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Re: Projected dividends
Posted: March 25th, 2020, 2:27 pm
by Wizard
I have just updated the list of cancelled / suspended / cut dividends. Not many cuts, I think pretty much everything so far has been a total wipe out of dividends. We have reached the unfortunate benchmark of 10% of the FTSE100 announcing the next dividend is cancelled. The proportion of FTSE250 is lower, but it is more likely we have missed some of those and the percentage of those companies that paid dividends is of course lower to start with.
Not good for income strategies. I have a feeling this could be the stiffest test HYP has had in respect of income reduction.
Re: Projected dividends
Posted: March 25th, 2020, 8:00 pm
by 88V8
Wizard wrote:I have a feeling this could be the stiffest test HYP has had in respect of income reduction.
Post-08, drops of 40-50%.
Luni started a thread Do Cutters Come Again, to illustrate the (rather long) time to dividend recovery.
I expect a faster recovery after C19, the question for me is whether BoDs will be happy to run such low cover in future, and therefore whether we will see former divi levels resumed....rebase rebase.
Hope Shell continues shelling out, or we're doomed
V8
Re: Projected dividends
Posted: March 26th, 2020, 7:35 am
by Arborbridge
Wizard wrote:I have just updated the list of cancelled / suspended / cut dividends. Not many cuts, I think pretty much everything so far has been a total wipe out of dividends. We have reached the unfortunate benchmark of 10% of the FTSE100 announcing the next dividend is cancelled. The proportion of FTSE250 is lower, but it is more likely we have missed some of those and the percentage of those companies that paid dividends is of course lower to start with.
Not good for income strategies. I have a feeling this could be the stiffest test HYP has had in respect of income reduction.
I've just been lucky so far. My only disaster is quite a big payer: Persimmon. Morrisons, Marks, Go-Ahead Group, were all sold in former times.
It's only a matter of time before I get some serious erosion of income, I believe. And of my other income streams, I am sure that I will have to carry defaults from tenants so I'm squeezed from both sides. Still, with State pension, ITs, income reserve - and the wife(!) - the household should be OK.
Whether this
is going to be a stiffer test than 2007-8, we shall see. Someone did comment that the past ten years austerity have been nothing to what's coming in view of all the borrowing HMG is clocking up.
Arb.
Re: Projected dividends
Posted: March 26th, 2020, 7:43 am
by Golam
Topical item in today's FT. 'High dividend stocks suffer as companies delay AGMs'
Re: Projected dividends
Posted: March 26th, 2020, 7:45 am
by monabri
ReallyVeryFoolish wrote:I have a small basket of high yielding shares and so far, my holdings have not declared any adjustments to dividends. Yet. The one share I hold that I think might soon join the cutters list is Petrofac. It did previously cut after the SFO investigation was launched. That's when I bought. I think in order to hedge a potential fine. However, if that money is still sitting in the company, might that temporarily support the present dividend until things improve? Or is it a forlorn hope and business is so bad that they will cut anyway? I guess we will soon find out.
I agree regarding the likelihood of a cut at PFC and the reason for the last cut. The only temper to this is that the Asfari family own a large chunk of PFC ( 18% ?) and they may try to maintain a dividend, albeit much reduced.
Re: Projected dividends
Posted: March 26th, 2020, 8:28 am
by Wizard
monabri wrote:ReallyVeryFoolish wrote:I have a small basket of high yielding shares and so far, my holdings have not declared any adjustments to dividends. Yet. The one share I hold that I think might soon join the cutters list is Petrofac. It did previously cut after the SFO investigation was launched. That's when I bought. I think in order to hedge a potential fine. However, if that money is still sitting in the company, might that temporarily support the present dividend until things improve? Or is it a forlorn hope and business is so bad that they will cut anyway? I guess we will soon find out.
I agree regarding the likelihood of a cut at PFC and the reason for the last cut. The only temper to this is that the Asfari family own a large chunk of PFC ( 18% ?) and they may try to maintain a dividend, albeit much reduced.
I think the PFC dividend is toast. Oil companies are no doubt cutting costs like crazy and that is going to hit PFC very hard. In the case of PFC it is not the dividend I am worried about, it is the survival of the company.
Re: Projected dividends
Posted: March 26th, 2020, 8:32 am
by Golam
Further topical item from today's FT ' Income Investors face dividend drought'
Re: Projected dividends
Posted: March 26th, 2020, 12:10 pm
by moorfield
Wizard wrote:Not good for income strategies. I have a feeling this could be the stiffest test HYP has had in respect of income reduction.
Well capital gains and dividends are fungible no? And I don't think it is O/T to discuss that because I suspect (from what I've read) that many here are timing/buying at bargain prices, and may be tinkering away gains in future. They certainly cannot be buying for sustainable and rising dividends over the next 12-36 months, if the direction of travel of the
Cut Dividends thread is any yardstick to go by.
