Bailing out of BT. but what to buy?...

[Itsallaguess]

Or are there any other candidates who’s share price has dropped lately but might be a better home for my dosh?

I meant to post this extra tip on my earlier post, but for some reason it didn't make it into the final edit..

Anyway, just in case you or anyone else is ever looking for candidates that might have dropped their share-price over a given time-scale, then so long as Google Finance has the share in it's database, you can have a play with their charting software over different periods, and there's a great little tool in their charting software that lets you see values and percentage changes for share-prices over a user-selected time-frame.

To show an example of this in action, open the following link, which leads to the Google Finance chart for Vodafone -

https://www.google.co.uk/search?tbm=fin&q=lon%3Avod

Then click on the '6 months' option above the chart.

Now, left-click somewhere to the left hand side of the chart (you will see the given date of the chart-point in a little pop-up tool-tip, as you hover your mouse over the chart), and then whilst holding down the left mouse-button on a point on the left of the chart, drag your mouse to the right towards the right hand end of the 6-months chart...

In the snapshot example below, I left-clicked on the 18th Feb 2020 date on the Vodafone 6-months price-chart, and then dragged my mouse (whilst holding the left mouse-button) to the far right side of the chart, which is 24th June 2020, and you can see that the charting tool tells us in another little tool-tip window just above the chart area, that over that period, Vodafone has dropped in price by 29.36p, which equates to a drop of 18.91% -



So if you happen to be considering a particular HYP candidate on what might be a good yield, and would also like to see if there's been any price reduction over the past few months where you might want to take additional advantage of that, then as well as the table of data posted earlier, I hope the above tip might come in handy for any other potential candidates that may not have made it into the earlier tabulated data.

By the way, you can also find price-changes for FTSE100, FTSE250, and FTSE350 shares over different time-scales using the links below, if you're still wanting to start at the 'what's fallen quite a lot?' end of the investigation instead -

FTSE100 - https://www.hl.co.uk/shares/stock-market-summary/ftse-100/performance

FTSE250 - https://www.hl.co.uk/shares/stock-market-summary/ftse-250/performance

FTSE350 - https://www.hl.co.uk/shares/stock-market-summary/ftse-350/performance

Cheers,

Itsallaguess

[floyd3592]

I do still feel that I'd have a better chance of making useful suggestions if I knew what was already in your HYP...

Gengulphus

AV. 2.2%
BAE 2.5%
BATS 3.7%
BDEV 2.4%
BLND 4.5%
BP 3.8%
BT.A 3.3%
DGE 3.9%
DLG 4.5%
GSK, 6.1%
HSBA 4.0%
IMB 4.9%
ITV 2.6%
LGEN 8.3%
NG., 7.2%
PHNX 3.9%
RDSB 5.3%
RIO 6.2%
SDR 6.5%
SLA 3.1%
ULVR 5.0%
VOD 2.5%
WPP 3.8%

[idpickering]

AV. 2.2%
BAE 2.5%
BATS 3.7%
BDEV 2.4%
BLND 4.5%
BP 3.8%
BT.A 3.3%
DGE 3.9%
DLG 4.5%
GSK, 6.1%
HSBA 4.0%
IMB 4.9%
ITV 2.6%
LGEN 8.3%
NG., 7.2%
PHNX 3.9%
RDSB 5.3%
RIO 6.2%
SDR 6.5%
SLA 3.1%
ULVR 5.0%
VOD 2.5%
WPP 3.8%

Thanks for listing your HYP. For your consideration, here are some I hold that you don't;

Admiral Group
BHP Group
IG Group
Primary Health Properties
Sainsbury (or Tesco)
Smith (DS)
SSE
Tate & Lyle
United Utilities

Mind you, on 23 holdings, you are well diversified already imho. ie You don't necessarily have to buy something else to fill the gap on selling BT.A. I hold 25 shares in my HYP, see viewtopic.php?p=318258#p318258

I hope that helps.

Ian.

[Dod101]

I do still feel that I'd have a better chance of making useful suggestions if I knew what was already in your HYP...

