How might one currently construct a HYP in practice?

[monabri]

A few possible selections, marked (**). Although I've counted SSE & NG as candidates. Maybe I should have taken a punt on RDSB as well now that the dividamage has (hopefully) been done? I could have added SLA as their record (to date) is clear.

One thing that was apparent on mooching down the FTSE250 was the abundance of high(er) yielding ITs...just a comment!.

[tjh290633]

A similar question was put a few months back, and I replied by posting the top end of my portfolio down to about the median, which I think is about where the FTSE yield is at the moment. This is the current list:

Rank   EPIC   Yield 
   1   BP.    10.56%
   2   IMB     9.70%
   3   LGEN    7.73%
   4   BATS    7.55%*
   5   RIO     7.10%
   6   BHP     6.26%*
   7   VOD     5.74%
   8   SSE     5.57%
   9   NG.     5.45%
  10   ADM     5.05%*
  11   UU.     4.88%
  12   GSK     4.82%
  13   TATE    4.57%
  14   BLND    4.28%
  15   TSCO    4.26%
  16   RDSB    4.09%*
  17   PHP     3.98%
  18   PSON    3.52%
  19   ULVR    3.28%
  20   S32     3.27%*

I make it 5 duplicated sectors from that 20, considering SSE, NG. and UU. to be in different sectors. The median yield is 3.40% at the moment, so ULVR might be a little low to be considered. Of course, the highest yielding share does not have to be chosen, for those who are worried about BP. British Land has cancelled two dividends so far, but may be obliged to pay more later and again, I consider it to be a different animal from PHP.

In his earlier post, viewtopic.php?p=327036#p327036 dealtn went back a few years and raked over the misdemeanours of a number of shares, but I have ignored his comments on the shares in my list.

TJH

[Breelander]

... It certainly means that the published yield of the FTSE100 is meaningless and it is probably well under 4% now...

Yes, for a suitable 'yield' to use, the TTM yield is meaningless. You could aggregate the brokers' forecasts for all the FTSE100 constituents then calculate a forecast yield from that. To save you the effort, AJ Bell have done just that...

This leaves the FTSE 100 on a forecast yield of 3.6% for 2020

AJ Bell Dividend Dashboard - Q2 2020 (pdf)

[Dod101]

Thanks Bree. That is pretty close to my guesstimate. But it says something about the previous yield surely, that it was 'way too high for the good of those companies contributing, especially given the very low interest rates. 3.6% or so is probably a realistic hurdle for a HYP share these days.

Interesting what we can discover.

Dod

[moorfield]

Well, that link goes to a post that asked Clariman to name posters who had not been "following the faith" - which is neither the question I originally asked here nor the one I intended, and not one I'll even try to answer because site rules tell us to "Stick to the facts and argue the points discussed, rather than criticise the poster." And I too don't have the time or inclination to go searching through a 222-post thread for any other questions you asked on it.

Sorry wrong link, I was referring to the post immediately prior to that viewtopic.php?p=316707#p316707

My point still stands, when laying out the new rules the mods appear to have declined to follow through with an illustrative portfolio.

[Gengulphus]

Well, that link goes to a post that asked Clariman to name posters who had not been "following the faith" - which is neither the question I originally asked here nor the one I intended, and not one I'll even try to answer because site rules tell us to "Stick to the facts and argue the points discussed, rather than criticise the poster." And I too don't have the time or inclination to go searching through a 222-post thread for any other questions you asked on it.

Sorry wrong link, I was referring to the post immediately prior to that viewtopic.php?p=316707#p316707

My point still stands, when laying out the new rules the mods appear to have declined to follow through with an illustrative portfolio.

Thanks for the corrected link. There seems to me to be at least one entirely plausible alternative explanation for the one specific moderator you asked not having posted an illustrative portfolio, namely that AFAIAA, he is not a HYPer and so quite likely has no interest in spending a significant amount of time designing a HYP! So IMHO inferring a "No, it's not possible" answer by that moderator to my original question isn't justified.

In any case, that's as much of a diversion from what is now the subject of the thread as I am going to take part in, so I'm afraid I won't be responding again about it.

Gengulphus

[Gengulphus]

... It certainly means that the published yield of the FTSE100 is meaningless and it is probably well under 4% now...

Yes, for a suitable 'yield' to use, the TTM yield is meaningless. You could aggregate the brokers' forecasts for all the FTSE100 constituents then calculate a forecast yield from that. To save you the effort, AJ Bell have done just that...

