Supposing you were starting a new HYP today

[Dod101]

I will not quote kempiejohn's long posts but one flaw which jumps out at me is that ADM (Admiral I assume), does not duplicate LGEN (Legal and General) You might as well say apples and oranges are duplicates; they may both be fruit but they are very different, arguably less so than Admiral and Legal & General.

Dod

[monabri]

I still use CTY as a high yield benchmark, as you know I've written here many times that if I can't beat CTY on yield, I might as well join it.

I am giving serious consideration to dumping all my zero/low yielders, viz. HSBA,IMI,WPP plus others, and replacing with CTY. But I am resisting that urge for now, probably until current holdings resume their dividend cycles, at which time I will be able to review forecast vs. target retirement income and make a decision. CTY ultimately relies on these individual holdings for its own dividend payout after all.

As you allude to in the last sentence...there is jam in the pot at the moment but the majority of the jam factories are on furlough . The sweet moolah will flow for a while but is likely to dwindle as the input reduces. Divis might be maintained but future increases will be curtailed to allow for restocking!

[Wizard]

I am slightly concerned my SIPP could breach the lifetime limit, so rather than putting more cash from our company into that, just before the end of the last tax year we set up a new SIPP for my wife and put the money in there instead. Today we bit the bullet and invested about 5% of the funds transferred to it. We invested somewhat inline with my suggestion up this thread on 6th, buying equal sized chunks of Unilever, Diageo, HSBC and Shell. I picked up on the fact it was pointed out I had missed big pharma off my suggestion so we substituted BATs with AstraZeneca, we also decided that RIO was a better option than National grid so made that switch as well.

[tjh290633]

Given all the cutting and chaos going on all around us, supposing you had a lump sum and you were wanting to start a new HYP today. What would it look like?

It wouldn't.

Those needing a reliable income for the next 2-3 years I imagine would opt for Investment Trusts or an Annuity.

As a builder, my spreadsheet is telling me today none of my 21 holdings are topup-able for various reasons (yield too high, yield too low, income ntm forecast is zero, sector overweight) so I am looking either to add a new holding (SMDS was a candidate, not now) or just sit on my hands and cash for the forseeable future.

My last purchase was PHP, Primary Health Properties. Yield at 3.7% a little low, but surely safe in these times.

TJH

[ADrunkenMarcus]

* I think the concept of only looking at shares with a yield above the FTSE100 yield is impossible to apply at this time. The trailing FTSE100 yield is clearly massively higher than the future yield and that future yield is particularly difficult to take a view on right now. For all we know Diageo at c. 2.75% may well be above what the FTSE100 will pay in the next 12 months.

Absolutely.

I would also suggest Unilever and/or Diageo are a lot more resilient than much of the FTSE100, which is stuffed with rubbish.

Best wishes

Mark.

[unperplex]

Dear Mark,
Interesting you refer to the FTSE 100 being “stuffed with rubbish”. A few examples of what you think are “rubbish” ? I’m not criticising, but genuinely interested.

[ADrunkenMarcus]

Interesting you refer to the FTSE 100 being “stuffed with rubbish”. A few examples of what you think are “rubbish” ? I’m not criticising, but genuinely interested.

The list would vary according to the particular criteria, although for this board the issue is one of a high and rising dividend. On that basis, Aviva is a standout example - along with RSA - as I recently posted on another board:

[Aviva] has form.

It's a serial slasher.

From memory, they slashed [the dividend] c. 2002-03, c. 2009, c. 2011-12 and now c. 2020.

The dividend per share forecast for 2019 was still substantially below that of 2002 even on a nominal basis. And they didn't pay it anyway as the final was cancelled or, if we're charitable, postponed.

I held from October 1998 to April 2010 - the share price went from 855p to 385p (still much higher than today). Total return -18% for the twelve year period and only because the dividends that were paid compensated for some of the capital loss.

Holding Aviva for any length of time is only really for the masochists, in my opinion.

I'd include the major banks, from Lloyds to Barclays and RBS, but potentially allowing for HSBC and even Standard Chartered.

Easyjet - I don't like airlines (even aside from the current crisis).

Supermarkets - look at Sainsbury's or Tesco's long-term dividend per share records.

I see companies such as BP and even Shell as creating little shareholder value, even if they are paying healthy headline dividend yields.

I'm not keen on many of the debt-burdened utility companies, either.

Telecoms - BT and Vodafone are challenged IMHO.

By weight, many of the above account for a large part of the index. I think that helps to explain why the FTSE100's total return has not been a real return at all for the last four years, as a nominal gain is less than inflation over the period.

Best wishes

Mark.

[Alaric]

Interesting you refer to the FTSE 100 being “stuffed with rubbish”. A few examples of what you think are “rubbish” ?

In normal times, there are invariably shares in the FTSE 100 that show up as "high" yield, not because of stellar dividend growth, but because the price has collapsed and the dividend hasn't (yet) been reduced or cancelled. It's the problem of buying an index. By its very nature you buy into the failures as well as the successes.

[Wizard]

I am slightly concerned my SIPP could breach the lifetime limit, so rather than putting more cash from our company into that, just before the end of the last tax year we set up a new SIPP for my wife and put the money in there instead. Today we bit the bullet and invested about 5% of the funds transferred to it. We invested somewhat inline with my suggestion up this thread on 6th, buying equal sized chunks of Unilever, Diageo, HSBC and Shell. I picked up on the fact it was pointed out I had missed big pharma off my suggestion so we substituted BATs with AstraZeneca, we also decided that RIO was a better option than National grid so made that switch as well.

Just to clarify that should read 75%.