It also raises the question of cash reserve, ie. how much is enough, on the average, to ride out a bear market?
Re: Projected dividends
Posted: March 26th, 2020, 12:20 pm
by Dod101
moorfield wrote:Wizard wrote:Not good for income strategies. I have a feeling this could be the stiffest test HYP has had in respect of income reduction.
Well capital gains and dividends are fungible no? And I don't think it is O/T to discuss that because I suspect (from what I've read) that many here are timing/buying at bargain prices, and may be tinkering away gains in future. They certainly cannot be buying for sustainable and rising dividends over the next 12-36 months, if the direction of travel of the
Cut Dividends thread is any yardstick to go by.
It also raises the question of cash reserve, ie. how much is enough, on the average, to ride out a bear market?
The trouble is that a bear market is not necessarily the same as one not paying dividends although of course they are usually related. I guess the real question is how long after the economy more or less normalises will it take for businesses to rebuild their reserves/financial positions so as to be able to start paying dividends again.
Dod
Re: Projected dividends
Posted: March 26th, 2020, 12:44 pm
by Bouleversee
It's not just the high yielding companies which are cutting/suspending. My old stalwart, James Fisher and Sons, are doing so and I shall be surprised if my dividend income is not reduced by considerably more than 50% this year as the number of suspensions increases by the day. Fortunately, I do not depend on it and have accessible cash reserves. God help those who don't. If everyone starts selling in order to get the necessary cash, won't the stock market be shut down like a fund is whenever everyone is trying to sell? I don' think we have seen the half of it yet.
Re: Projected dividends
Posted: March 26th, 2020, 1:01 pm
by kempiejon
moorfield wrote:Well capital gains and dividends are fungible no? And I don't think it is O/T to discuss that because I suspect (from what I've read) that many here are timing/buying at bargain prices, and may be tinkering away gains in future. They certainly cannot be buying for sustainable and rising dividends over the next 12-36 months, if the direction of travel of the Cut Dividends thread is any yardstick to go by.
It also raises the question of cash reserve, ie. how much is enough, on the average, to ride out a bear market?
Yes a good test I feel, my cash reserve is 3 years of income. So a 50% cut that recovers over 3 years won't wipe out my cash but when will I be able to start building it up afterwards? As for buying now I'm looking at collectives to mop up dividends, but I was expecting to throw another ISA allowance at the HYP, starting in April/May I think I'll let that slide for a bit. Come Christmas time I wonder how may HYPable shares there'll be? HIgh yield with 5 years of rising dividends and an eye on the debt? It might show some unusual suspects.
Re: Projected dividends
Posted: March 26th, 2020, 1:49 pm
by dealtn
Bouleversee wrote:It's not just the high yielding companies which are cutting/suspending. My old stalwart, James Fisher and Sons, are doing so and I shall be surprised if my dividend income is not reduced by considerably more than 50% this year as the number of suspensions increases by the day. Fortunately, I do not depend on it and have accessible cash reserves. God help those who don't. If everyone starts selling in order to get the necessary cash, won't the stock market be shut down like a fund is whenever everyone is trying to sell? I don' think we have seen the half of it yet.
Well not "everyone" will be selling as not "everyone" wants, or needs, an income from their investments.
Even if they did, assuming a say 5% yield requirement, that would be "everyone" selling 1/20th of their portfolio spread over a year. Even in distressed times there is plenty of liquidity to accommodate that. So I wouldn't worry (at least on that score).
Re: Projected dividends
Posted: March 26th, 2020, 2:22 pm
by Wizard
moorfield wrote:Wizard wrote:Not good for income strategies. I have a feeling this could be the stiffest test HYP has had in respect of income reduction.
Well capital gains and dividends are fungible no? And I don't think it is O/T to discuss that because I suspect (from what I've read) that many here are timing/buying at bargain prices, and may be tinkering away gains in future. They certainly cannot be buying for sustainable and rising dividends over the next 12-36 months, if the direction of travel of the
Cut Dividends thread is any yardstick to go by.
It also raises the question of cash reserve, ie. how much is enough, on the average, to ride out a bear market?
I'm not calling this O/T, but I certainly would not call it HYP.
