My Jan 17 addition

[idpickering]

Good afternoon all,

I mentioned recently that I was looking at bringing Admiral Group on board (excuse pun) my HYP. I'm looking at buying over two months, Jan and Feb, whereupon it would form about 2% of the HYP whole in capital terms. I'm attracted by the 6.6% yield, and lowering of it's SP, and the further diversification it brings. Current state of play is like this;

Stock                        Yield            
                                                                           
AstraZeneca                  5.1%                  
BAE Systems                  3.7%                
BP.                          7.4%                
BT Group                     4.3%                
British American Tobacco     4.2%                
British Land                 5.0%                
Carillion                    7.7%                
Centrica                     6.2%               
Diageo                       3.2%                
GlaxoSmithKline              5.2%               
HSBC                         6.2%                
Imperial Brands              5.0%                
Legal & General              6.6%               
National Grid                4.2%              
Provident Finance            5.2%               
Rio Tinto                    3.0%                
Shell                        7.3%                
Royal Mail                   4.6%                
SSE                          6.1%                
Sainsbury                    4.3%                                          
Tate & Lyle                  4.2%                                          
Taylor Wimpey                9.4%                                          
Unilever                     3.6%                                          
Vodafone                     6.3%         

 Sector                     Weighting                                                                                     
Oil & gas                    12%  
Tobacco                      9.9% 
Pharmas                      8.7%
Utilities                    7.2%
Banks                        6.4% 
Life insurance               5.9%
Food producers               5.5%
Aero & defence               5.4%  
Household goods              4.5%
General finance              4.5%  
 Mobile tels                 4.4%   
Fixed tels                   4.0% 
Mining                       3.7% 
Support                      3.4% 
Food retail                  3.4%
Ind transport                3.2%
Electricity                  3.0% 
Real estate                  2.6%  
Beverages                    2.2%

Comments welcome,

Ian.

[OLTB]

Hi Ian

I've just checked the Dividend Data site and it looks like the dividend yield you state may be down to specials and that the yield without specials is 3.85% http://www.dividenddata.co.uk/dividend- ... or=finance

Cheers, OLTB.

[the0ni0nking]

Worth noting that the Admiral dividend over the past year has consisted of 3 elements:

At the recent interim stage:
36.8 pence per share normal dividend;
4.2 pence per share special dividend;
11.9 pence per share further additional return of capital, representing an element of surplus capital not required for solvency

At the previous finals:
33.6 pence per share representing a normal element, based on the updated dividend policy of distributing 65% of post-tax profits;
17.9 pence per share special element;
11.9 per share additional return of capital, representing an element of surplus capital not required for solvency

When you go back into the 2015 and 2014 numbers, the special element remains but the surplus capital does not so there is a nice (recent) history of the special dividend so I think it is understandable to include that in any dividend yield calculation. However, the surplus capital one is more one-off in nature as it relates to changes in solvency requirements under Solvency II.

So I think trailing yield at the current £18.30 share price is more like (36.8+4.2+33.6+17.9) = 92.5p/£18.30 = 5.05%. Still not to be sniffed at but not as high as the 6.6% you reference?

cheers,
0inK

[idpickering]

Hi Ian

I've just checked the Dividend Data site and it looks like the dividend yield you state may be down to specials and that the yield without specials is 3.85% http://www.dividenddata.co.uk/dividend- ... or=finance

Cheers, OLTB.

Thanks for your post OLTB. I checked that too. It seems that's the way this firm does things. Maybe other holders could shed some light on this aspect. My original intent was to top up my AZN holdings but their SP is rising of late and I like a bargain.

Regards,

Ian

[idpickering]

Worth noting that the Admiral dividend over the past year has consisted of 3 elements:

At the recent interim stage:
36.8 pence per share normal dividend;
4.2 pence per share special dividend;
11.9 pence per share further additional return of capital, representing an element of surplus capital not required for solvency

At the previous finals:
33.6 pence per share representing a normal element, based on the updated dividend policy of distributing 65% of post-tax profits;
17.9 pence per share special element;
11.9 per share additional return of capital, representing an element of surplus capital not required for solvency

When you go back into the 2015 and 2014 numbers, the special element remains but the surplus capital does not so there is a nice (recent) history of the special dividend so I think it is understandable to include that in any dividend yield calculation. However, the surplus capital one is more one-off in nature as it relates to changes in solvency requirements under Solvency II.

