Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to Bhoddhisatva,scotia,Anonymous,Cornytiv34,Anonymous, for Donating to support the site

too high?

For discussion of the practicalities of setting up and operating income-portfolios which follow the HYP Group Guidelines. READ Guidelines before posting
Forum rules
Tight HYP discussions only please - OT please discuss in strategies
Alaric
Lemon Half
Posts: 6025
Joined: November 5th, 2016, 9:05 am
Has thanked: 20 times
Been thanked: 1396 times

Re: too high?

#510359

Postby Alaric » June 28th, 2022, 6:14 pm

IanTHughes wrote:[All other things being equal, the chance of a dividend cut is exactly the same at whatever yield the market chooses to put on a share. What has possibly changed is that more of the market now believe the dividend to be in danger than did before.
Ian



Dividend cuts are made by human decision not the roll of a dice, so I don't see how chance comes into it.

Boards of Directors react in different ways. Some accept the valuation logic implied by the market price and cut the dividend to reduce the dividend yield to a more avearge figure. Vodafone did this when the recent HYP portfolio was being constructed. Others, Carillion being an example, will exhaust the Company's resources in a doomed attepmt to maintain the dividend.

Charlottesquare
Lemon Quarter
Posts: 1768
Joined: November 4th, 2016, 3:22 pm
Has thanked: 104 times
Been thanked: 559 times

Re: too high?

#510619

Postby Charlottesquare » June 29th, 2022, 12:03 pm

Alaric wrote:
IanTHughes wrote:[All other things being equal, the chance of a dividend cut is exactly the same at whatever yield the market chooses to put on a share. What has possibly changed is that more of the market now believe the dividend to be in danger than did before.
Ian



Dividend cuts are made by human decision not the roll of a dice, so I don't see how chance comes into it.

Boards of Directors react in different ways. Some accept the valuation logic implied by the market price and cut the dividend to reduce the dividend yield to a more avearge figure. Vodafone did this when the recent HYP portfolio was being constructed. Others, Carillion being an example, will exhaust the Company's resources in a doomed attepmt to maintain the dividend.


Of course the secret with Carillion/Interserve etc was that EPS was a very flexible concept , especially when impacted by say flexible revenue recognition.

Personally if div yields are very high I really ask myself why this is so before buying, if something enormous and solid like IMP/BAT I will make a rational argument why that may be so (ex growth type shares, you get the yield and little else, cash cows) but for others an outlier high yield, to me at least, gives out a bad smell that warns that greater care than normal is needed.

Markets are certainly not always correct with their judgements but where the shares are outliers re yield, P/E etc ,this should mean far greater diligence should be applied, broker view should at least be read (even if then ignored) etc

When I first started on the HYP approach I would spend hours researching each possible share, I delved in accounts, I kept a folder with notes re possibles, eventually I could not be bothered with the work analysing accounts (too much of a busman's holiday) and this was one of the reasons that I mainly departed from single share investing (though recent drops tempted me back for the odd purchase, BAT,IMP, Unilever, Smith(DS), Coca Cola HBC all recent additions, though not all really that high yield)

micrographia
Lemon Pip
Posts: 86
Joined: November 14th, 2016, 3:30 pm
Has thanked: 119 times
Been thanked: 55 times

Re: too high?

#510639

Postby micrographia » June 29th, 2022, 12:46 pm

This is a hard thread to make sense of! I'm a long-term HYP builder. I've only ever bought "anomalously high" yields at times of major economic upheaval - so the Great Crash and the current COVID/brexit/Ukraine mash-up. In less interesting times it's usually pretty clear why a share price is getting a kicking and feeling able to take a contrarian position on this while also being able to reconcile such a purchase with my existing portfolio composition has never coincided. I've had my share of the same imploding companies as everyone else. So, a few more data points then.

