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FTSE 250 yields over 3.5% (Dividend and Yield History)

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csearle
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Re: FTSE 250 yields over 3.5% (Dividend and Yield History)

#443201

Postby csearle » September 17th, 2021, 11:34 pm

JohnnyCyclops wrote:I respect the decision, if it's OT for this thread.

However, having a benchmark to measure a HYP's performance is a very practical tool. A benchmark can be an index (I choose FTSE100 TR). And a measureable/accessible form of an index can be an ETF index tracker. T'was only that. I accept it might then read as "invest in HYP or an index tracker (ETF)?" which was not the intent of those posts.
I think that is the crux of the matter. The way you present it here it seems to me perfectly reasonable and on-topic. The way I read the posts (whilst I was deciding what to do with them) was completely different. They seemed to me to be advocating a different strategy - which is not allowed here. Eventually as it turned out events overtook me as my friend Malcolm was quicker off the mark. :) C.

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Re: FTSE 250 yields over 3.5% (Dividend and Yield History)

#449604

Postby 88V8 » October 12th, 2021, 6:04 pm

88V8 wrote:I hold Diversified Energy, a fave of JohnHemming. It does seems a little like a Ponzi scheme, they keep diluting holders by issuing new shares to fund new acquisitions, well we'll see, or at least I will.


And today.... down 20% for an 11% yield viewtopic.php?p=449602#p449602

V8

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Re: FTSE 250 yields over 3.5% (Dividend and Yield History)

#449726

Postby idpickering » October 13th, 2021, 5:34 am

88V8 wrote:
And today.... down 20% for an 11% yield viewtopic.php?p=449602#p449602

V8


Imho, that seemingly high yield is a red flag. If it looks to good to be true etc. Tread with care.

Ian.

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Re: FTSE 250 yields over 3.5% (Dividend and Yield History)

#449733

Postby moorfield » October 13th, 2021, 7:23 am

Interesting that folk draw a connection between seemingly high yields and red flags, without any DYOR of the underlying business (btw DEC hedges its future cashflows, somehow).

More interesting is when those high yields might raise red flags in folks minds. I use a "ceiling" of 2*CTY yield above which I avoid buying or topping up.

Moderator Message:
Sentence referring to other posters deleted. --MDW1954

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Re: FTSE 250 yields over 3.5% (Dividend and Yield History)

#449738

Postby Dod101 » October 13th, 2021, 8:09 am

moorfield wrote:Interesting that folk draw a connection between seemingly high yields and red flags, without any DYOR of the underlying business (btw DEC hedges its future cashflows, somehow).

More interesting is when those high yields might raise red flags in folks minds. I use a "ceiling" of 2*CTY yield above which I avoid buying or topping up.


As a very broad brush approach I think that a 'seemingly' very high yield is a good indicator that at least caution is required, without doing any research. A share either has a high yield at some point or it does not so I am not altogether sure of the meaning of 'seemingly' here.

I know nothing of Diversified Energy, in fact I had never heard of it until I read of it here.

Dod

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Re: FTSE 250 yields over 3.5% (Dividend and Yield History)

#449802

Postby Alaric » October 13th, 2021, 12:50 pm

Dod101 wrote:I know nothing of Diversified Energy, in fact I had never heard of it until I read of it here.

There's a dedicated thread.
viewtopic.php?f=16&t=24762

It's suggested in that thread that they are booking profits before they are earned by the device of revaluing reserves that have yet to be extracted.

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Re: FTSE 250 yields over 3.5% (Dividend and Yield History)

#449805

Postby Dod101 » October 13th, 2021, 12:58 pm

Alaric wrote:
Dod101 wrote:I know nothing of Diversified Energy, in fact I had never heard of it until I read of it here.

There's a dedicated thread.
viewtopic.php?f=16&t=24762

It's suggested in that thread that they are booking profits before they are earned by the device of revaluing reserves that have yet to be extracted.


Thanks. Yes since I wrote the post you are replying to I have looked at Diversified Energy and posted on the other thread.