So I think trailing yield at the current £18.30 share price is more like (36.8+4.2+33.6+17.9) = 92.5p/£18.30 = 5.05%. Still not to be sniffed at but not as high as the 6.6% you reference?

cheers,
0inK

Likewise, thank you 0ink. It's not set in stone and my fall back option of AZN is there. However, as you say, 5.05% is not to be sniffed at.

Regards,

Ian.

[idpickering]

Worth noting that the Admiral dividend over the past year has consisted of 3 elements:

At the recent interim stage:
36.8 pence per share normal dividend;
4.2 pence per share special dividend;
11.9 pence per share further additional return of capital, representing an element of surplus capital not required for solvency

At the previous finals:
33.6 pence per share representing a normal element, based on the updated dividend policy of distributing 65% of post-tax profits;
17.9 pence per share special element;
11.9 per share additional return of capital, representing an element of surplus capital not required for solvency

When you go back into the 2015 and 2014 numbers, the special element remains but the surplus capital does not so there is a nice (recent) history of the special dividend so I think it is understandable to include that in any dividend yield calculation. However, the surplus capital one is more one-off in nature as it relates to changes in solvency requirements under Solvency II.

So I think trailing yield at the current £18.30 share price is more like (36.8+4.2+33.6+17.9) = 92.5p/£18.30 = 5.05%. Still not to be sniffed at but not as high as the 6.6% you reference?

cheers,
0inK

Likewise, thank you 0ink. It's not set in stone and my fall back option of AZN is there. However, as you say, 5.05% is not to be sniffed at.

Regards,

Ian.

Sorry, I should disclose my source of that 6.6% yield. THat was from digitallook.

Ian.

[Raptor]

Ian,

I picked up Admiral over the last few years.

Firstly in April 2014, then May 2016, with an inheritance added in Dec 2015. It is one my larger holdings, over 8% of my total and 9%of my dividend income. No chance of me topping it up at the moment.

I have been happy with the income, but you need to factor in the way they pay the dividends and decide if that is likely to continue.

Raptor.

[idpickering]

Ian,

I picked up Admiral over the last few years.

Firstly in April 2014, then May 2016, with an inheritance added in Dec 2015. It is one my larger holdings, over 8% of my total and 9%of my dividend income. No chance of me topping it up at the moment.

I have been happy with the income, but you need to factor in the way they pay the dividends and decide if that is likely to continue.

Raptor.

Thanks for your input Raptor, and your words of caution. I'm comfortable with this aspect, certainly with regards to the fact that they will be one of twenty five different holdings.

Regards,

Ian

[Gengulphus]

It's clear to me that ordinary dividends should be counted as part of the dividend income a HYPer is expecting in the future, and most special dividends should not - in both cases those expectations may turn out to be wrong, but usually don't. But what I call 'not so specials' - i.e. dividends that the company appears to routinely pay but labels as 'special' dividends - are not so clear, and Admiral's 'special' dividends are a prime example... I really don't have a clear answer about whether to count them or not.

What I will say is to be consistent: make the same decisions about whether to count them when determining the company's dividend yield and when looking at its dividend safety. For quite a few years, for example, Admiral's ordinary dividend was a bit under half its earnings and its 'not so special' dividend was about the same amount again. Count both and you saw a very high yield with cover only just over 1; count just the ordinary and you saw an averagish yield with cover over 2. Be careless about consistency, and you saw a very high yield with cover over 2 - and that was definitely too rose-tinted a view of its dividend income!