Gengulphus

AV. 2.2%
BAE 2.5%
BATS 3.7%
BDEV 2.4%
BLND 4.5%
BP 3.8%
BT.A 3.3%
DGE 3.9%
DLG 4.5%
GSK, 6.1%
HSBA 4.0%
IMB 4.9%
ITV 2.6%
LGEN 8.3%
NG., 7.2%
PHNX 3.9%
RDSB 5.3%
RIO 6.2%
SDR 6.5%
SLA 3.1%
ULVR 5.0%

You certainly have enough Legal & General so I would go for my second suggestion which was Primary Health Properties

Dod
VOD 2.5%
WPP 3.8%

[Gengulphus]

AV. 2.2%
BAE 2.5%
BATS 3.7%
BDEV 2.4%
BLND 4.5%
BP 3.8%
BT.A 3.3%
DGE 3.9%
DLG 4.5%
GSK, 6.1%
HSBA 4.0%
IMB 4.9%
ITV 2.6%
LGEN 8.3%
NG., 7.2%
PHNX 3.9%
RDSB 5.3%
RIO 6.2%
SDR 6.5%
SLA 3.1%
ULVR 5.0%
VOD 2.5%
WPP 3.8%

Thanks. Using my own sector classification, my breakdown of that portfolio is:

FINANCIALS (32.5%)
==================

Insurance (18.9%)
-----------------
AV. 2.2%
DLG 4.5%
LGEN 8.3%
PHNX 3.9%

Asset Managers (9.6%)
---------------------
SDR 6.5% (should this be SDRC?)
SLA 3.1%

Banks (4.0%)
------------
HSBA 4.0%


HOLES IN THE GROUND (15.3%)
===========================

Oil & Gas Producers (9.1%)
--------------------------
BP 3.8%
RDSB 5.3%

Miners (6.2%)
------------
RIO 6.2%


UTILITIES (13.0%)
=================

Energy Utilities (7.2%)
-----------------------
NG. 7.2%

Telecoms Utilities (5.8%)
-------------------------
BT.A 3.3%
VOD 2.5%


'SINS' (12.5%)
==============

Tobacco (8.6%)
--------------
BATS 3.7%
IMB 4.9%

Booze (3.9%)
------------
DGE 3.9%


PROPERTY (6.7%)
===============

REITs (4.5%)
------------
BLND 4.5%

Housebuilders (2.4%)
--------------------
BDEV 2.4%


OTHER SECTORS (20.0%)
=====================

Media (6.4%)
------------
ITV 2.6%
WPP 3.8%

Pharmaceuticals (6.1%)
----------------------
GSK 6.1%

Food & Household Product Producers (5.0%)
-----------------------------------------
ULVR 5.0%

Defence (2.5%)
--------------
BA. 2.5%


Based on that, the first thing I would say is that IMHO you're already well overweight in financials and within them, especially insurance. I would steer well clear of any further purchases of them for the foreseeable future (*). That reduces your list of four shares to just two (Imperial Brands and RDSB) and also gets rid of my previous support for considering Legal & General. My previous comments on Imperial Brands and RDSB still apply, and both of their sectors are pretty fully weighted, at 8.6% and 9.1% respectively (average sector weighting in a 15-sector portfolio would be 6.7%. If you do nevertheless still want to consider adding to tobacco, I would suggest also considering BATS - its yield is lower, at least in Itsallaguess's table posted above (**): it's got a lower yield than Imperial Brands, but still an entirely adequately high one, and it does look to have stabilised since losing its way a bit in 2017 and 2018.

Other than those, looking at Itsallaguess's table together with your weightings throws up a few shares that strike me as worth taking a detailed look at:

* A top up of BAE Systems - decently high yield, lowly weighted for company and sector, decent very long-term dividend record. They've deferred a decision about whether/when to pay last year's final dividend, but their RNSes in April and yesterday both talk about their cash position being strong, suggesting that it was just a deferral to keep cash in hand in case things turned really bad for the company, and that since that doesn't appear to have happened, the chances of them deciding to pay the deferred dividend when they provide the update on it at their announcement of their interim results on July 30th aren't bad. No promises, though - the risk of their dividend prospects being worse than they appear is non-trivial, but then again, there are few companies around at present for which that isn't the case!

