Arborbridge wrote:Dod101 wrote:Thanks Ian. This seems to me to be a nice little company with an almost guaranteed rental income stream and 4.2% is fine by me. In fact it has to be an ideal hold for dedicated HYPers.
An ideal "hold", but not necessarily an ideal "buy" or "add" I doubt it would qualify for a HYP purchase using the well known method for selecting HYP shares which PYAD laid down years ago.
I've just done a quick 'finger in the air' exercise about that: I looked up PHP's yield on dividenddata, which gives it as 4.05%. Then I looked at its tables of FTSE100 and FTSE250 yields, sorted in descending order of dividend yield - they contained 56 companies with yields of 4.05% or above. Of those, 21 had market caps below £1.5b, the threshold pyad used when selecting HYP1. That left 35 companies, and I've eliminated two more (CTY and MYI) because I know they're off-topic ITs on this board, leaving 33 companies which I've sorted by their sectors according to dividenddata:
Closed End Investments (HICL, INPP, SEQI, TRIG, UKW)
Investment Banking and Brokerage Services (ASHM, EMG, IGG, MNG, SLA)
Gas, Water and Multi-utilities (NG., SVT, UU.)
Industrial Metals and Mining (BHP, EVR, RIO)
Life Insurance (AV., LGEN, PHNX)
Electricity (DRX, SSE)
Non-life Insurance (ADM, DLG)
Tobacco (BATS, IMB)
Aerospace and Defense (BA.)
Household Goods and Home Construction (PSN)
Oil, Gas and Coal (BP.)
Personal Care, Drug and Grocery Stores (SBRY)
Pharmaceuticals and Biotechnology (GSK)
Precious Metals and Mining (POLY)
Real Estate Investment Trusts (PHP)
Telecommunications Service Providers (VOD)
Would PHP be chosen as one of a 15-share HYP chosen out of that lot by pyad's "look at the highest-yielding share, checking its dividend sustainability and sector diversification; if it doesn't pass, move on to the next highest-yielding share" method? Against it is the fact that it's the lowest-yielding of the 33; for it is the fact that it's the only REIT or property company in the list and that there are only 16 sectors in the list, so most of them are going to have to be present in a 15ish-sector HYP. Adding a bit of uncertainty are the facts that the HYPer might not want to use historical yields and/or dividenddata's sectors (there are definitely arguments for regarding the two mining sectors as one, the two insurance sectors as one and/or the two utilities sectors as one, though it's up to the HYPer whether they find those arguments persuasive). And I haven't done the detailed checks on dividend sustainability, nor am I going to: this is a 'finger in the air' exercise, not a full HYP selection!
The net result is that while I'm by no means certain that PHP would be selected, it seems quite plausible to me that it would.
A final note: my own HYP is not currently in need of another REIT holding, so I'm not going to consider PHP for a purchase - but the reasons why not are to do with the state of my HYP, not the state of the company!