This leaves the FTSE 100 on a forecast yield of 3.6% for 2020

AJ Bell Dividend Dashboard - Q2 2020 (pdf)

Many thanks for that - I was contemplating the possibility of doing a calculation along those lines and somewhat regretfully coming to the conclusion that it was more work than it was worth... So it's very pleasant to hear that someone else has done it!

One caveat about it is that like all yields, the calculation of that 3.6% involves a division by a 'price' - in this case, division of the total forecast dividends for the FTSE100 companies by their total market capitalisation. That total market capitalisation varies up and down, essentially in line with the FTSE100 index, so it matters what day the yield was calculated for. At a guess, it was June 30th, the last day of Q2; if so, the index is currently standing on 6290.30, almost 2% above its value of 6169.74 on June 30th. That means that we can expect the FTSE100 yield to currently be about 2% below 3.6%, which would make it about 0.072 percentage points less than 3.6%; depending on rounding effects, that will come out as either 3.5% or 3.6%, with 3.5% the more likely result.

Not a major effect in this case, but bearing in mind that AJ Bell presumably only do the calculation once per quarter, the FTSE100 index might have changed quite significantly since the last such calculation - and of course the forecast dividends fro companies might well have changed quite significantly as well. So the caveat is that such FTSE100 yield figures from AJ Bell will become increasing out-of-date as each quarter progresses...

Gengulphus

[MDW1954]

When the new rules were redrafted I asked (twice) the mods here ("HYP Practical - Some Changes"), for the avoidance of doubt and some illustration of the rules. None forthcoming, which I took as a "No". (*)

(*) I may be wrong on this as I haven't re-read the whole thread, nor do I have time to. If the mods did, and can link to the appropriate post, my apologies.

Moorfield,

If you don't have time to re-read the whole thread in order to properly ask your question, or check if there has been an answer, then I certainly don't.

I vaguely recall providing an answer to a question of yours, but whether it is this one or not I have no idea.

Point me to a particular post, and if it turns out not to have been answered, then I'll certainly have a go.

MDW1954

[Dod101]

... It certainly means that the published yield of the FTSE100 is meaningless and it is probably well under 4% now...

Yes, for a suitable 'yield' to use, the TTM yield is meaningless. You could aggregate the brokers' forecasts for all the FTSE100 constituents then calculate a forecast yield from that. To save you the effort, AJ Bell have done just that...

This leaves the FTSE 100 on a forecast yield of 3.6% for 2020

AJ Bell Dividend Dashboard - Q2 2020 (pdf)

Many thanks for that - I was contemplating the possibility of doing a calculation along those lines and somewhat regretfully coming to the conclusion that it was more work than it was worth... So it's very pleasant to hear that someone else has done it!

One caveat about it is that like all yields, the calculation of that 3.6% involves a division by a 'price' - in this case, division of the total forecast dividends for the FTSE100 companies by their total market capitalisation. That total market capitalisation varies up and down, essentially in line with the FTSE100 index, so it matters what day the yield was calculated for. At a guess, it was June 30th, the last day of Q2; if so, the index is currently standing on 6290.30, almost 2% above its value of 6169.74 on June 30th. That means that we can expect the FTSE100 yield to currently be about 2% below 3.6%, which would make it about 0.072 percentage points less than 3.6%; depending on rounding effects, that will come out as either 3.5% or 3.6%, with 3.5% the more likely result.

Not a major effect in this case, but bearing in mind that AJ Bell presumably only do the calculation once per quarter, the FTSE100 index might have changed quite significantly since the last such calculation - and of course the forecast dividends fro companies might well have changed quite significantly as well. So the caveat is that such FTSE100 yield figures from AJ Bell will become increasing out-of-date as each quarter progresses...

Gengulphus

But for the purposes of the subject in the thread it matters not a whit whether the estimate of the FTSE100 average is 3.5% or 3.6% so I am afraid that the discussion seems to grind to a halt at this point. the FTSE100 yield seems to be around 3.55% if it matters to anyone setting out to build a HYP at this particular time.

Dod

[Wizard]

I shouldn’t be posting here, but to try and help move things on...

There was discussion of FTSE forward yield before on HYS&S, I suggested 3.1% based on quoted analysis. As pointed out above also on HYS&S there was discussion of a possible HYP portfolio. Ignoring cutters I found it impossible to construct a list of shares above £1b market cap (well into FTSE250 territory) with greater than 3.1% forward yield without duplicating sectors, so upping the hurdle rate to 3.5% will just make it harder. Just posting a list of shares and ignoring the fact others have pointed out some of them are cutters is bizarre at best IMHO. Would be interested to see somebody actually have a decent go at constructing a list of candidates. If the only way to construct a list is to flex most of the rules then surely that is not an HYP?

