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Diageo Update on trading and capital return programme posted on Company News Board.

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idpickering
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Diageo Update on trading and capital return programme posted on Company News Board.

#411236

Postby idpickering » May 12th, 2021, 7:32 am

Here; viewtopic.php?p=411235#p411235

The item includes this bit on share buy-backs and/or possible special dividends;

Return of capital programme

On 25 July 2019, the Board of Diageo approved the return of up to £4.5 billion to shareholders in the three-year period from 1 July 2019 to 30 June 2022, utilising the most appropriate mechanic of either share buybacks or special dividends depending on market conditions. Under the first phase of the ROC programme, which ended on 31 January 2020, Diageo repurchased shares to a value of £1.25 billion. On 9 April 2020, Diageo announced that it had not initiated the next phase of the ROC programme.

Diageo is announcing today that it is initiating the second phase of its ROC programme of up to £1.0 billion to be completed by the end of fiscal 22. Diageo has entered into a non-discretionary agreement with UBS AG London Branch (UBS) to enable the company to buy back shares. This agreement will commence on 12 May 2021 and is expected to end no later than 12 November 2021 and will be for a value of up to £0.5 billion. All shares repurchased will be cancelled. Further execution phases of the ROC programme will be announced in due course.


I hold DGE in my HYP, as of seven years ago. OK, not the highest yielding share, but handy in providing added diversification to my HYP.

Ian.

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Re: Diageo Update on trading and capital return programme posted on Company News Board.

#411296

Postby kempiejon » May 12th, 2021, 10:58 am

As said elsewhere not the highest of yielders currently but it does occasionally move into view for a HYPer, annualised dividend growth of 5% odd which is nice.

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Re: Diageo Update on trading and capital return programme posted on Company News Board.

#411311

Postby Dod101 » May 12th, 2021, 11:37 am

I am constantly surprised at the apparent lack of interest in the trading reports of most shares deemed worthy of discussion on this Board. Without decent trading results there would be no dividend and so these are fundamental to discussion surely. As it is, Diageo seems to be recovering quite well which will hopefully help boost the dividend increases. We have had an increase during the pandemic of course, which has been very helpful to all income investors and the fact that they are able to announce a modest resumption of their share buybacks has got to be even better news. It indicates confidence in future trading and reduces the number of shares in issue, giving a boost to EPS.

This is surely a share for all seasons, although some including me, may have some ethical objections, but I am afraid that it simply cannot be ignored and the relatively modest yield is surely a reflection of its ability to keep generating profits.

Dod

idpickering
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Re: Diageo Update on trading and capital return programme posted on Company News Board.

#411317

Postby idpickering » May 12th, 2021, 11:47 am

Dod101 wrote:I am constantly surprised at the apparent lack of interest in the trading reports of most shares deemed worthy of discussion on this Board. Without decent trading results there would be no dividend and so these are fundamental to discussion surely. As it is, Diageo seems to be recovering quite well which will hopefully help boost the dividend increases. We have had an increase during the pandemic of course, which has been very helpful to all income investors and the fact that they are able to announce a modest resumption of their share buybacks has got to be even better news. It indicates confidence in future trading and reduces the number of shares in issue, giving a boost to EPS.

This is surely a share for all seasons, although some including me, may have some ethical objections, but I am afraid that it simply cannot be ignored and the relatively modest yield is surely a reflection of its ability to keep generating profits.

Dod


Bravo Dod! Well said sir, have a rec. I agree with what you're saying there regarding DGE.

As for the discussions hereabouts, that is why I put these opening posts on this board, ie to hopefully generate some chat. I do get frustrated sometimes though, as it seems other HYPers are reluctant to share their thoughts in writing here for some reason?

Ian.

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Re: Diageo Update on trading and capital return programme posted on Company News Board.

#411325

Postby Dod101 » May 12th, 2021, 12:09 pm

idpickering wrote:
Dod101 wrote:I am constantly surprised at the apparent lack of interest in the trading reports of most shares deemed worthy of discussion on this Board. Without decent trading results there would be no dividend and so these are fundamental to discussion surely. As it is, Diageo seems to be recovering quite well which will hopefully help boost the dividend increases. We have had an increase during the pandemic of course, which has been very helpful to all income investors and the fact that they are able to announce a modest resumption of their share buybacks has got to be even better news. It indicates confidence in future trading and reduces the number of shares in issue, giving a boost to EPS.

