The Lemon Fool

funduffer wrote:

MDW1954 wrote:
Be careful. Some of these infrastructure shares are formally ITs (eg Greencoat UK Wind), and some are investment companies. So requirements vary.

But, as has been said, very bond-like.

MDW1954

Perhaps you could enlighten me on the major differences?

Presumably, an IT invests in the shares of other companies, whereas an investment company invests in the assets themselves. Similarly, a REIT invests in the assets (property) themselves. I know all 3 are different in some ways, but what difference does it make to the investor?

Disclosure - I own REIT's, IT's and some of the investment companies mentioned here.

FD

An investment trust is an investment company incorporated in the UK that is prepared to pay out at least 85% of its revenue profits as a dividend each year. In return for that it pays no corporation tax.

A REIT is simply a property company which agrees to distribute at least 90% of its income profits ( called PIDS) in return for which it pays no tax on these profits. There is a 20% with holding tax on the distributions which can be recovered if the shares are held in an ISA or SIPP

An investment company is neither of the above but is usually incorporated outside of the UK to avoid these taxes.

The late Gengulphus would have corrected any of my errors but that is my broad understanding. Others may feel free to correct anything mistake or indeed to expand on what I have said.

Fundamentally it does not make a lot of difference to the investor. I think I hold examples of all three.



Dod

Dod101 wrote:The late Gengulphus would have corrected any of my errors but that is my broad understanding.

I'm so sad to hear this.

Best wishes


Mark.

Dod101 wrote:
A REIT is simply a property company which agrees to distribute at least 90% of its income profits ( called PIDS) in return for which it pays no tax on these profits. There is a 20% with holding tax on the distributions which can be recovered if the shares are held in an ISA or SIPP

Dod

I wasn't aware of the tax situation regarding REITs. I hold one in my ISA (BLND). How does one go about recovering the withholding tax?

teecee90 wrote:

Dod101 wrote:
A REIT is simply a property company which agrees to distribute at least 90% of its income profits ( called PIDS) in return for which it pays no tax on these profits. There is a 20% with holding tax on the distributions which can be recovered if the shares are held in an ISA or SIPP

Dod

I wasn't aware of the tax situation regarding REITs. I hold one in my ISA (BLND). How does one go about recovering the withholding tax?

Your ISA company* does it automatically for you. If your broker holds its ISA account holdings separate from its GIA accounts then it can apply to receive REIT dividends gross (both my brokers pay gross - II and HSDL). If the GAI and ISA accounts are not separate then the REIT dividend is received after 20% tax and your broker applies for the tax to be paid back for the ISA holdings and you see the money a few weeks later. Also note the with-holding tax only apples to the PID element of any dividend.

So as an example I will receive the SGRO dividend of 16.9p on or about the payment date in full and I received the BLND dividend of 10.32p on 7/1/22 in full. For this reason I only hold REITs in my ISA.

* the same apples to SIPPS

Quick update following H1

Holding	Weighting	fwd Yield	
NESF	11.67%	6.50%	
BATS	10.94%	6.50%	
FSFL	8.06%	5.90%	
BSIF	6.31%	6.10%	
IMB	5.57%	7.80%	
LGEN	5.48%	8.00%	
MNG	4.47%	9.50%	
ADM	4.22%	7.60%	
HFEL	3.86%	8.30%	
BDEV	3.62%	8.60%	
MONY	3.81%	6.80%	
AV	3.56%	7.70%	
ULVR	3.72%	3.80%	
VOD	3.58%	6.10%	
PSN	2.91%	12.80%	
DLG	2.96%	9.20%	
CSN	2.74%	8.30%	
PHNX	2.63%	8.60%	
HSBA	2.35%	4.20%	
RIO	1.86%	14.40%	
NWG	1.66%	5.90%	
BLND	1.49%	4.80%	
HL	1.41%	5.10%	
			
		7.25%	Estimated fwd yield

Changes since start of year:

Sold
BARC & GSK

New holdings:
PSN, BDEV, PHNX, CSN, HFEL, ADM

Added to existing holdings:
ULVR, LGEN, FSFL, NSEF, AV, IMB, MONY, MNG

Its grown a bit in the number of holdings, but it's still a concentrated portfolio with the top 10 holdings accounting for 64% of the capital value.

Continuing to add new and existing holdings as and when the money becomes available.