[Dod101]

Well Wizard, if I am guilty so be it. I can only provide what I can see.

This thread is not yielding much in the way of new ideas which is a shame because I am as keen as you seem to be to get some new input.

Dod

[Arborbridge]

Well Wizard, if I am guilty so be it. I can only provide what I can see.

This thread is not yielding much in the way of new ideas which is a shame because I am as keen as you seem to be to get some new input.

Dod

Well, I haven't made a further input because as I explained yesterday, like many people I was out making use of a decent weather day. It's a bit early, in that case, to conclude that people are not going to contribute especially as this subject must demand a certain amount of thought and research.
My family actually have the belief that their demands on me might trump my desire to spend a long time at the computer trying to come up with something here! Would you credit that?

Arb.

[Gengulphus]

My family actually have the belief that their demands on me might trump my desire to spend a long time at the computer trying to come up with something here! Would you credit that?

You've clearly neglected to educate them properly about what's really important in life... :-J

Gengulphus

[MrFoolish]

I note the OP has changed the thread title. Is this going to bias the OP into concluding there is a workable strategy consistent with the rules, or is he open to concluding there might not be?

[Arborbridge]

My family actually have the belief that their demands on me might trump my desire to spend a long time at the computer trying to come up with something here! Would you credit that?

You've clearly neglected to educate them properly about what's really important in life... :-J

Gengulphus

It's an interesting point - why would I waste my time trying to construct a HYP at present anyway? Only intellectual curiosity, but otherwise it's a waste of effort. My approach and advice to anyone thinking of HYP isn't to build a lump sum HYP anyway, especially not at the moment. I might current construct a HYP intentionally over a period of time, not right now. If it turns out that one can only buy 7-9 sectors at the moment, really who cares? I wouldn't. I'd buy them and then add sectors later on as they come "into season". HYP isn't just for the next week or two, and one could afford to wait until the shares become available, increasing diversity as one proceeds.

For the intellectual experiment, Luni seems to have laid down rules as to what he would find as an acceptable answer: I would choose something different, and you and others likewise.

But the question people should address is the title of your thread. That is to say, how one might construct a HYP, in practice, not whether one can buy a lump sum HYP obeying Luni's own restrictive group of rules.

PS this is the last from me until tonight since we are out for the day again. Perhaps not even tonight and I certainly won't be bothering to do much research then!
In other words, I still think Dod is being a little impatient bearing in mind that people do have lives
Arb.

[Dod101]

I am sorry Arb thinks I am being a little impatient. That is probably true. I am on my own these days and yesterday I had a particularly busy day, mostly boring domestic stuff as my weather was not conducive to a day out. Between times I was thinking on this subject and trying to move it forward in the interests of my own curiosity. But time is something I have plenty of so I am happy to let the thread develop or not at its own pace.

Dod

[tjh290633]

I shouldn’t be posting here, but to try and help move things on...

There was discussion of FTSE forward yield before on HYS&S, I suggested 3.1% based on quoted analysis. As pointed out above also on HYS&S there was discussion of a possible HYP portfolio. Ignoring cutters I found it impossible to construct a list of shares above £1b market cap (well into FTSE250 territory) with greater than 3.1% forward yield without duplicating sectors, so upping the hurdle rate to 3.5% will just make it harder. Just posting a list of shares and ignoring the fact others have pointed out some of them are cutters is bizarre at best IMHO. Would be interested to see somebody actually have a decent go at constructing a list of candidates. If the only way to construct a list is to flex most of the rules then surely that is not an HYP?

Wizard you obviously haven't read the entire thread, as, if you had done, you would have seen viewtopic.php?p=327113#p327113 where I have given a list of 20 shares, with 5 duplicated sectors, which meets that criterion. [Deleted.]

TJH

Moderator Message:
Unnecessary last sentence removed. - Chris

[88V8]

A few possible selections, marked (**). Although I've counted SSE & NG as candidates. Maybe I should have taken a punt on RDSB as well now that the dividamage has (hopefully) been done? I could have added SLA as their record (to date) is clear.

One thing that was apparent on mooching down the FTSE250 was the abundance of high(er) yielding ITs...just a comment!.