For this thread though, I am certainly firmly in the camp of dismissing any share where the yield is consistently above say twice the FTSE100 yield although even that needs to be modified sometimes when that yield is unnaturally low. I think I judge it more by 'feel' or instinct. But I need do very little research to dismiss a particularly high yielding share.

Dod

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Re: FTSE 250 yields over 3.5% (Dividend and Yield History)

#449808

Postby CryptoPlankton » October 13th, 2021, 1:10 pm

moorfield wrote:Interesting that folk draw a connection between seemingly high yields and red flags, without any DYOR of the underlying business (btw DEC hedges its future cashflows, somehow).

More interesting is when those high yields might raise red flags in folks minds. I use a "ceiling" of 2*CTY yield above which I avoid buying or topping up.

Moderator Message:
Sentence referring to other posters deleted. --MDW1954

Without any DYOR of the underlying business? ;)

Interesting that folk should consider CTY's yield a better benchmark than the index yield when it is dependent on factors such as current discount/premium to NAV and management's obsession with maintaining their record of rising dividends.

I prefer to look at each potential "income share" transaction based solely on the merits of the equity in question (which includes yield, but also cover, dividend history and other financials, as well as more subjective factors such as company/sector prospects). It's very unlikely that anything with twice the yield of CTY would pass muster, but then it is also extremely likely that many companies yielding less won't either...

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Re: FTSE 250 yields over 3.5% (Dividend and Yield History)

#449831

Postby Gengulphus » October 13th, 2021, 2:23 pm

CryptoPlankton wrote:Interesting that folk should consider CTY's yield a better benchmark than the index yield when it is dependent on factors such as current discount/premium to NAV and management's obsession with maintaining their record of rising dividends.

Some folk here consider that, others don't. Most of those that don't (including me) will have seen the arguments for and against using CTY's yield as a benchmark many times before and so are quite likely to see no point in having yet another round of them... So those folk who do use it as a benchmark tend not to be challenged about it very much, which gives it the appearance of being generally accepted. And that appearance is correct, provided one understands that means "generally accepted as a benchmark some HYPers use". But not if one understands it to mean "generally accepted as a good benchmark for a HYPer to use"!

There's nothing special about that type of acceptance, by the way. Plenty of other practices around here are accepted by some HYPers and not by others in a similar way, and that's what makes the board a valuable source of ideas. But don't assume that if an idea hasn't met much criticism, there's little or nothing to criticise about it - there are other explanations, especially if it's an idea that's been around a long time.

Gengulphus

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Re: FTSE 250 yields over 3.5% (Dividend and Yield History)

#449835

Postby CryptoPlankton » October 13th, 2021, 2:45 pm

Gengulphus wrote:
CryptoPlankton wrote:Interesting that folk should consider CTY's yield a better benchmark than the index yield when it is dependent on factors such as current discount/premium to NAV and management's obsession with maintaining their record of rising dividends.

Some folk here consider that, others don't. Most of those that don't (including me) will have seen the arguments for and against using CTY's yield as a benchmark many times before and so are quite likely to see no point in having yet another round of them... So those folk who do use it as a benchmark tend not to be challenged about it very much, which gives it the appearance of being generally accepted. And that appearance is correct, provided one understands that means "generally accepted as a benchmark some HYPers use". But not if one understands it to mean "generally accepted as a good benchmark for a HYPer to use"!

There's nothing special about that type of acceptance, by the way. Plenty of other practices around here are accepted by some HYPers and not by others in a similar way, and that's what makes the board a valuable source of ideas. But don't assume that if an idea hasn't met much criticism, there's little or nothing to criticise about it - there are other explanations, especially if it's an idea that's been around a long time.

Gengulphus

Indeed. I was merely pointing out an irony in the post to which I was replying (somewhat lost with my first sentence having been omitted from your quote, but also possibly hard to identify for anyone who hadn't seen earlier posts before their deletion/amendment). It matters not, nothing to see here...

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Re: FTSE 250 yields over 3.5% (Dividend and Yield History)

#449856

Postby Dod101 » October 13th, 2021, 3:47 pm

CryptoPlankton wrote:
moorfield wrote:Interesting that folk draw a connection between seemingly high yields and red flags, without any DYOR of the underlying business (btw DEC hedges its future cashflows, somehow).

