idea depends on a) those companies being HYPable in the first place b) and ended up being ruined by crooks or idiots, which thankfully effects only a tiny minority of HYP companies. He's forgotten that HYPers do not put all their eggs in one basket.

Arb.

Dod1010
Lemon Quarter
Posts: 1058
Joined: November 4th, 2016, 10:18 am
Has thanked: 19 times
Been thanked: 164 times

Re: Do you ever sell HYP low yielders?

#21758

Postby Dod1010 » January 10th, 2017, 7:24 am

edited 10/1/17. To remove personal attack. Raptor.

Arborbridge wrote:Dod,
- whereas you have been supportive.

There's a big difference.


Thanks Arb. Yes I am in general totally supportive of the concept of a HYP and should maybe not have jumped in to this discussion without reading the entire thread carefully and then thinking it through. It has a lot of angles.

Whilst here I can think of one low yielder which I did shift out of my HYP and that was BT. This share rests in my Growth portfolio but it is now in HYP territory again. I think I will just leave it and watch.

Dod

DiamondEcho
Lemon Quarter
Posts: 3131
Joined: November 4th, 2016, 3:39 pm
Has thanked: 3060 times
Been thanked: 554 times

Re: Do you ever sell HYP low yielders?

#21771

Postby DiamondEcho » January 10th, 2017, 8:21 am

Something that comes out of this discussion is that it seems we have no published strategy. Hence if a newbie came to the board how might he figure out what to do?

Previous comments up-topic^ about the sift-metrics I noted and are guided by are useful. They are based on Stephen Bland's earliest posts outlining the strategy. But since that goes back to the year 2000 it might be reasonable to consider the given metrics/hurdle-rates as long expired. And that would explain why my notes contain an updated version, quite probably assisted by TJH's linked^ post.

If it's correct that we have no published HYP selection and management strategy, perhaps we could collectively Wiki-Lemon one?

Arborbridge
The full Lemon
Posts: 10371
Joined: November 4th, 2016, 9:33 am
Has thanked: 3601 times
Been thanked: 5227 times

Re: Do you ever sell HYP low yielders?

#21773

Postby Arborbridge » January 10th, 2017, 8:26 am

Whilst here I can think of one low yielder which I did shift out of my HYP and that was BT.


Perhaps you had a moment of impatience as I do occasionally :) But at least you didn't sell it.

The decrease in yield was caused by the price elevating. BT dividends have been proceeding nicely: 13% pa increase over 5yrs. On my holding, I received dividends giving a yield of 3.9% on the 2016 year end value and next year's forecast is 4.4%. Seems a pretty good HYP share to me - there are far worse!


Arb.

idpickering
The full Lemon
Posts: 11276
Joined: November 4th, 2016, 5:04 pm
Has thanked: 2468 times
Been thanked: 5763 times

Re: Do you ever sell HYP low yielders?

#21836

Postby idpickering » January 10th, 2017, 12:18 pm

Arborbridge wrote:
Whilst here I can think of one low yielder which I did shift out of my HYP and that was BT.


Perhaps you had a moment of impatience as I do occasionally :) But at least you didn't sell it.

The decrease in yield was caused by the price elevating. BT dividends have been proceeding nicely: 13% pa increase over 5yrs. On my holding, I received dividends giving a yield of 3.9% on the 2016 year end value and next year's forecast is 4.4%. Seems a pretty good HYP share to me - there are far worse!


Arb.



I agree with you on that Arb. The normal downer I've heard in the past was more bout the pension deficit. According to digitallook they're yielding 4% on a pe of 12, and a cover of 1.9. What's not to like? I topped up twice recently, Oct 16 @ 378p and Nov 16 @ 365p. I would've carried on into Dec 16 with a further purchase but looked elsewhere instead.

Ian.

idpickering
The full Lemon
Posts: 11276
Joined: November 4th, 2016, 5:04 pm
Has thanked: 2468 times
Been thanked: 5763 times

Re: Do you ever sell HYP low yielders?

#21839

Postby idpickering » January 10th, 2017, 12:31 pm

idpickering wrote:
Arborbridge wrote:
Whilst here I can think of one low yielder which I did shift out of my HYP and that was BT.


Perhaps you had a moment of impatience as I do occasionally :) But at least you didn't sell it.

The decrease in yield was caused by the price elevating. BT dividends have been proceeding nicely: 13% pa increase over 5yrs. On my holding, I received dividends giving a yield of 3.9% on the 2016 year end value and next year's forecast is 4.4%. Seems a pretty good HYP share to me - there are far worse!


Arb.



I agree with you on that Arb. The normal downer I've heard in the past was more bout the pension deficit. According to digitallook they're yielding 4% on a pe of 12, and a cover of 1.9. What's not to like? I topped up twice recently, Oct 16 @ 378p and Nov 16 @ 365p. I would've carried on into Dec 16 with a further purchase but looked elsewhere instead.

Ian.


Further to this chat, this item by Stephen Bland covers such things;

To Dabble Or Not

"However, many readers on the HYP discussion board have expressed themselves to be uncomfortable with the idea of a total lack of trading. I see two main situations where trading can be desirable. One is where a share cuts, or maybe even merely holds, its dividend and the other is where it has risen very strongly thus reducing the running yield so that in both cases, a better income could be obtained by selling and reinvesting in a higher yielder if a suitable choice is available -- not always that easy."

http://news.fool.co.uk//valueinvesting/ ... 031212.htm

micrographia
Lemon Pip
Posts: 88
Joined: November 14th, 2016, 3:30 pm
Has thanked: 120 times
Been thanked: 56 times

Re: Do you ever sell HYP low yielders?

#21867

Postby micrographia » January 10th, 2017, 3:04 pm

I'm pretty much with kempiejon on this. Since I buy HYP shares to contribute to portfolio income I see no reason to tinker with them unless that contribution drops. Even then I've only ever sold where there is clearly no prospect of a recovery over a reasonable time frame - an example that springs readily to mind being RBS (as opposed to LLOY, which I kept). If a share began to dominate the income stream I'd think about top-slicing, but as I'm one of those building my HYP over the very long term I have scope to rebalance by continued purchasing and this hasn't happened yet.

I've bought ULVR 3 times over the last 7 years (first April 2009, forecast yield above 5% and last Oct 13 when my records show a forecast yield around 3.8%) when it was a worthwhile candidate in the context of my HYP; it's very big, has a good divi record, was yielding at or above the FTSE average at the time and any "better" candidates would have put my portfolio overweight in another sector. It wouldn't be added to at present - yield too low and sector contribution too high.

In general I think too little consideration is given to portfolio context in some of these discussions about whether share X is/was a good HYP candidate/still worth keeping. For long-term portfolio builders, sometimes the least-worse option is an acceptable one. I'm not one to sit on cash waiting for the perfect portfolio addition to pop up.

Regards, EEM.


Return to “HYP Practical (See Group Guidelines)”

Who is online

Users browsing this forum: No registered users and 11 guests