I don't have all my eggs in one basket; the HYP is just one of several strategies that I am employing, but it has become my largest and most important one. Will continue to build it up over the next few years as one of the pillars of my overall wealth building strategy.

daveh wrote:For this reason I only hold REITs in my ISA.

Just noticed that sentence. It is a bit like 'dogs must be carried on the escalators' (relating to the London Underground)

What daveh probably means is that he holds REITs only in his ISA.

Dod

A quick EOY update

NESF	10.37%
BATS	8.91%
FSFL	7.08%
ADM	6.74%
LGEN	6.12%
BSIF	5.74%
IMB	5.57%
AV	5.45%
HFEL	4.49%
MNG	3.92%
ULVR	3.60%
MONY	3.54%
CSN	3.50%
VOD	3.15%
BDEV	2.73%
PSN	2.60%
SBRY	2.59%
PHNX	2.41%
DLG	2.33%
HSBA	1.99%
RIO	1.98%
NWG	1.76%
HL	1.36%
BLND	1.15%
LAND	0.93%

Over the course of the year I have disposed of BARC and GSK.

New positions:

ADM - Very happy to have been able to take adavantage of the recent shareprice weakness to build a core position in this company which I have always been impressed by.
HFEL
PHNX
SBRY
BDEV
PSN

Bought more:
LGEN
AV
MNG
MONY
NESF
VOD (yeah.. sigh)

Overall the portfolio has become slightly less concentrated, with the addition of a few new holdings, but it remains quite concentrated with the top 10 holdings making up 64% of the capital value.

The fwd yield is about 7.3% I think - difficult to tell with the recent sharecast problems.

I will continue to build this over the next couple of years. It is not my only stratetgy, but it is my largest - the aim is to have about 40% of my investments in this strategy.

Not a full update but just a quickie.

In terms of total return the Portfolio has been treading water, as I imagine most other HYPs have, since January as the market seems to have swung away from the high yield strategy since the turn of the year.

Have continued to add to existing holdings except for ULVR which I sold completely and SBRY which I greatly trimmed back - both got to fair price in my estimation... in fact I seem to have a knack of being able to sell near highs on some of theae recovery plays as I sold ULVR for 44.28 and SBRY for 2.89 (and sold SBRY for £3.34 back in 2021). Recycled money back into NESF, HL and PHNX.

vand wrote:Not a full update but just a quickie.

In terms of total return the Portfolio has been treading water, as I imagine most other HYPs have, since January as the market seems to have swung away from the high yield strategy since the turn of the year.

Have continued to add to existing holdings except for ULVR which I sold completely and SBRY which I greatly trimmed back - both got to fair price in my estimation... in fact I seem to have a knack of being able to sell near highs on some of theae recovery plays as I sold ULVR for 44.28 and SBRY for 2.89 (and sold SBRY for £3.34 back in 2021). Recycled money back into NESF, HL and PHNX.

Perhaps you are trading a little more often than would be normal around here. And what would be your approx split between HYPing and other types of investment? Is HYP and mainstay of your future?

Cheers, Miner

seem to have a knack of being able to sell near highs

I wonder where on the continuum between luck and skill ‘a knack’ lies.

JohnW wrote:

seem to have a knack of being able to sell near highs

I wonder where on the continuum between luck and skill ‘a knack’ lies.

If you apply a limit on holding weight, it becomes automatic. If the price continues to rise, the exercise can be repeated as necessary. I've had holdings where it has run to about 5 times, although this might include a corporate action returning capital as well. IMB in its former guise of IMT is a case in point.

TJH

vand wrote:Not a full update but just a quickie.

In terms of total return the Portfolio has been treading water, as I imagine most other HYPs have, since January as the market seems to have swung away from the high yield strategy since the turn of the year.

Have continued to add to existing holdings except for ULVR which I sold completely and SBRY which I greatly trimmed back - both got to fair price in my estimation... in fact I seem to have a knack of being able to sell near highs on some of theae recovery plays as I sold ULVR for 44.28 and SBRY for 2.89 (and sold SBRY for £3.34 back in 2021). Recycled money back into NESF, HL and PHNX.

Much the same as mine. Income unit value on 31st Dec 22 was 1.60 and it was the same on 31st May this year, though dividends are up compared to last year. I was doing well in the first couple of months of the year (income units value 1.70 at the end of february), value then dropped a litte in march and April and a lot in May such that I'm back to where I was at the end of last year.