* A water utility. United Utilities has the highest yield and the only one that is unambiguously 'high yield', but a rather mediocre very long-term dividend record. Severn Trent and Pennon have yields in the region of the FTSE100's - probably lower than it, but within the range of uncertainty about just how the FTSE100 yield should be calculated at present and/or the range of current share price fluctuations - and pretty good very long-term dividend records. All three have reported final results in the last month or so and have announced normal dividend rises. About future dividends, United Utilities did say "We will review our dividend policy for AMP7 as a clearer picture of the post COVID-19 economic environment emerges." and Pennon's situation is unclear because it's just made a major disposal of its Viridor waste business, which will reduce the company's earnings but also means that it is talking about returning capital to shareholders: the former would be expected to reduce the dividend but the latter might well counteract that reduction (as e.g. doing the capital return by a special dividend + share consolidation would). All in all, I think Severn Trent would be the first of the three that I would consider in detail, but the others might well also be worth a look.

* DS Smith - decently high yield, new sector for your HYP, did cut by 50% in the 2008-9 financial crisis cut has grown its dividend excellently since then. It did cancel its interim dividend in early April, but the general tone of that trading statement sounds to me more like being prudent with cash when things were very uncertain than any real difficulty, and it does indicate that announcing a dividend payment with their final results next month was still very much on the table. Their business (packaging, especially corrugated cardboard) does also suggest to me that they may well be experiencing a silver lining to the COVID-19 cloud, given the increase in getting things delivered. So I read it as a possibility not unlike the one I describe for BAE Systems above: could well have very decent dividend prospects, but not a sure thing.

None of those suggestions are recommendations to buy, by the way, just recommendations to take a good look and decide whether you like them.

(*) Though note that the amount of the future I think is foreseeable is especially low at present.

(**) Do double-check all yields anyone else gives for being reasonable and up to date before relying on them, especially in times like these when things are particularly likely to have changed recently...

Gengulphus

[floyd3592]

None of those suggestions are recommendations to buy, by the way, just recommendations to take a good look and decide whether you like them.

Gengulphus

Wow! Very comprehensive information here, lot's to chew on! As well as assisting in my decision vis-a-vis my BT shares, this will also help me to improve my portfolio generally, by enabling me to address the sector diversification issues. Many thanks for taking the time to do this Gengulphus.

Regards
Floyd

[88V8]

....SDR 6.5%

SDRC has a better yield.

I second Smith DS, As HYPers we are pretty light on manufacturing.

V8

[johnstevens77]

I second SMDS as well, both high yield and capital growth. They just created a machine that makes to measure cardboard cartons to fit individual product sizes. They have factories in UK, Europe and North America, maybe elsewhere too.

I hold.

john

[tjh290633]

I believe that DS Smith report on Thursday. Thweir final rerssults may be of interest.

TJH

[idpickering]

I believe that DS Smith report on Thursday. Thweir final rerssults may be of interest.

TJH

That is indeed the case Terry, see: https://www.lse.co.uk/share-prices/fina ... 2-Jul-2020

I bought into the SMDS story mid 2019, and have topped up twice since. I'm likely to buy more of their shares too, especially if they reinstate the dividend. As of now they account for 4.8% of my 25 share HYP, in capital value terms. A good HYP share imho offering much needed diversification for ones HYP.

Ian.

[TUK020]

I believe that DS Smith report on Thursday. Thweir final rerssults may be of interest.

TJH

That is indeed the case Terry, see: https://www.lse.co.uk/share-prices/fina ... 2-Jul-2020

I bought into the SMDS story mid 2019, and have topped up twice since. I'm likely to buy more of their shares too, especially if they reinstate the dividend. As of now they account for 4.8% of my 25 share HYP, in capital value terms. A good HYP share imho offering much needed diversification for ones HYP.

Ian.

Any idea why 5 funds are shorting 3.4% of DS Smith stock?
https://shorttracker.co.uk/companies/?sort=2&d=desc

[Arborbridge]

I believe that DS Smith report on Thursday. Thweir final rerssults may be of interest.