I've picked up some bits in the current situation, again only if they fit into my portfolio (no life insurers for example). From the list in the OP (with a tenth of the FTSE100 to choose from when does a yield stop being anomalous :D ?) I've topped up existing holdings in RIO (yes, usual cyclicals arguments) and PSN (yes, perennial UK housing market arguments) and added MNG (yes, a little punt). Held on to existing holdings in LGEN, IMB and TW. Dipping into the FTSE250 (where about 10% of shares currently yield over 6%) I also took a minor holding in SYNT on the assumption that it would return to an OK yield after the COVID bubble burst, while in the meantime it would pay a big divi to put into something else and would add a holding in an underrepresented sector. All of the above buys were made in the context of other purchases on much less controversial yields. All were bought on double figure yields after the next big divi payout had been announced. They represent less than 4% of the current value of my HYP.

Back at the end of the noughties I picked up TATE and RDSB yielding north of 9%. My HYP was much smaller so both were a much bigger financial commitment than my recent buys. Both did well until recently. I just top-sliced TATE after pocketing the special, not so much because of the divi cut but because I'm not clear where it's going now and I was sitting on significant capital appreciation. I also bought BP above 7% at around the same time as these purchases, then shortly afterwards Deepwater Horizon happened. The resulting fallout was nothing to do with why its yield was so high when I bought it. Still hold, didn't buy any more for a decade. So based on the info available at the time, I was 3/3 with those buys. Was the market wrong?

I didn't add more very high yielders back then as I didn't have the same level of divi income to reinvest and unlike today there were big blue chips that never usually entered HYP territory to be picked up. ULVR above 5% for example - been part of the bedrock of my HYP income ever since, as hoped.

This was as confusing a post to write as this thread was to read :lol: . TL;DR? For me yield alone is not a basis on which to make a buying decision, regardless of how high it is. This is not restricted to considering other company-specific fundamentals, because existing portfolio composition and the level and source of panic in the market has a direct bearing on my tolerance of risk.

EEM

Alaric
Lemon Half
Posts: 6025
Joined: November 5th, 2016, 9:05 am
Has thanked: 20 times
Been thanked: 1396 times

Re: too high?

#510642

Postby Alaric » June 29th, 2022, 12:48 pm

Charlottesquare wrote:Markets are certainly not always correct with their judgements but where the shares are outliers re yield, P/E etc ,this should mean far greater diligence should be applied, broker view should at least be read (even if then ignored) etc


Suppose you have a share where the dividend yield has been in the "average" zone for a few years and where there may even have been modest increases fom time to time. Let's suppose the share price has halved or more. It now appears on the high yielders list. But what's going to happen next? If the Company has run into difficult trading, then presumably the dividend will eventually follow the share price downwards. Alternatively the market has it wrong or there's an improvement in trading or some other good news on the horizon. The share price will then recover and the dividend yield fall to normal levels.

Other high yielders like the tobacco stocks are behaving as annuities. Slowly over time the investor's capital is being returned to them as income enhancements. That may even be a suitable choice for a portfolio expected to act as an annuity substitute.

Itsallaguess
Lemon Half
Posts: 9129
Joined: November 4th, 2016, 1:16 pm
Has thanked: 4140 times
Been thanked: 10020 times

Re: too high?

#510649

Postby Itsallaguess » June 29th, 2022, 1:00 pm

micrographia wrote:
Back at the end of the noughties I picked up TATE and RDSB yielding north of 9%. My HYP was much smaller so both were a much bigger financial commitment than my recent buys. Both did well until recently. I just top-sliced TATE after pocketing the special, not so much because of the divi cut but because I'm not clear where it's going now and I was sitting on significant capital appreciation. I also bought BP above 7% at around the same time as these purchases, then shortly afterwards Deepwater Horizon happened. The resulting fallout was nothing to do with why its yield was so high when I bought it. Still hold, didn't buy any more for a decade.

So based on the info available at the time, I was 3/3 with those buys. Was the market wrong?

I didn't add more very high yielders back then as I didn't have the same level of divi income to reinvest and unlike today there were big blue chips that never usually entered HYP territory to be picked up.

ULVR above 5% for example - been part of the bedrock of my HYP income ever since, as hoped.