Gengulphus

[idpickering]

It's clear to me that ordinary dividends should be counted as part of the dividend income a HYPer is expecting in the future, and most special dividends should not - in both cases those expectations may turn out to be wrong, but usually don't. But what I call 'not so specials' - i.e. dividends that the company appears to routinely pay but labels as 'special' dividends - are not so clear, and Admiral's 'special' dividends are a prime example... I really don't have a clear answer about whether to count them or not.

What I will say is to be consistent: make the same decisions about whether to count them when determining the company's dividend yield and when looking at its dividend safety. For quite a few years, for example, Admiral's ordinary dividend was a bit under half its earnings and its 'not so special' dividend was about the same amount again. Count both and you saw a very high yield with cover only just over 1; count just the ordinary and you saw an averagish yield with cover over 2. Be careless about consistency, and you saw a very high yield with cover over 2 - and that was definitely too rose-tinted a view of its dividend income!

Gengulphus

Sound advice as usual Gengulphus. Thank you.

[idpickering]

So, on returning to this thread, I'm just confirming that on 20 Jan 17 my first dollop of Admiral Group will be bought. As it stands right now, that'll be followed up with the second batch in Feb 17. To be confirmed nearer the time, but thereafter my plan is to top up Carillion in Mar, Centrica in Apr, then bring a newbie on board, that being United Utilities, that being bought over May and June. All this being if an opportunity elsewhere doesn't raise it's head.

Regards,

Ian.

[idpickering]

So, on returning to this thread, I'm just confirming that on 20 Jan 17 my first dollop of Admiral Group will be bought. As it stands right now, that'll be followed up with the second batch in Feb 17. To be confirmed nearer the time, but thereafter my plan is to top up Carillion in Mar, Centrica in Apr, then bring a newbie on board, that being United Utilities, that being bought over May and June. All this being if an opportunity elsewhere doesn't raise it's head.

Regards,

Ian.

By the way, no-one commented on my typo in the title of this thread. I meant "My Jan 17 Addition" of course. Maybe our mods can rename it?

Ian.

[idpickering]

So, on returning to this thread, I'm just confirming that on 20 Jan 17 my first dollop of Admiral Group will be bought. As it stands right now, that'll be followed up with the second batch in Feb 17. To be confirmed nearer the time, but thereafter my plan is to top up Carillion in Mar, Centrica in Apr, then bring a newbie on board, that being United Utilities, that being bought over May and June. All this being if an opportunity elsewhere doesn't raise it's head.

Regards,

Ian.

By the way, no-one commented on my typo in the title of this thread. I meant "My Jan 17 Addition" of course. Maybe our mods can rename it?

Ian.

Talking to myself now! . I mentioned in another thread maybe bring GNK on board to sit alongside my DGE holdings. I do like that idea, then maybe the HYP is done. That'd be 27 shares and 21 sectors. Nice.

Ian.

[Raptor]

Available to anyone to change the topic of the post... Useful on some posts, IMHO.

Raptor.

[idpickering]

Available to anyone to change the topic of the post... Useful on some posts, IMHO.

Raptor.

Thanks for your input Raptor.

Ian.

[Instep]

Available to anyone to change the topic of the post... Useful on some posts, IMHO.

But it only changes on the other poster's reply
EDIT: Sorry, it does apply to subsequent posts, bit not the original topic in the board list.
Instep

[Raptor]

There we are Ian. Main subject altered for you and all subsequent ones will follow my lead.....

Raptor.

[idpickering]

There we are Ian. Main subject altered for you and all subsequent ones will follow my lead.....

Raptor.

Excellent. Thank you Raptor. I shall be more careful in the future.

Ian.

[AJC5001]

There we are Ian. Main subject altered for you and all subsequent ones will follow my lead.....

Raptor.

Only seems to apply to new posts. Those that were replies to the original subject are still Re: My Jan 07 addition.

Adrian

[Raptor]

There we are Ian. Main subject altered for you and all subsequent ones will follow my lead.....

Raptor.

Only seems to apply to new posts. Those that were replies to the original subject are still Re: My Jan 07 addition.

Adrian

Sorry I have a life outsife of TFL, so not going to edit every post.

Raptor