More interesting is when those high yields might raise red flags in folks minds. I use a "ceiling" of 2*CTY yield above which I avoid buying or topping up.

Moderator Message:
Sentence referring to other posters deleted. --MDW1954

Without any DYOR of the underlying business? ;)

Interesting that folk should consider CTY's yield a better benchmark than the index yield when it is dependent on factors such as current discount/premium to NAV and management's obsession with maintaining their record of rising dividends.


Like Gengulphus I did not see any point in picking up on CTY yet again but I entirely agree with your comments. I think that the CTY yield has now become rather artificial for the reasons you cite.

Dod

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Re: FTSE 250 yields over 3.5% (Dividend and Yield History)

#449979

Postby MDW1954 » October 13th, 2021, 10:35 pm

Dod101 wrote:
CryptoPlankton wrote:
moorfield wrote:Interesting that folk draw a connection between seemingly high yields and red flags, without any DYOR of the underlying business (btw DEC hedges its future cashflows, somehow).

More interesting is when those high yields might raise red flags in folks minds. I use a "ceiling" of 2*CTY yield above which I avoid buying or topping up.

Moderator Message:
Sentence referring to other posters deleted. --MDW1954

Without any DYOR of the underlying business? ;)

Interesting that folk should consider CTY's yield a better benchmark than the index yield when it is dependent on factors such as current discount/premium to NAV and management's obsession with maintaining their record of rising dividends.


Like Gengulphus I did not see any point in picking up on CTY yet again but I entirely agree with your comments. I think that the CTY yield has now become rather artificial for the reasons you cite.

Dod


Gengulphus is correct, I feel. Loath as I am to contribute to a thread in which I have been actively moderating, I've never really understood the use of CTY as a yield benchmark.

Why not something like the prevailing yield of the UK FTSE 350 Higher Yield Index? Much more rational.

MDW1954

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Re: FTSE 250 yields over 3.5% (Dividend and Yield History)

#450011

Postby Gengulphus » October 14th, 2021, 8:13 am

MDW1954 wrote:... a yield benchmark.

Why not something like the prevailing yield of the UK FTSE 350 Higher Yield Index? Much more rational.

For some, the reason may be not knowing of any source for it, which is an easily-remedied problem: https://markets.ft.com/data/indices/tea ... =HIX.D:FSI

Currently on 4.76%, having been below 4% six months ago. That ~20% rise in the yield is very largely due to a similar rise in the dividends paid by the index's constituents, not to share price falls, as the index itself (https://markets.ft.com/data/indices/tea ... s=FTHY:FSI) is at a very similar level to where it was six months ago. But by extending the charts to 3-year timescales, one can see that the FTSE350HY yield is still some 20% below its prevailing level in the region of 6% in 2019, while the index itself is some 10% below its prevailing level in 2019, so the dividends its constituents are paying (which are proportional to its level times its yield) are still in the region of 30% below their pre-pandemic levels. So still a fair way to go before they can be said to have fully recovered - a clear case of 'long COVID' ;-).

Gengulphus

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Re: FTSE 250 yields over 3.5% (Dividend and Yield History)

#450015

Postby Arborbridge » October 14th, 2021, 8:30 am

MDW1954 wrote:Gengulphus is correct, I feel. Loath as I am to contribute to a thread in which I have been actively moderating, I've never really understood the use of CTY as a yield benchmark.

Why not something like the prevailing yield of the UK FTSE 350 Higher Yield Index? Much more rational.

MDW1954


I believe the CTY suggestion mostly likely came about by asking oneself the following question: "If a HYPer cannot achieve a higher yield from a single share than an IT investing in the same "pond" with risk spread over many companies, why take the perceived higher risk?".
I've often asked myself the same question.

Anyone who had a bunch of ITs already, might consider this a sensible line of reasoning. That's not to say that it's the best option, nor that CTY is the best choice. An index fund might be better, but I guess some of us view ITs as the natural alternative to HYP.



Arb.

Moderator Message:
Let's not get into discussing natural alternatives to HYP, please -- at least not on this board. --MDW1954


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