I think it would be fair to say that when we're discussing 'anomalously high yields' in the context of this particular thread, they aren't being discussed in terms of complete market-dislocations, where if we agree that the vast majority of investment prices are likely to go down in such circumstances, then every single yield is generally likely to then go up, but I think we're talking about those yields that are 'anomalously high' in any particular market, even the dislocated one you were quite right to invest in at the back end of the noughties...

So I don't think Unilever going from 3% to 5% would qualify as an 'anomalously high yield' in the context of this particular discussion to be honest, and I wonder if this is where the source of your confusion in following this thread might be coming from...

I would totally agree that Unilever at a 5% yield might then be seen as irregularly high on it's own normal terms, but I think the yields we'd *then* be looking at in terms of them still being 'anomalously high' in your example, might be the ones that were yielding 9% before the 2007/08 market crash, and were perhaps showing something like 14% during the time you were buying - so still an 'anomalously high yield', in the broader relative market that we're in at *any* given time...

So, an 'anomalously relative high yield' when viewed at any particular time against the broader yield spectrum...

Cheers,

Itsallaguess

Charlottesquare
Lemon Quarter
Posts: 1768
Joined: November 4th, 2016, 3:22 pm
Has thanked: 104 times
Been thanked: 559 times

Re: too high?

#510658

Postby Charlottesquare » June 29th, 2022, 1:34 pm

Alaric wrote:
Charlottesquare wrote:Markets are certainly not always correct with their judgements but where the shares are outliers re yield, P/E etc ,this should mean far greater diligence should be applied, broker view should at least be read (even if then ignored) etc


Suppose you have a share where the dividend yield has been in the "average" zone for a few years and where there may even have been modest increases fom time to time. Let's suppose the share price has halved or more. It now appears on the high yielders list. But what's going to happen next? If the Company has run into difficult trading, then presumably the dividend will eventually follow the share price downwards. Alternatively the market has it wrong or there's an improvement in trading or some other good news on the horizon. The share price will then recover and the dividend yield fall to normal levels.

Other high yielders like the tobacco stocks are behaving as annuities. Slowly over time the investor's capital is being returned to them as income enhancements. That may even be a suitable choice for a portfolio expected to act as an annuity substitute.


I concur , nobody holds a crystal ball but a high yield, as you first describe, should be very carefully investigated.

Charlottesquare
Lemon Quarter
Posts: 1768
Joined: November 4th, 2016, 3:22 pm
Has thanked: 104 times
Been thanked: 559 times

Re: too high?

#510661

Postby Charlottesquare » June 29th, 2022, 1:43 pm

Itsallaguess wrote:
micrographia wrote:
Back at the end of the noughties I picked up TATE and RDSB yielding north of 9%. My HYP was much smaller so both were a much bigger financial commitment than my recent buys. Both did well until recently. I just top-sliced TATE after pocketing the special, not so much because of the divi cut but because I'm not clear where it's going now and I was sitting on significant capital appreciation. I also bought BP above 7% at around the same time as these purchases, then shortly afterwards Deepwater Horizon happened. The resulting fallout was nothing to do with why its yield was so high when I bought it. Still hold, didn't buy any more for a decade.

So based on the info available at the time, I was 3/3 with those buys. Was the market wrong?

I didn't add more very high yielders back then as I didn't have the same level of divi income to reinvest and unlike today there were big blue chips that never usually entered HYP territory to be picked up.

ULVR above 5% for example - been part of the bedrock of my HYP income ever since, as hoped.


I think it would be fair to say that when we're discussing 'anomalously high yields' in the context of this particular thread, they aren't being discussed in terms of complete market-dislocations, where if we agree that the vast majority of investment prices are likely to go down in such circumstances, then every single yield is generally likely to then go up, but I think we're talking about those yields that are 'anomalously high' in any particular market, even the dislocated one you were quite right to invest in at the back end of the noughties...

So I don't think Unilever going from 3% to 5% would qualify as an 'anomalously high yield' in the context of this particular discussion to be honest, and I wonder if this is where the source of your confusion in following this thread might be coming from...