This is surely a share for all seasons, although some including me, may have some ethical objections, but I am afraid that it simply cannot be ignored and the relatively modest yield is surely a reflection of its ability to keep generating profits.

Dod


Bravo Dod! Well said sir, have a rec. I agree with what you're saying there regarding DGE.

As for the discussions hereabouts, that is why I put these opening posts on this board, ie to hopefully generate some chat. I do get frustrated sometimes though, as it seems other HYPers are reluctant to share their thoughts in writing here for some reason?

Ian.


Well I do not want to reopen any controversy but some posters are I think unwilling to post here because of the perceived strict control of what is posted but it seems to me to be of great importance to HYP investors as well as others how the constituent companies are progressing.

Dod

idpickering
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Re: Diageo Update on trading and capital return programme posted on Company News Board.

#411366

Postby idpickering » May 12th, 2021, 1:49 pm

Dod101 wrote:
Well I do not want to reopen any controversy but some posters are I think unwilling to post here because of the perceived strict control of what is posted but it seems to me to be of great importance to HYP investors as well as others how the constituent companies are progressing.

Dod


Agreed. It is a shame because we do have a wealth of knowledge on offer hereabouts, should they be willing to share their thoughts with us here.

Back to DGE though, although I'm happy to 'let it be' in my HYP, I have no plans of buying more of it unless DGE has a wobble, and becomes much cheaper, thereby offering a higher yield.

Ian.

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Re: Diageo Update on trading and capital return programme posted on Company News Board.

#411422

Postby Gengulphus » May 12th, 2021, 4:47 pm

idpickering wrote:As for the discussions hereabouts, that is why I put these opening posts on this board, ie to hopefully generate some chat. I do get frustrated sometimes though, as it seems other HYPers are reluctant to share their thoughts in writing here for some reason?

In my case, the reason is generally not wanting to do any proper research on the company, and so not having any well-based thoughts to share. There are multiple reasons why I might want to do some proper research on a company, such as wanting a new share for my HYP and thinking the company might be a good candidate for a purchase, or owning the company already but getting uneasy about it, or wanting to sort out some apparent discrepancy I've noticed, or getting the feeling that my last bit of researching the company has probably got out-of-date in a major way (that feeling builds up with time, but very slowly if the company is releasing steady-as-she-goes news), or doubtless a few other reasons.

In the case of Diageo, none of those reasons to want to research it currently apply to me. It's not currently in my HYP, but I'm not particularly looking for a new purchase to add to the HYP - and if I were, the sum total of the research I would do on Diageo would be to check its yield (which https://dividenddata.co.uk/dividend-yield.py?epic=DGE currently gives as 2.21%), think "Way below new HYP share territory" and move on to the next candidate. I've never had Diageo in my HYP, but that's basically just because it's generally (*) been in that situation at times when I have been looking for additions to my HYP. If it had made it into my HYP in the past, I would doubtless regularly be re-researching it to work out whether its yield had gone low enough for me to want to sell completely (the answer would always have been "no") and whether its capital value had gone high enough for me to want to top-slice the holding (if I'd bought anything like a full holding, the answer to that would almost certainly have been "yes" on at least one occasion). But it hasn't ever made it into my HYP or even come all that close to doing so, nor given me any other reason to want to research it as a potential HYP purchase - so I've only very rarely researched it, and therefore seldom had any thoughts to share about it.

Note I'm not saying that Diageo is off-topic here - it will clearly have made it into some people's HYPs and qualify for discussion here because the guidelines want a high yield "when initially bought". I'm just saying that being on-topic doesn't mean I have anything much to say about it!

(*) There are a few past occasions when its yield was high enough to at least be worth considering IMHO, and I haven't kept good enough records to be able to guarantee that I wasn't looking for additions to my HYP on those occasions - but they're few and far between, and if I was looking on any of them, I must have decided I preferred other candidates...

Gengulphus

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Re: Diageo Update on trading and capital return programme posted on Company News Board.

#412599

Postby miner1000 » May 17th, 2021, 4:07 am

Fair enough comment from Gengulphus, although I bought Diageo many years ago at 1800p and it has consistently returned cash and sometimes in the intervening period has been on 4% yield. Total return however has been outstanding, and although I am generally a HYPer, I believe that shares like Diageo, Unilever and Reckitt B just have to be in the HYP to give it the stability one wants to see during some of the more turbulent times that we have experienced over the past 15 years.

idpickering
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Re: Diageo Update on trading and capital return programme posted on Company News Board.

