Next miner?

[Newroad]

Evening, All.

I currently hold RIO. As I cycle through my strategy, my next default pick in the (Basic Materials) sector would have been ANTO (3.08% yield*) but it has suffered a recent dividend cut.

As such, my methodology now suggests GLEN (6.56% yield*) then AAL (5.55% yield*).

Any thoughts on whether there is any compelling reason to override the now default next purchase of GLEN, either from a standalone view of the three stocks and/or diversification from RIO (all other things being equal, I regard diversification as good)?

Regards, Newroad

* source: DividendData

[kempiejon]

I have GLEN, cut a few years back, more than caught up now I also hold BHP in the sector which has also cut the income.
As an alternative view there's the ETF BRWM Blackrock World Resources 5.5% yield. Globally distributed and instant diversification, top 10 holdings include RIO, GLEN, BHP, and ANTO plus a bunch more.

[Newroad]

Thanks, KempieJon.

So, no reason not to simply go with the default GLEN from your point of view - thanks.

Regards, Newroad

[88V8]

So, no reason not to simply go with the default GLEN ...

Not fundamentally if you prefer to hold individual shares, but all the miners are erratic in their divis and BRWM currently on offer at 5.8% yield and a small discount will provide a smoother stream and has beaten the AIC sector return over 1,3,5,10 years.

V8

[Newroad]

Thanks, V8.

Yes, for this part of the portfolio I prefer to hold individual shares - FTSE 100 ideally - FTSE250 if needed.

Regards, Newroad

[kempiejon]

Thanks, KempieJon.

So, no reason not to simply go with the default GLEN from your point of view - thanks.

Regards, Newroad

I like the idea of having a system and sticking to it - otherwise what's the point. I hold GLEN, I prefer 5 years of rising dividends, not necessarily an increase in each of those 5 years but no reductions in the period and hence GLEN is ruled out. Looking back at 10 years GLEN have cut twice so I must have flexed my rules to buy them. Perhaps I took the Xastra merger dividends into account.
I offered the ETF for some of the reasons V8 highlights though for your individual shares only system ETFs would be excluded.

[Newroad]

Thanks, KempieJon.

The decision to hold simply UK equities in this part of the portfolio (as opposed to, say, ETF's) is premised on two things

(1) It's an explicit part of the method, and
(2) It's not tax sheltered - and some ETF's have more complex tax treatments in the UK

https://www.justetf.com/uk/news/passive-investing/how-etfs-are-taxed-in-the-uk.html

Hence, keeping it simple.

On the dividend history, I had a similar intent to filter at the start. However, with Covid driving a train through some dividend histories (reasonable choices, in my opinion) I decided not to be strict on that requirement.

Regards, Newroad

[kempiejon]

On the dividend history, I had a similar intent to filter at the start. However, with Covid driving a train through some dividend histories (reasonable choices, in my opinion) I decided not to be strict on that requirement.

I'm still chewing this over. My HYP, like you plan single shares, is fairly well done, accumulated dividends are re-invested but I've yet to have to make the judgement call to forgive covid stumbles. PHP my last buy had 7 years rising. If hte best pick next time around had a covid stumble I'll cross that bridge.

[tjh290633]

I would stick with your method. It is probably reacting in the right way.

TJH

[John123ab]

I hold shares in Glencore,AA and Rio. I'm moving half of my portfolio to steady div income producing (getting old and need the income stream) and wondering whether I should sell these and just buy BRWM.

Would it produce a more consistent dividend? Certainly easier from an admin perspective but of course I'd then be paying the 1% OCF.

TIA
John

[88V8]

I hold shares in Glencore,AA and Rio. I'm moving half of my portfolio to steady div income producing (getting old and need the income stream) and wondering whether I should sell these and just buy BRWM.
Would it produce a more consistent dividend?

Yes, it would.
And even after the management charge, the yield is pretty decent.

V8

[richfool]

If it's of any help:

BRWM's largest holding is BHP (@ 9.95%) and its second largest holding is: Glencore (@ 7.39%).

BERI's (Blackrock Energy and Resources Trust) largest holding is: Glencore (@ 7.71%) and second largest holding is: BHP (@4.45%)

Per HL:

https://www.hl.co.uk/shares/shares-sear ... rdinary-5p

https://www.hl.co.uk/shares/shares-sear ... rd-gbp0.01

[Itsallaguess]

I hold shares in Glencore,AA and Rio. I'm moving half of my portfolio to steady div income producing (getting old and need the income stream) and wondering whether I should sell these and just buy BRWM.