TJH

That is indeed the case Terry, see: https://www.lse.co.uk/share-prices/fina ... 2-Jul-2020

I bought into the SMDS story mid 2019, and have topped up twice since. I'm likely to buy more of their shares too, especially if they reinstate the dividend. As of now they account for 4.8% of my 25 share HYP, in capital value terms. A good HYP share imho offering much needed diversification for ones HYP.

Ian.

Any idea why 5 funds are shorting 3.4% of DS Smith stock?
https://shorttracker.co.uk/companies/?sort=2&d=desc

No, but I wouldn't regards that as a particularly good indicator, nor is it a high enough level to raise alram bells. Hedgies operate on a short-ish term and just want to make a regular turn rather than destroy the golden goose. If it gets over 10% or 15%, maybe that's the time to be worried - but Greene King was sometimes around that level over the years and was notably successful rather than a disaster.

Arb.

[GrahamPlatt]

SMDS has an Altman Z score of 1.48 and is on two of the well known shorting strategy screens.

[Dod101]

Any idea why 5 funds are shorting 3.4% of DS Smith stock?
https://shorttracker.co.uk/companies/?sort=2&d=desc

No, but I wouldn't regards that as a particularly good indicator, nor is it a high enough level to raise alram bells. Hedgies operate on a short-ish term and just want to make a regular turn rather than destroy the golden goose. If it gets over 10% or 15%, maybe that's the time to be worried - but Greene King was sometimes around that level over the years and was notably successful rather than a disaster.

I do not know much about shorting apart from the principals involved but in volatile markets I would have thought that traders would be happy to hold a short position just as much as a long one. Money to be made either way and as Arb says surely not a big enough short position to ring any alarm bells.

[Wizard]

The recent strong performance of BT.A reminded me of some of the past discussion of the share. At the time this thread started I was strongly thinking of selling, but I am very glad I did not. There are freqently such discussions on shares that underperform on dividends, but they are usualy very hard to assess as the question asked will always be 'what would the alternative have been?'.

Interestingly in this thread there is an opportunity to at least consider that and produce a single data point. In this post earlier in the thread https://lemonfool.co.uk/viewtopic.php?p=320618#p320618 IDPickering helpful told us he had sold BT.A and a number of other shares and also told us what the disposals were replaced with. I have used that to build a theoretical comparison. For the avoidance of doubt, this is not, and can never be, an analysis of IDPickerings decision as there are simplifying assumptions I make which will not hold true in his actual portfolio.

I assumed that all shares mentioned were sold and bought on the day of the post, 23rd June 2020. I also assumed they were held with exactly the same weighting and that the disposal proceeds were spilt exactly equally between the shares puchased. I ignored all dealing costs and stamp duty.



Broadly speaking, based on my simplified assumption the performance of the cutters that were sold (shown over the roughly 12 month period) has been materially better than the shares bought which were continuing to pay. The amount of dividend received is about a third of the gain for those that purchased but was less than 10% for those sold.

In this scenario, simplified though it is, it would seem a pot builder who is not drawing down any income would have been much better to not make the switch. Somebody drawing down a large proportion of the income from the portfolio may have been happy to trade overall performance for maintainng a necessary income level.

SHare price data from Hargreaves Lansdown. Dividend Data from dividenddata.co.uk.

[monabri]

and you've not even mentioned Royal Mail Group ( RMG)...

186p (23/06/2020)
587.x pence at close today.

Aviva 280p to 417p.

[idpickering]

The recent strong performance of BT.A reminded me of some of the past discussion of the share. At the time this thread started I was strongly thinking of selling, but I am very glad I did not. There are freqently such discussions on shares that underperform on dividends, but they are usualy very hard to assess as the question asked will always be 'what would the alternative have been?'.

Interestingly in this thread there is an opportunity to at least consider that and produce a single data point. In this post earlier in the thread https://lemonfool.co.uk/viewtopic.php?p=320618#p320618 IDPickering helpful told us he had sold BT.A and a number of other shares and also told us what the disposals were replaced with. I have used that to build a theoretical comparison. For the avoidance of doubt, this is not, and can never be, an analysis of IDPickerings decision as there are simplifying assumptions I make which will not hold true in his actual portfolio.