#412602

Postby idpickering » May 17th, 2021, 5:57 am

miner1000 wrote:Fair enough comment from Gengulphus, although I bought Diageo many years ago at 1800p and it has consistently returned cash and sometimes in the intervening period has been on 4% yield. Total return however has been outstanding, and although I am generally a HYPer, I believe that shares like Diageo, Unilever and Reckitt B just have to be in the HYP to give it the stability one wants to see during some of the more turbulent times that we have experienced over the past 15 years.


Well said, although I'd only buy Reckitt if it had a wobble and was a lot cheaper. As for DGE, I've held since 22 Jun 2016 with a buying price of £18.54. I hold ULVR too, and am topping up my holdings of them soon, but let's not discuss that in this thread please. Tbh, I often regret not buying more DGE in the first place. Currently, it weighs in at being only 3% in capital value terms, of my 25 share HYP. However, I'm always reminding myself too, that this is meant to be an HYP, holding high yielding shares. ;)

Ian.

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Re: Diageo Update on trading and capital return programme posted on Company News Board.

#412730

Postby Gengulphus » May 17th, 2021, 1:55 pm

miner1000 wrote:Fair enough comment from Gengulphus, although I bought Diageo many years ago at 1800p and it has consistently returned cash and sometimes in the intervening period has been on 4% yield. Total return however has been outstanding, and although I am generally a HYPer, I believe that shares like Diageo, Unilever and Reckitt B just have to be in the HYP to give it the stability one wants to see during some of the more turbulent times that we have experienced over the past 15 years.

But what I care about for a new purchase is not the returns and stability it has given you over the last 15 years, but those it will give me over the next 15 years (*). A company's past record gives some indication of how skilled its management is at delivering those returns and stability, but only some indication, because managements can change, resulting in skills being lost to the company, and even if that doesn't happen, external changes can mean that particular skills cease to be as relevant to the company and others that haven't been particularly relevant and may not be present become important. The history of HYPing (and more generally of the stockmarket) is littered with examples of companies with excellent-looking returns and stability which subsequently went wrong. As just one example, I can remember exactly the same sort of argument being made about Tesco around 2007: a historical dividend of 9.64p and a share price in the rough range 400-500p gave it a yield in the rough range 1.9-2.4%, but it had an excellent record of returns and stability over many years (at least back to 1994, probably further). Unfortunately, it only kept the record of dividend growth going until 2011, then slowed down considerably in 2012, ground to a halt in 2013 and 2014, then cut completely. It's resumed dividend payments since, but at 9.15p, they're not yet back to the 2007 level - and the share price is currently about half of its 2007 level...

The net result is that when combined with not seeing any reason why it shouldn't continue, I regard a company's good record of returns and stability as being highly likely to continue for the next few years, but increasingly less likely to do so as the number of years increases. That basically means that at the time of purchase, there's only a certain amount of shortfall in dividend yield even a truly excellent company record can compensate for - and a 2.2% yield in current conditions is just too great a shortfall. That's on a statistical basis - i.e. if I make a habit of allowing such a record to compensate for a 2.2% yield, in 15 years' time I may well find I've some 'Diageo's for which I'm heartily glad I made that decision, but equally, I may well find I've got some 'Tesco' for which I bitterly regret having made it, and overall, I doubt that I'd be better off other than by blind luck.

At higher yields, my verdict on Diageo would accordingly be very different. At 4% (which I agree it has been on very occasionally historically, though not in the last decade as far as historical yield is concerned according to https://dividenddata.co.uk/dividend-yield.py?epic=DGE with "Max" timeframe selected), I would snap it up (**). At 3.5%, I would very likely buy it, even if it was below the FTSE100 yield at the time (that just means I would be unlikely to post about doing so!). At 3%, I would still think about buying it, though probably end up not doing so. At 2.5% and below, I wouldn't think about it for a new HYP purchase any longer than I needed to establish that its yield was that low.

(*) Or more accurately, the next N years, where the unknown N depends on how much longer I live - but as it happens, N's statistically-expected value for me is probably not all that far from 15!

(**) Provided it still had the good record, I had the money available and I was paying attention at the time!

Gengulphus


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