I would totally agree that Unilever at a 5% yield might then be seen as irregularly high on it's own normal terms, but I think the yields we'd *then* be looking at in terms of them still being 'anomalously high' in your example, might be the ones that were yielding 9% before the 2007/08 market crash, and were perhaps showing something like 14% during the time you were buying - so still an 'anomalously high yield', in the broader relative market that we're in at *any* given time...

So, an 'anomalously relative high yield' when viewed at any particular time against the broader yield spectrum...

Cheers,

Itsallaguess


Catch is there is no exact answer, if FTSE say for example yielded 3.2% when do we get an outlier, maybe 6.4% yield or higher ,but that is mere arbitrary choice. Or maybe anything at 6.4% that does not have at least say 1.5 div cover?

Catch of course is lots of different types of companies in different activities within the FTSE100 throw out different types of yields, earnings, P/E ratios etc, so not sure one can ever have any hard and fast rule so you end up smell testing.

idpickering
The full Lemon
Posts: 11221
Joined: November 4th, 2016, 5:04 pm
Has thanked: 2465 times
Been thanked: 5739 times

Re: too high?

#510663

Postby idpickering » June 29th, 2022, 1:46 pm

micrographia wrote:This is a hard thread to make sense of! I'm a long-term HYP builder. I've only ever bought "anomalously high" yields at times of major economic upheaval - so the Great Crash and the current COVID/brexit/Ukraine mash-up. In less interesting times it's usually pretty clear why a share price is getting a kicking and feeling able to take a contrarian position on this while also being able to reconcile such a purchase with my existing portfolio composition has never coincided. I've had my share of the same imploding companies as everyone else. So, a few more data points then.

I've picked up some bits in the current situation, again only if they fit into my portfolio (no life insurers for example). From the list in the OP (with a tenth of the FTSE100 to choose from when does a yield stop being anomalous :D ?) I've topped up existing holdings in RIO (yes, usual cyclicals arguments) and PSN (yes, perennial UK housing market arguments) and added MNG (yes, a little punt). Held on to existing holdings in LGEN, IMB and TW. Dipping into the FTSE250 (where about 10% of shares currently yield over 6%) I also took a minor holding in SYNT on the assumption that it would return to an OK yield after the COVID bubble burst, while in the meantime it would pay a big divi to put into something else and would add a holding in an underrepresented sector. All of the above buys were made in the context of other purchases on much less controversial yields. All were bought on double figure yields after the next big divi payout had been announced. They represent less than 4% of the current value of my HYP.

Back at the end of the noughties I picked up TATE and RDSB yielding north of 9%. My HYP was much smaller so both were a much bigger financial commitment than my recent buys. Both did well until recently. I just top-sliced TATE after pocketing the special, not so much because of the divi cut but because I'm not clear where it's going now and I was sitting on significant capital appreciation. I also bought BP above 7% at around the same time as these purchases, then shortly afterwards Deepwater Horizon happened. The resulting fallout was nothing to do with why its yield was so high when I bought it. Still hold, didn't buy any more for a decade. So based on the info available at the time, I was 3/3 with those buys. Was the market wrong?

I didn't add more very high yielders back then as I didn't have the same level of divi income to reinvest and unlike today there were big blue chips that never usually entered HYP territory to be picked up. ULVR above 5% for example - been part of the bedrock of my HYP income ever since, as hoped.

This was as confusing a post to write as this thread was to read :lol: . TL;DR? For me yield alone is not a basis on which to make a buying decision, regardless of how high it is. This is not restricted to considering other company-specific fundamentals, because existing portfolio composition and the level and source of panic in the market has a direct bearing on my tolerance of risk.

EEM


A great post EEM, thank you. Have a rec/thanks. We should see more from you hereabouts I think......now where's my flak jacket? (I haven't had to wear one for real since 1994).

Ian.
Last edited by idpickering on June 29th, 2022, 1:51 pm, edited 1 time in total.

Itsallaguess
Lemon Half
Posts: 9129
Joined: November 4th, 2016, 1:16 pm
Has thanked: 4140 times
Been thanked: 10020 times

Re: too high?

#510665

Postby Itsallaguess » June 29th, 2022, 1:48 pm

Charlottesquare wrote:
Itsallaguess wrote:
So, an 'anomalously relative high yield' when viewed at any particular time against the broader yield spectrum...


