Here is the data for the year ended 12 November 2020, the twentieth year of this non-tinker portfolio.
Anglo American 283.71 10,011
BA Tobacco 1,799.79 24,164
BT Group 262.51 6,983
Dixons Carphone 27.92 1,438
Glaxo 281.60 5,095
InterCon Hotels 0.00 18,425
Land Sex 78.30 4,585
Lloyds 0.00 2,590
Mitch & But 0.00 1,479
Persimmon 422.80 28,920
Pearson 173.75 5,325
RD Shell B 289.22 4,411
Rio Tinto 1,536.58 24,697
RSA 38.16 3,103
United Utilities 339.10 7,401
Total £ 5,533.44 148,627
Gain 73,627 98.2%
FTSE100 at start 6,274.8
Gain 64.1 1.0%
HYP1 capital outperformance 96.2%
Total to date £ 101,057
Corporate events in year
This is the purpose of HYPs and the £5,533 for 2020 was lousy, down 47.6% on last year and making it only the fourth ever year on year fall in the twenty year history of HYP1 - and definitely the worst. The previous record yoy fall was in 2009, down 36.8%, but the other two were far smaller at 8.0% in 2003 and 3.9% in 2014. From year one the increase is still though ahead by 60.3% over the 20 years.
Total income to date is £101,057, averaging £5,053 per year which is 6.74% pa on the £75,000 cost.
BA Tobacco was the single largest income contributor with 32.5% of total income and second was Rio Tinto with 27.8%. All others were far below these two. At the other end, there were three zeros, InterContinental Hotels, Lloyds Banking Group and Mitchells & Butlers.
There are two main reasons for the big fall. Firstly the pandemic causing many companies to suspend and cut dividends. The second and less obvious major influence was that RIO paid large specials last year which were not repeated in 2020.
However, note that much of the reduced income is likely to be made up next year when many companies, as far as I can establish at this stage, resume and increase dividends and in addition pay out sums that were originally due in 2020 but withheld. Persimmon in particular, previously one of the very largest HYP1 dividend contributors, has stated it will pay its postponed sums next year and if they follow through on that, it will make a very large boost to income recovery.
In effect, if I’m right, what is happening is that there will be a large timing difference in payouts between 2020 and 2021 rather than a long term impairment of the dividend stream so that the average of the two years may not be as awful as 2020 in isolation appears. No guarantees of course, dividend income is always risk income.
This is irrelevant or very much secondary depending on your viewpoint.
The value of £148,627 is up 98.2% since the outset and continues to murder the market with the FTSE100 over the 20 years up just 1.0%. Thus HYP1 is outperforming it by 96.2%. Last year the portfolio beat the market by 81.4% so has improved well upon that in 2020 due to the figures below. These results do not include any reinvested dividends.
In the last twelve months the FTSE100 has fallen 13.9% whilst HYP1 is down 6.9%, thus outperforming the index quite well this year.
Persimmon remains the largest holding at 19.5% of portfolio value with Rio Tinto at 16.6% and BA Tobacco at 16.3%. The smallest holdings are Mitchells and Butlers and Dixons Carphone at 1.0% with Lloyds at 1.7%.
No I don't think the HYP strategy is dead.