Would it produce a more consistent dividend?

Certainly easier from an admin perspective but of course I'd then be paying the 1% OCF.

Welcome to the Lemon Fool John.

As someone who's been shifting single-company holdings over to collective income-delivering Investment Trusts for a number of years now, it's been my experience that generally, income-IT's are able to utilise their revenue-reserves over long periods to help stabilise and grow the long-term dividends that they pay out, although I perhaps might expect a little more turbulence than usual with collective income-IT's that operate in such a cyclical commodity-facing area as BRWM does...

Broadly, due to the inherently 'blended' nature of their underlying holdings, income-producing Investment Trusts are likely to yield less than some of the higher-yielding sector-related single-share options, and as you've rightly pointed out, there are also ongoing management costs to bear over what might be a long holding period, but this should of course be weighed against what then becomes an almost completely 'hands-off' income-investment approach, and speaking personally, making that shift is something that I can only say I wish I'd done much sooner...

If you've wanting to directly compare some total-return figures for the options you're looking at, then here's a couple of links that might help with that -

Total-return comparison charts (dividends re-invested) - https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/f/fundsmith-equity-class-i-accumulation/charts

Total-return comparison charts (dividends taken) - https://www2.trustnet.com/Tools/Charting.aspx?typeCode=FLSX6,XO:GLBLGRTH

Note that both of the above links will open with some default entries in the charts, but simply adding a couple of the comparison options that you're wanting to look at and then removing those default entries will then help to clean the charts up to only show your personal options.

If we use the first link above to take a look at the 5-year total-return performance of Glencore, Anglo American, Rio, and Blackrock World Mining, we can see the following comparable performance -





We can see from the 'Cumulative Performance' table above that Blackrock World Mining (BRWM) has out-performed the other three single-share options in three of the five holding periods, although it should be noted, as we can see in the 3-year chart to the above-left, that Glencore has been a stand-out performer over a three-year period, but with Anglo and Rio performing worse than Blackrock over that same three-year period.

If you're keen to do further comparison work, then there's a couple of links below to the Dividend Data site, which can help to provide interesting insights into things like multi-year Dividend History, and also long-term Yield History as well, with all three of your single-share options being available on the FTSE100 links, and with Blackrock World Mining being available via the FTSE250 links on both pages -

Dividend History - https://www.dividenddata.co.uk/ftse-dividend-history.py?market=ftse100

Yield History - https://www.dividenddata.co.uk/dividendyield.py?market=ftse100


Do note that on both of the above links, there are small, easily missed grey arrows to the right of all listed entries, and if this level of investigation is something that might interest you, then those grey-arrow links will help to provide access to these types of useful multi-year charts -

BRWM Dividend History - https://www.dividenddata.co.uk/dividend-history.py?epic=BRWM

BWRM Yield History - https://www.dividenddata.co.uk/dividend-yield.py?epic=BRWM


Hopefully the above helps a little if you're wanting to make some further comparisons of long-term performance between the options that you're looking at.

Cheers,

Itsallaguess

[John123ab]

Thank you for your amazing help. I think on balance it's worth the consolidation especially when I look at the 5 year chart with it's performance being up there. This is a longer term move for me as I move into needing income and some simplification. My only concern is that commodity shares are quite high at the moment and as you say are quite cyclical but as I'm swapping 'like for like' then I guess it doesn't matter so much. I do quite like Glencore though as spent a few years as the son of a miner in the copperbelt Zambia!

[Itsallaguess]

I think on balance it's worth the consolidation especially when I look at the 5 year chart with it's performance being up there.

I would agree, and it was interesting for me when I was compiling the chart-data presented in my earlier post, because the results were really quite similar to a lot of the other sector-consolidation work that I've carried out with my income-portfolio over the years, where the broad long-term performance of various income-oriented Investment Trusts was generally seen to be a good 'middle of the road' option when placed alongside a number of the types of single-share holdings that I was looking to replace.

Clearly, with a large set of blended holdings underpinning a sector-based income-IT like Blackrock World Mining, it's always going to under-perform the best individual performers in those underlying holdings, but as we can see when comparing the long-term BRWM performance with AAL and RIO, it's also the case that it's able to outperform some of the other sector-related single-share options, and is capable of doing so for quite long periods of time in some cases, and that 'middle ground' benefit, alongside a usefully yielding, highly diverse set of sector-related holdings, and an almost completely 'hands-off' subsequent investment-management process is something that can present considerable appeal for those of us that would prefer to move away from the more 'active management' of single-share holdings.