Catch is there is no exact answer, if FTSE say for example yielded 3.2% when do we get an outlier, maybe 6.4% yield or higher ,but that is mere arbitrary choice. Or maybe anything at 6.4% that does not have at least say 1.5 div cover?

Catch of course is lots of different types of companies in different activities within the FTSE100 throw out different types of yields, earnings, P/E ratios etc, so not sure one can ever have any hard and fast rule so you end up smell testing.


Oh absolutely, and I wouldn't disagree with any of that.

I think the question for me would always be to ask when the smell starts to move from something sweet-smelling to something a lot more rotten and closer to de-composure than perhaps being about to bear fruit...

Cheers,

Itsallaguess

pyad
Lemon Slice
Posts: 448
Joined: November 4th, 2016, 10:17 am
Been thanked: 1114 times

Re: too high?

#510675

Postby pyad » June 29th, 2022, 2:17 pm

Charlottesquare wrote:
But "The Market" is surely not an irrational player, if "The Market" thinks there may be issues with a company its collective wisdom surely needs really carefully investigated, whilst mispricing in the short term does occur with FTSE 100 companies it tends to not prevail for too long.

Of course the collective is not always correct but it is quite often correct.


I don't agree that mispricing, by which we mean in this thread UHYs, tends not to prevail for long. In many cases it can continue, for years in some cases, even with 100 index shares. If you've ever traded value shares, you'll know the extreme patience often required for the value to out.

I think it was JM Keynes who said something like: the market can remain irrational longer than you can remain solvent.

As I've said, arbitrary yield cut-off points when choosing new shares are in my view unecessary, UHYs just require more investigation. But each to their own of course. Personally if I wasn't already stuffed with mining shares I'd be adding RIO to my HYP right now.

BullDog
Lemon Quarter
Posts: 2425
Joined: November 18th, 2021, 11:57 am
Has thanked: 1943 times
Been thanked: 1190 times

Re: too high?

#510681

Postby BullDog » June 29th, 2022, 2:43 pm

Itsallaguess wrote:
Charlottesquare wrote:
Itsallaguess wrote:
So, an 'anomalously relative high yield' when viewed at any particular time against the broader yield spectrum...


Catch is there is no exact answer, if FTSE say for example yielded 3.2% when do we get an outlier, maybe 6.4% yield or higher ,but that is mere arbitrary choice. Or maybe anything at 6.4% that does not have at least say 1.5 div cover?

Catch of course is lots of different types of companies in different activities within the FTSE100 throw out different types of yields, earnings, P/E ratios etc, so not sure one can ever have any hard and fast rule so you end up smell testing.


Oh absolutely, and I wouldn't disagree with any of that.

I think the question for me would always be to ask when the smell starts to move from something sweet-smelling to something a lot more rotten and closer to de-composure than perhaps being about to bear fruit...

Cheers,

Itsallaguess

A bit like mining companies as we head into a likely deep recession, perhaps.......

Of course, the obvious issues with due diligence, research, call it whatever you like. Is it is 100% backward looking. There's no possible way of knowing what the medium to long term future of a company looks like with any degree of certainty. History simply suggests that buying the very highest yields in the market isn't really a very good idea. A more........

At that point I will stop as this is the HYP walled garden.

Charlottesquare
Lemon Quarter
Posts: 1768
Joined: November 4th, 2016, 3:22 pm
Has thanked: 104 times
Been thanked: 559 times

Re: too high?

#510685

Postby Charlottesquare » June 29th, 2022, 2:53 pm

pyad wrote:
Charlottesquare wrote:
But "The Market" is surely not an irrational player, if "The Market" thinks there may be issues with a company its collective wisdom surely needs really carefully investigated, whilst mispricing in the short term does occur with FTSE 100 companies it tends to not prevail for too long.

Of course the collective is not always correct but it is quite often correct.


I don't agree that mispricing, by which we mean in this thread UHYs, tends not to prevail for long. In many cases it can continue, for years in some cases, even with 100 index shares. If you've ever traded value shares, you'll know the extreme patience often required for the value to out.