What I've been doing dealing wise is move my high yielders outside my ISA into my ISA, but I've been selling in one broker and buying in a different broker in one case. My aim is to get my tax year dividends down below £500 for next year (I'll be below this tax years £1000 limit as long as there are no big specials), while keeping within the CGT allowance. I'm holding back on selling some shares carrying large loses in case I need to sell them for the loses at a later date what with the CGT allowance coming down to £3000 next year.

H1 2023 has sucked and my portfolio is certainly down a few % on a like for like basis, ignoring the new money that has gone in - although I think this is probably reflective of the FTSE's performance as a whole, too.

Had a couple of pockets of success with ULVR, MONY & SBRY but they have not been enough to make up for the slide in everything else.

NESF	11.48%
BATS	7.77%
HFEL	7.67%
LGEN	6.89%
FSFL	6.89%
ADM	6.29%
BSIF	6.20%
IMB	6.06%
AV	5.86%
MONY	4.78%
MNG	3.82%
PHNX	3.23%
CSN	3.19%
BDEV	2.73%
VOD	2.65%
HL	2.50%
HSBA	2.30%
PSN	2.10%
RIO	1.63%
NWG	1.53%
SBRY	1.40%
DLG	1.37%
BLND	0.85%
LAND	0.82%

SBRY has just been completely sold.
BLND also sold.
Will begin building a new position in another 1 or 2 holdings over the next 6 months.

Year end weightings:

10.00%	NESF	NextEnergy Solar Fund Limited Red
7.22%	ADM	Admiral Group
7.16%	FSFL	Foresight Solar Fund Limited
6.78%	LGEN	Legal and General Group
6.71%	BATS	British American Tobacco
6.11%	HFEL	Henderson Far East Income Ltd.
5.74%	AV	Aviva
5.61%	IMB	Imperial Brands
5.46%	BSIF	Bluefield Solar Income Fund Limited
5.09%	MNG	M and G
4.40%	MONY	Moneysupermarket.com Group
3.89%	TRY	TR Property Inv Trust
4.68%	PHNX	Phoenix Group Holdings (DI)
3.55%	CSN	Chesnara
3.31%	BDEV	Barratt Developments
2.53%	PSN	Persimmon
2.19%	VOD	Vodafone Group
2.09%	HSBA	HSBC Holdings
2.00%	HL	Hargreaves Lansdown
1.70%	RIO	Rio Tinto
1.63%	DLG	Direct Line Insurance Group
1.25%	NWG	NatWest Group
0.90%	LAND	Land Securities Group

You can take some comfort from HSBC which has performed well on both the capital and income front in the last few months. Promise of more to come.

Sensible sells in my book. As I have recorded I am getting out of both tobacco shares, probably over a couple of years and will I think probably buy Law Debenture. A bit of a loss of income but I think I can live with that.

Despite enthusiasts’ comments about Morgan Sindall I cannot quite bring myself to buy it with its very low margins. It is no wonder that they like to have net cash in the bank.

Dod

vand wrote:SBRY has just been completely sold.
BLND also sold.
Will begin building a new position in another 1 or 2 holdings over the next 6 months.

Year end weightings:

10.00%	NESF	NextEnergy Solar Fund Limited Red
7.22%	ADM	Admiral Group
7.16%	FSFL	Foresight Solar Fund Limited
6.78%	LGEN	Legal and General Group
6.71%	BATS	British American Tobacco
6.11%	HFEL	Henderson Far East Income Ltd.
5.74%	AV	Aviva
5.61%	IMB	Imperial Brands
5.46%	BSIF	Bluefield Solar Income Fund Limited
5.09%	MNG	M and G
4.40%	MONY	Moneysupermarket.com Group
3.89%	TRY	TR Property Inv Trust
4.68%	PHNX	Phoenix Group Holdings (DI)
3.55%	CSN	Chesnara
3.31%	BDEV	Barratt Developments
2.53%	PSN	Persimmon
2.19%	VOD	Vodafone Group
2.09%	HSBA	HSBC Holdings
2.00%	HL	Hargreaves Lansdown
1.70%	RIO	Rio Tinto
1.63%	DLG	Direct Line Insurance Group
1.25%	NWG	NatWest Group
0.90%	LAND	Land Securities Group

22% combined weighting in solar generation and 25% in insurance companies looks "interesting"?