I assumed that all shares mentioned were sold and bought on the day of the post, 23rd June 2020. I also assumed they were held with exactly the same weighting and that the disposal proceeds were spilt exactly equally between the shares puchased. I ignored all dealing costs and stamp duty.



Broadly speaking, based on my simplified assumption the performance of the cutters that were sold (shown over the roughly 12 month period) has been materially better than the shares bought which were continuing to pay. The amount of dividend received is about a third of the gain for those that purchased but was less than 10% for those sold.

In this scenario, simplified though it is, it would seem a pot builder who is not drawing down any income would have been much better to not make the switch. Somebody drawing down a large proportion of the income from the portfolio may have been happy to trade overall performance for maintainng a necessary income level.

SHare price data from Hargreaves Lansdown. Dividend Data from dividenddata.co.uk.

I’m amazed that you’ve dragged this up again. I take offence to your antics. The bottom line is that I had no idea of the future of those companies and I don’t think you do either. Each to their own.

Ian.

[Wizard]

The recent strong performance of BT.A reminded me of some of the past discussion of the share. At the time this thread started I was strongly thinking of selling, but I am very glad I did not. There are freqently such discussions on shares that underperform on dividends, but they are usualy very hard to assess as the question asked will always be 'what would the alternative have been?'.

Interestingly in this thread there is an opportunity to at least consider that and produce a single data point. In this post earlier in the thread https://lemonfool.co.uk/viewtopic.php?p=320618#p320618 IDPickering helpful told us he had sold BT.A and a number of other shares and also told us what the disposals were replaced with. I have used that to build a theoretical comparison. For the avoidance of doubt, this is not, and can never be, an analysis of IDPickerings decision as there are simplifying assumptions I make which will not hold true in his actual portfolio.

I assumed that all shares mentioned were sold and bought on the day of the post, 23rd June 2020. I also assumed they were held with exactly the same weighting and that the disposal proceeds were spilt exactly equally between the shares puchased. I ignored all dealing costs and stamp duty.



Broadly speaking, based on my simplified assumption the performance of the cutters that were sold (shown over the roughly 12 month period) has been materially better than the shares bought which were continuing to pay. The amount of dividend received is about a third of the gain for those that purchased but was less than 10% for those sold.

In this scenario, simplified though it is, it would seem a pot builder who is not drawing down any income would have been much better to not make the switch. Somebody drawing down a large proportion of the income from the portfolio may have been happy to trade overall performance for maintainng a necessary income level.

SHare price data from Hargreaves Lansdown. Dividend Data from dividenddata.co.uk.

I’m amazed that you’ve dragged this up again. I take offence to your antics. The bottom line is that I had no idea of the future of those companies and I don’t think you do either. Each to their own.

Ian.

I tried to make it as clear as I could that this was not an analysis of your portfolio, in fact I explicitly said so. As I explained in my post I thought this represented a rare opportunity to consider holding versus trading without hindsight bias. I also concluded that for some the holding option may have been better while for others the trading option may be the better approach.

If you insist on looking for reasons to take offence I can do nothing about that.

[tjh290633]

The recent strong performance of BT.A reminded me of some of the past discussion of the share. At the time this thread started I was strongly thinking of selling, but I am very glad I did not. There are freqently such discussions on shares that underperform on dividends, but they are usualy very hard to assess as the question asked will always be 'what would the alternative have been?'.

Interestingly in this thread there is an opportunity to at least consider that and produce a single data point. In this post earlier in the thread https://lemonfool.co.uk/viewtopic.php?p=320618#p320618 IDPickering helpful told us he had sold BT.A and a number of other shares and also told us what the disposals were replaced with. I have used that to build a theoretical comparison. For the avoidance of doubt, this is not, and can never be, an analysis of IDPickerings decision as there are simplifying assumptions I make which will not hold true in his actual portfolio.

I assumed that all shares mentioned were sold and bought on the day of the post, 23rd June 2020. I also assumed they were held with exactly the same weighting and that the disposal proceeds were spilt exactly equally between the shares puchased. I ignored all dealing costs and stamp duty.