I think it was JM Keynes who said something like: the market can remain irrational longer than you can remain solvent.

As I've said, arbitrary yield cut-off points when choosing new shares are in my view unecessary, UHYs just require more investigation. But each to their own of course. Personally if I wasn't already stuffed with mining shares I'd be adding RIO to my HYP right now.


Many value shares in the FTSE100?

BullDog
Lemon Quarter
Posts: 2425
Joined: November 18th, 2021, 11:57 am
Has thanked: 1943 times
Been thanked: 1190 times

Re: too high?

#510710

Postby BullDog » June 29th, 2022, 4:32 pm

Charlottesquare wrote:
pyad wrote:
Charlottesquare wrote:
But "The Market" is surely not an irrational player, if "The Market" thinks there may be issues with a company its collective wisdom surely needs really carefully investigated, whilst mispricing in the short term does occur with FTSE 100 companies it tends to not prevail for too long.

Of course the collective is not always correct but it is quite often correct.


I don't agree that mispricing, by which we mean in this thread UHYs, tends not to prevail for long. In many cases it can continue, for years in some cases, even with 100 index shares. If you've ever traded value shares, you'll know the extreme patience often required for the value to out.

I think it was JM Keynes who said something like: the market can remain irrational longer than you can remain solvent.

As I've said, arbitrary yield cut-off points when choosing new shares are in my view unecessary, UHYs just require more investigation. But each to their own of course. Personally if I wasn't already stuffed with mining shares I'd be adding RIO to my HYP right now.


Many value shares in the FTSE100?

Depends on your definition, I suppose. Some FTSE100 stocks seem to just convert your capital into income for you. That's not great "value" in my thinking.

Itsallaguess
Lemon Half
Posts: 9129
Joined: November 4th, 2016, 1:16 pm
Has thanked: 4140 times
Been thanked: 10020 times

Re: too high?

#510728

Postby Itsallaguess » June 29th, 2022, 5:09 pm

BullDog wrote:
Charlottesquare wrote:
pyad wrote:
I don't agree that mispricing, by which we mean in this thread UHYs, tends not to prevail for long. In many cases it can continue, for years in some cases, even with 100 index shares. If you've ever traded value shares, you'll know the extreme patience often required for the value to out.

I think it was JM Keynes who said something like: the market can remain irrational longer than you can remain solvent.


Many value shares in the FTSE100?


Depends on your definition, I suppose. Some FTSE100 stocks seem to just convert your capital into income for you. That's not great "value" in my thinking.


I suspect the point being made by Charlottesquare is that 'market anomalies' are perhaps much less likely where an army of market-analysts are trawling through the much larger companies that attract HYP investors, compared to the types of much lower market-cap companies that 'value investors' often seek out, which tend to have much fewer market-analysts looking at them...

I think it's a very fair point, and one that probably shouldn't need to be raised to be honest, and I strongly suspect pyad was aware that his analogy was built on fairly dodgy foundations from the get-go...

Cheers,

Itsallaguess

BullDog
Lemon Quarter
Posts: 2425
Joined: November 18th, 2021, 11:57 am
Has thanked: 1943 times
Been thanked: 1190 times

Re: too high?

#510743

Postby BullDog » June 29th, 2022, 5:47 pm

Itsallaguess wrote:
BullDog wrote:
Charlottesquare wrote:
pyad wrote:
I don't agree that mispricing, by which we mean in this thread UHYs, tends not to prevail for long. In many cases it can continue, for years in some cases, even with 100 index shares. If you've ever traded value shares, you'll know the extreme patience often required for the value to out.

I think it was JM Keynes who said something like: the market can remain irrational longer than you can remain solvent.


Many value shares in the FTSE100?


Depends on your definition, I suppose. Some FTSE100 stocks seem to just convert your capital into income for you. That's not great "value" in my thinking.


I suspect the point being made by Charlottesquare is that 'market anomalies' are perhaps much less likely where an army of market-analysts are trawling through the much larger companies that attract HYP investors, compared to the types of much lower market-cap companies that 'value investors' often seek out, which tend to have much fewer market-analysts looking at them...