The ability to seek out sector-specific or geographical-focus with these types of collective income-investors is a real benefit, in my view.

Cheers,

Itsallaguess

[John123ab]

Have you done any more consolidation work like this?

[Itsallaguess]

Have you done any more consolidation work like this?

I initially held a large number of UK-market (FTSE100 / FTSE250) income-related investments, and have consolidated most of those into a small number of UK income-IT's, mainly Merchants (MRCH), City of London (CTY), Law Debenture (LWDB), and a smaller legacy holding in Edinburgh (EDIN).

Alongside that, I also now look to spread collective investments more globally, into broad geographically-themed income-IT's, primarily driven by the type of sector-related data contained in the type of data-series linked below, which has instructions underneath the table to help with generating up-to-date income-IT data -

High Yield Investment Trusts - AIC Sector and Yield table -

https://www.lemonfool.co.uk/viewtopic.php?f=31&t=36145

The current aim is to achieve a broad geographical spread with a relatively moderate set of collective income-IT holdings, all of which are diversely invested themselves, and I've been very happy with the decision to generally move away from single-share holdings of any sort.

Alongside my primarily income-related collective holdings, I have a couple of interests in a small number of non-income collectives as well, mainly consisting of Vanguard LifeStrategy 80/20, Foreign & Colonial (FCIT), and JP Morgan India (JII), which are viewed as long-term holdings to perhaps release a little capital somewhere down the line if required.

Cheers,

Itsallaguess

[77ss]

I hold shares in Glencore,AA and Rio. I'm moving half of my portfolio to steady div income producing (getting old and need the income stream) and wondering whether I should sell these and just buy BRWM.

Would it produce a more consistent dividend?

....

'''''''''

As someone who's been shifting single-company holdings over to collective income-delivering Investment Trusts for a number of years now, it's been my experience that generally, income-IT's are able to utilise their revenue-reserves over long periods to help stabilise and grow the long-term dividends that they pay out, although I perhaps might expect a little more turbulence than usual with collective income-IT's that operate in such a cyclical commodity-facing area as BRWM does...

......
Itsallaguess

I have nothing against BWRM - indeed I am a happy holder (RIO and BHP as well), but you should not expect this particular IT to smooth its dividends by using 'revenue reserves'. Check out its explicit policy as stated in;

https://www.investegate.co.uk/blackrock ... 0847P72A3/

[Itsallaguess]

I have nothing against BWRM - indeed I am a happy holder (RIO and BHP as well), but you should not expect this particular IT to smooth its dividends by using 'revenue reserves'. Check out its explicit policy as stated in;

https://www.investegate.co.uk/blackrock ... 0847P72A3/

Thanks - that's interesting. I assume given the already-mentioned largely-cyclical nature of the sector that they've given up trying to actively manage that side of things.

When that's taken into account then, and when comparing available dividend-payment histories between the four options, I think BRWM still delivers on a relatively smooth comparable payout history, given the already caveated cyclical nature of the underlying sector, and I wonder if that's largely down to the diverse and blended nature of it's underlying holdings then -




Source - https://www.dividenddata.co.uk/ftse-dividend-history.py?market=ftse100

An additional complication with all these commodity-based dividend comparisons that's not been mentioned yet is often down to potential currency effects as well, but the long-term dividend, yield, and total-return performance of BRWM detailed in my earlier posts do look to provide a compelling basis for seeing it as a useful 'single-shot' diversified holding for income-investors looking for exposure to this important and influential sector, but who might prefer not to have to choose or own single-share options within it.

Cheers,

Itsallaguess

[John123ab]

Have you done any more consolidation work like this?

I initially held a large number of UK-market (FTSE100 / FTSE250) income-related investments, and have consolidated most of those into a small number of UK income-IT's, mainly Merchants (MRCH), City of London (CTY), Law Debenture (LWDB), and a smaller legacy holding in Edinburgh (EDIN).


Itsallaguess

Same thing for me here. I could sell my FTSE100 div payers for these then I'd have less holdings to worry about I guess and then I can put it with my fidelity global dividend and just have fewer dividend paying holdings.