Re: Projected dividends
Posted: March 26th, 2020, 2:40 pm
by Wizard
Wizard wrote:IanTHughes wrote:Recent Dividend History | | | | | | |
Company | EPIC | Year End | Div'd CCY | GBP | Change | Div'd CCY | GBP
Vodafone Group | VOD | 31-Mar-19 | -40.28% | -40.35% | Increase | 11 | 13
IG Group Holdings | IGG | 31-May-19 | 0.00% | 0.00% | Unchanged | 6 | 4
Standard Life Aberdeen | SLA | 31-Dec-19 | 0.00% | 0.00% | Decrease | 2 | 2
Aviva | AV | 31-Dec-19 | 3.00% | 3.00% | | |
Imperial Brands | IMB | 30-Sep-19 | 10.00% | 10.00% | | |
WPP | WPP | 31-Dec-19 | 0.00% | 0.00% | | |
HSBC Holdings | HSBA | 31-Dec-19 | 0.00% | 6.87% | | |
ITV | ITV | 31-Dec-19 | -67.50% | -67.50% | | |
Royal Dutch Shell | RDSB | 31-Dec-19 | 0.00% | 1.88% | | |
BP | BP | 31-Dec-19 | 1.23% | 4.04% | | |
Land Securities Group | LAND | 31-Mar-19 | 3.05% | 3.05% | | |
British Land Company | BLND | 31-Mar-19 | 3.06% | 3.06% | | |
BHP Group | BHP | 30-Jun-19 | 12.71% | 18.95% | | |
Pennon Group | PNN | 31-Mar-19 | 6.40% | 6.40% | | |
GlaxoSmithKline | GSK | 31-Dec-19 | 0.00% | 0.00% | | |
BAE Systems | BA | 31-Dec-19 | 4.50% | 4.50% | | |
DS Smith | SMDS | 30-Apr-19 | 10.20% | 12.81% | | |
Carnival Corporation | CCL | 30-Nov-19 | 2.56% | 6.10% | | |
Ibstock | IBST | 31-Dec-19 | 54.74% | 54.74% | | |
...
Therefore, for now at least, I believe that your forecast of a 50% drop in income is unduly pessimistic, for this portfolio at least...
For what it is worth, of those I would suggest the following as likely cutters or suspenders:
Aviva - claims impact (cut)
WPP - reduced marketing /advertising spend by clients (suspend)
BP - they do not have Shell's epic record to maintain and revenues must have gone off a cliff (cut)
Land Securities - REIT rules have an impact but revenue must be reduced (cut)
British Land - REIT rules have an impact but revenue must be reduced (cut)
BHP - must be lower demand from industrial customers (cut)
BAE Systems - impact on civil business (though not as bad as for Meggitt) (cut)
Carnival - not even sure the company will survive in its current form (suspend)
Ibstock - reduced demand for products due to house building slowing dramatically (cut)
OK, so three days on I appear to have been rather too optimistic on Ibstock. British Land may make some of its current suspension up depending on how it deals with REIT rules, but Land Securities must look more likely than ever to cut now IMHO.
Re: Projected dividends
Posted: March 26th, 2020, 5:02 pm
by tjh290633
moorfield wrote:Well capital gains and dividends are fungible no? And I don't think it is O/T to discuss that because I suspect (from what I've read) that many here are timing/buying at bargain prices, and may be tinkering away gains in future. They certainly cannot be buying for sustainable and rising dividends over the next 12-36 months, if the direction of travel of the Cut Dividends thread is any yardstick to go by.
Capital losses and dividends are certainly not fungible. It surely makes sense to invest in what you consider to be the most reliable payers of dividends.
TJH
Re: Projected dividends
Posted: March 26th, 2020, 5:09 pm
by Bouleversee
Perhaps we could have another list showing the few who have confirmed they will definitely be paying their dividends. I can't think of any of mine which have done so offhand.
Re: Projected dividends
Posted: March 26th, 2020, 5:40 pm
by moorfield
tjh290633 wrote:moorfield wrote:Well capital gains and dividends are fungible no? And I don't think it is O/T to discuss that because I suspect (from what I've read) that many here are timing/buying at bargain prices, and may be tinkering away gains in future. They certainly cannot be buying for sustainable and rising dividends over the next 12-36 months, if the direction of travel of the Cut Dividends thread is any yardstick to go by.
Capital losses and dividends are certainly not fungible. It surely makes sense to invest in what you consider to be the most reliable payers of dividends.
TJH
I wrote capital gains, not losses, and my point being I believe some have buys discussed here have been motivated by bargain prices rather than reliable dividends, in the short/medium term at least. I think the most reliable payers of dividends over these timescales will be collective ITs, which is what I'll be investing for the rest of the year.
Re: Projected dividends
Posted: March 26th, 2020, 5:42 pm
by dundas666
Bouleversee wrote:Perhaps we could have another list showing the few who have confirmed they will definitely be paying their dividends. I can't think of any of mine which have done so offhand.
Great idea - instead of a "Cut, Cancelled or Suspended Dividends" thread we could also have a "Held, Increased or Special Dividends"
Re: Projected dividends
Posted: March 26th, 2020, 5:46 pm
by MDW1954
Bouleversee wrote:Perhaps we could have another list showing the few who have confirmed they will definitely be paying their dividends. I can't think of any of mine which have done so offhand.
Bouleversee,
That's a brilliant suggestion!
MDW1954
Re: Projected dividends
Posted: March 26th, 2020, 6:53 pm
by Bouleversee
Don't all rush!