Broadly speaking, based on my simplified assumption the performance of the cutters that were sold (shown over the roughly 12 month period) has been materially better than the shares bought which were continuing to pay. The amount of dividend received is about a third of the gain for those that purchased but was less than 10% for those sold.

In this scenario, simplified though it is, it would seem a pot builder who is not drawing down any income would have been much better to not make the switch. Somebody drawing down a large proportion of the income from the portfolio may have been happy to trade overall performance for maintainng a necessary income level.

SHare price data from Hargreaves Lansdown. Dividend Data from dividenddata.co.uk.

As far as I can see, all you have demonstrated is that shares which have continued to pay dividends have by and large maintained their share price, while those that cancelled or reduced their dividends suffered a fall in share price. Since then they have recovered to some extent, while in the case of BT.A a new shareholder has built a substantial stake of 12%.

I don't think that your conclusions are a valid interpretation of the situation. I have shown several times that one year's losers are often the next year's winners in terms of share price movement. Fluctuations in share price are usually of little consequence in an HYP. Fluctuations in dividend rates are more important. You show an increase in dividends, I think, but this is merely a partial restoration of previous reductions. You will, of course, have noted that BT.A is still not paying dividends and is intimating an intention to recommence with an interim next February.

Distorting facts to suit your personal agenda is not helpful.

TJH

[Wizard]

The recent strong performance of BT.A reminded me of some of the past discussion of the share. At the time this thread started I was strongly thinking of selling, but I am very glad I did not. There are freqently such discussions on shares that underperform on dividends, but they are usualy very hard to assess as the question asked will always be 'what would the alternative have been?'.

Interestingly in this thread there is an opportunity to at least consider that and produce a single data point. In this post earlier in the thread https://lemonfool.co.uk/viewtopic.php?p=320618#p320618 IDPickering helpful told us he had sold BT.A and a number of other shares and also told us what the disposals were replaced with. I have used that to build a theoretical comparison. For the avoidance of doubt, this is not, and can never be, an analysis of IDPickerings decision as there are simplifying assumptions I make which will not hold true in his actual portfolio.

I assumed that all shares mentioned were sold and bought on the day of the post, 23rd June 2020. I also assumed they were held with exactly the same weighting and that the disposal proceeds were spilt exactly equally between the shares puchased. I ignored all dealing costs and stamp duty.



Broadly speaking, based on my simplified assumption the performance of the cutters that were sold (shown over the roughly 12 month period) has been materially better than the shares bought which were continuing to pay. The amount of dividend received is about a third of the gain for those that purchased but was less than 10% for those sold.

In this scenario, simplified though it is, it would seem a pot builder who is not drawing down any income would have been much better to not make the switch. Somebody drawing down a large proportion of the income from the portfolio may have been happy to trade overall performance for maintainng a necessary income level.

SHare price data from Hargreaves Lansdown. Dividend Data from dividenddata.co.uk.

As far as I can see, all you have demonstrated is that shares which have continued to pay dividends have by and large maintained their share price, while those that cancelled or reduced their dividends suffered a fall in share price. Since then they have recovered to some extent, while in the case of BT.A a new shareholder has built a substantial stake of 12%.

I don't think that your conclusions are a valid interpretation of the situation. I have shown several times that one year's losers are often the next year's winners in terms of share price movement. Fluctuations in share price are usually of little consequence in an HYP. Fluctuations in dividend rates are more important. You show an increase in dividends, I think, but this is merely a partial restoration of previous reductions. You will, of course, have noted that BT.A is still not paying dividends and is intimating an intention to recommence with an interim next February.

Distorting facts to suit your personal agenda is not helpful.

TJH

I would be grateful if you could explain which facts you think I have distorted. Are the share prices wrong? Are the dividend figures wrong? If not, then what?

I completely agree with the reference to your previous comment that year one's losers can often become year two's winners, which is exactly why from a capital perspective trading out of these shares may not be the best approach. As I said, and again you seem to agree, for somebody drawing an income the dividends paid may well be the primary consideration and outweigh the capital consideration.