Thanks for this.
But for me it serves mainly to illustrate the unfeasibility of buying a classic one-shot HYP right now:
VOD with its uncovered divi.
Three uttilities which I regard as uninvestable due to Govt interference.
GSK with its static divi.
Admiral of merit only through specials.

Yes, one can scratch together a list, but imho we can't even assemble 15 solid candidates, let alone 15 sectors, and in recent time many posters were keen to tell us that fifteen shares were not enough.

Surely the point of HYP was that it offered a secure, diversified, rising income. At the moment, from directly held equities, that simply isn't available.
Bending the rules, relaxing, come on chaps.

I do hold a lot of present and past HYP shares. During the panpanic I sold nothing, and took a few more on board, but to start a classic HYP now, from scratch? No thanks.
Over on HYSS there is/was another approach which chimes much more with me at this moment viewtopic.php?f=31&t=23853

I dare say I'm being O/T, after all this is supposed to be the HYP echo chamber, but as someone who had seven figures in an HYP, I think I'm entitled to point out that the emperor currently has too few clothes.

V8

[moorfield]

When the new rules were redrafted I asked (twice) the mods here ("HYP Practical - Some Changes"), for the avoidance of doubt and some illustration of the rules. None forthcoming, which I took as a "No". (*)

(*) I may be wrong on this as I haven't re-read the whole thread, nor do I have time to. If the mods did, and can link to the appropriate post, my apologies.

Moorfield,

If you don't have time to re-read the whole thread in order to properly ask your question, or check if there has been an answer, then I certainly don't.

I vaguely recall providing an answer to a question of yours, but whether it is this one or not I have no idea.

Point me to a particular post, and if it turns out not to have been answered, then I'll certainly have a go.

MDW1954

I was asking if the authors of the new rules might also post up an illustrative portfolio (on that post, or another locked thread authored by a mod) ? - the new rules should be able to uphold some scrutiny after all. It seems (to me) an obvious question, this thread reminded me to ask again.

Thank you!

[dealtn]

I shouldn’t be posting here, but to try and help move things on...

There was discussion of FTSE forward yield before on HYS&S, I suggested 3.1% based on quoted analysis. As pointed out above also on HYS&S there was discussion of a possible HYP portfolio. Ignoring cutters I found it impossible to construct a list of shares above £1b market cap (well into FTSE250 territory) with greater than 3.1% forward yield without duplicating sectors, so upping the hurdle rate to 3.5% will just make it harder. Just posting a list of shares and ignoring the fact others have pointed out some of them are cutters is bizarre at best IMHO. Would be interested to see somebody actually have a decent go at constructing a list of candidates. If the only way to construct a list is to flex most of the rules then surely that is not an HYP?

Wizard you obviously haven't read the entire thread, as, if you had done, you would have seen viewtopic.php?p=327113#p327113 where I have given a list of 20 shares, with 5 duplicated sectors, which meets that criterion. [Deleted.]

TJH

But do they meet the criteria?

Lets look at the list.

BP -
IMB - Div Cut
LGEN -
BATS - Div Cut
RIO - Div Cut
BHP - Div Cut
VOD - Div Cut
SSE - Div Cut
NG. - Div Cut
ADM - Div Cut
UU. -
GSK - Div Cut
TATE-
BLND - Div Cut
TSCO - No 5 year Div Record
RDSB - Div Cut
PHP - Div Cut
PSON - Div Cut
ULVR - Div 3.2%
S32 - Div Cut

All taken by looking at Hargreaves Lansdowne last 5 full years dividend information (although some maybe include specials). I haven't analysed them fully.

My understanding is that all need to have a "high", lets say about FTSE 100 average dividend, and a 5 year history, and must have no cuts.

To be clear I am not saying this isn't a realistic portfolio, but the thread is specifically about constructing a one-hit HYP now. That should surely mean for a newbie-HYPer who has no knowledge of the history, who simply wants to follow the (original?) HYP method and refers to those rules, can a portfolio be made? It might be possible, but to date I can't see enough candidates that "strictly" meet the criteria.

Is that a problem? Well I guess it depends. System rules are flexed and evolve over time. So is any yield now ok, rather than high? Is 3 years now the filter not 5? Are this year's cuts "allowable" due to the unprecedented current situation?

The problem is (a bit like Trigger's broom) at some point it is no longer the original thing. When Webb Ellis picked up the ball it was still a ball game, but for most it became Rugby, not Football. At what point is (modified) HYP, no longer HYP but some other Income Strategy?