I think it's a very fair point, and one that probably shouldn't need to be raised to be honest, and I strongly suspect pyad was aware that his analogy was built on fairly dodgy foundations from the get-go...

Cheers,

Itsallaguess

I absolutely agree with you. And I would go much further about dodgy foundations. But we aren't allowed to here and it's all been said before anyway. Enough to say you need to be very careful when you go looking for value. It says much that the FTSE100 index isn't really any higher than it was over 20 years ago. How's that for value?

Itsallaguess
Lemon Half
Posts: 9129
Joined: November 4th, 2016, 1:16 pm
Has thanked: 4140 times
Been thanked: 10020 times

Re: too high?

#510746

Postby Itsallaguess » June 29th, 2022, 5:59 pm

pyad wrote:
UHYs just require more investigation.


<whisper>
Because they're higher risk...
</whisper>

Cheers,

Itsallaguess

csearle
Lemon Quarter
Posts: 4748
Joined: November 4th, 2016, 2:24 pm
Has thanked: 4785 times
Been thanked: 2076 times

Re: too high?

#510751

Postby csearle » June 29th, 2022, 6:27 pm

Itsallaguess wrote:
pyad wrote:
UHYs just require more investigation.


<whisper>
Because they're higher risk...
</whisper>

Cheers,
...indeed. I suppose it has much to do with one's risk aversion (or otherwise). Personally I am not particularly risk-averse, but then I'm young, just 62 (28 inside obviously). If I feel a business has years to run and is not in particular trouble then a very high yield isn't a problem. I imagine if their didvidend were to be "rebased" and likely still be attractive vis-à-vis the inflation rate then that's pretty much enough to give them the green light (for me).

Chris

idpickering
The full Lemon
Posts: 11221
Joined: November 4th, 2016, 5:04 pm
Has thanked: 2465 times
Been thanked: 5739 times

Re: too high?

#510793

Postby idpickering » June 30th, 2022, 3:38 am

csearle wrote:...indeed. I suppose it has much to do with one's risk aversion (or otherwise). Personally I am not particularly risk-averse, but then I'm young, just 62 (28 inside obviously). If I feel a business has years to run and is not in particular trouble then a very high yield isn't a problem. I imagine if their didvidend were to be "rebased" and likely still be attractive vis-à-vis the inflation rate then that's pretty much enough to give them the green light (for me).

Chris


Thanks for your input Chris. That’s pretty much along my way of thinking on this too. Each to their own anyway though, as is their right.

Ian.

uspaul666
2 Lemon pips
Posts: 231
Joined: November 4th, 2016, 6:35 am
Has thanked: 195 times
Been thanked: 111 times

Re: too high?

#510810

Postby uspaul666 » June 30th, 2022, 8:48 am

I’m happy to have a few high yielders in my portfolio like BHP and RIO given that my portfolio has in excess of 20 holdings and also there a few much lower yielders like SVT and BAE systems to balance them out. If, as some have said, high yields are more likely to be cut then hopefully the lower yields are more likely to be increased! Anyway, diversification helps me sleep at night.

idpickering
The full Lemon
Posts: 11221
Joined: November 4th, 2016, 5:04 pm
Has thanked: 2465 times
Been thanked: 5739 times

Re: too high?

#510815

Postby idpickering » June 30th, 2022, 9:08 am

uspaul666 wrote:I’m happy to have a few high yielders in my portfolio like BHP and RIO given that my portfolio has in excess of 20 holdings and also there a few much lower yielders like SVT and BAE systems to balance them out. If, as some have said, high yields are more likely to be cut then hopefully the lower yields are more likely to be increased! Anyway, diversification helps me sleep at night.


Likewise for me too. That’s why we hold a diversified HYP, or at least should do. I have 28 holdings, and am happy with the diversication they offer me. The average weighting in capital value terms is about 3.5%, so if one or two shares faulter, it’s not the end of the world so to speak.

Ian.


Return to “HYP Practical (See Group Guidelines)”

Who is online

Users browsing this forum: No registered users and 3 guests