The Lemon Fool

Not currently a HYP share, but some HYPers may hold it as a result of its takeover of Amec Foster Wheeler in 2017:

"The full year results reflect the strong strategic, financial and operational focus of the leadership team in an unprecedented trading environment. Revenue resilience reflects the benefits of Wood's broad end market exposure and adjusted EBITDA margin was successfully protected. Actions taken to protect cashflows and ensure balance sheet strength, including voluntary salary reductions by the Board, executive directors and senior leaders, and the withdrawal of dividend payments, together with progress on portfolio optimisation, have delivered a significant reduction in net debt.

While the enduring impacts of Covid-19 continue to be uncertain, Wood's focus on balance sheet strength remains and this is fully supported by the Board. In line with our approach at the interim results, the Board considers it prudent not to pay a 2020 final dividend. The Board recognises the importance of dividends to shareholders and is committed to reviewing the future policy once there is greater clarity on the longer-term impact of Covid-19 and increased end market stability."

https://investegate.co.uk/wood-group--j ... 00093337S/

Gengulphus

Gengulphus wrote:Not currently a HYP share, but some HYPers may hold it as a result of its takeover of Amec Foster Wheeler in 2017...

Thanks. Yes, I'm one of them...

Thank God I dumped this one when the dividend disappeared.

I think that will be my future strategy.
IF yield = 0 THEN dump

absolutezero wrote:Thank God I dumped this one when the dividend disappeared.

I think that will be my future strategy.
IF yield = 0 THEN dump

I did exactly that last year with a few shares. Some sold at a loss unfortunately, like Smith (DS) and Taylor Wimpey TW. I'd rather hold shares where the management do the right thing by their shareholders with regards to paying them their dividends when due, or if not on time, at least ASAP. No regrets from me, and currently, I'm in no rush to buy back into those pair, but might do so in the future. We'll see. As for John Wood, they've never been a HYP option for me.

Ian.

absolutezero wrote:I think that will be my future strategy.
IF yield = 0 THEN dump

I would adjust that algorithm slightly:

If yield = 0 THEN know where the money goes first THEN dump


Always a contentious action here, I can't recall what the Old Stone Tablets have to say on that, if anything at all. It may work until another market shock arrives, in which case you might find yourself doing a big dump

moorfield wrote:

absolutezero wrote:I think that will be my future strategy.
IF yield = 0 THEN dump

I would adjust that algorithm slightly:

If yield = 0 THEN know where the money goes first THEN dump


Always a contentious action here, I can't recall what the Old Stone Tablets have to say on that, if anything at all. It may work until another market shock arrives, in which case you might find yourself doing a big dump

I will paraphrase again.

IF individual company yield = 0 AND rest of market not in shock THEN dump

As for a big dump. I find doing that regularly is a huge help.

If only it were that simple. You are struggling to find the right algorithm because every case tends to be different, but certainly John Wood Group results are not very encouraging. In fact with great respect to Gengulphus, I cannot understand why they are even being discussed here.

I had only two shares where the dividend was cancelled, HSBC and M J Gleeson and have kept both. A year later and they have returned to paying dividends once again. In fact as I have said, the cut to the Shell and Imperial Brands dividends affected my dividend income much more and I still have them as well.

Dod

absolutezero wrote:As for a big dump. I find doing that regularly is a huge help.

A balanced diet would be of benefit

The margins for WG. are too small for my liking...any problems and they might tip into making a loss.

http://financials.morningstar.com/ratio ... region=GBR

Shouldn't it be dump when yield=0 and the knees have stopped jerking

Arborbridge wrote:Shouldn't it be dump when yield=0 and the knees have stopped jerking

I agree.

Take Marstons as an example. Dividends were stopped, last year but if you had sold straight away you would have got 30-40p per share. Now the share price is >90p.

Yes, by selling early you could buy a high yielding share and would have got a couple of dividends or so.

But now you can buy nearly 3 times that income by delaying the sale for a few months.

Stagecoach is another example in my HYP.

The lesson is that a cancelled dividend often leads to an over-reaction by the market, which means that is the worst time to dump the share. A bit of patience often leads to a higher selling price.

Disclosure: I sold Wood Group in 2018 at £6.27 shortly after I acquired the shares via the Amec takeover. I lost 14% in total return and never received a dividend. Current price, £2.91.

FD

funduffer wrote:

Arborbridge wrote:Shouldn't it be dump when yield=0 and the knees have stopped jerking

I agree.

Take Marstons as an example. Dividends were stopped, last year but if you had sold straight away you would have got 30-40p per share. Now the share price is >90p.

Yes, by selling early you could buy a high yielding share and would have got a couple of dividends or so.

But now you can buy nearly 3 times that income by delaying the sale for a few months.

Stagecoach is another example in my HYP.

The lesson is that a cancelled dividend often leads to an over-reaction by the market, which means that is the worst time to dump the share. A bit of patience often leads to a higher selling price.

Disclosure: I sold Wood Group in 2018 at £6.27 shortly after I acquired the shares via the Amec takeover. I lost 14% in total return and never received a dividend. Current price, £2.91.

FD

Annoyingly for me, I had Wood pencilled in as zero dividend for this year but decided to hang on - I have no idea why, because I had already had a clear out of other shares. Well, maybe that is why - I was feeling sated. I hung on too long.
This, BTW, is in my wife's HYP not in ArbHYP.

Arb.

absolutezero wrote:Thank God I dumped this one when the dividend disappeared.

If you had sold when the dividend disappeared then it looks like you would have received approx 159p a share. 28/2/20 was 366.20p and 31/3/20 was 159.40p, so maybe you got slightly higher.

On 28/2/21 they were 299.1p, so you have lost a fair percentage of capital by selling when the dividend was cut. I think last year were exceptional circumstances and I am willing to allow them until the next interim to see if they are going to reinstate the dividend.

I do realise that HYP is more concerned with capital rather than income, but by selling when the cut occurred you were able to buy less income producing shares than if you had waited a bit.

johnw11 wrote:
I do realise that HYP is more concerned with capital rather than income, but by selling when the cut occurred you were able to buy less income producing shares than if you had waited a bit.

With respect to you, a slip of the tongue/finger there I think/suspect? HYP is all about the income. Capital gains/losses are very much secondary.

Ian.

idpickering wrote:

johnw11 wrote:
I do realise that HYP is more concerned with capital rather than income, but by selling when the cut occurred you were able to buy less income producing shares than if you had waited a bit.

With respect to you, a slip of the tongue/finger there I think/suspect? HYP is all about the income. Capital gains/losses are very much secondary.

Ian.

I guess just a slip. Change "more concerned" to "less concerned" would do the trick.
At 6.46 John was probably "more concerned" with his rumbling stomach and getting some breakfast

Arb.

johnw11 wrote:

absolutezero wrote:Thank God I dumped this one when the dividend disappeared.

If you had sold when the dividend disappeared then it looks like you would have received approx 159p a share. 28/2/20 was 366.20p and 31/3/20 was 159.40p, so maybe you got slightly higher.

On 28/2/21 they were 299.1p, so you have lost a fair percentage of capital by selling when the dividend was cut. I think last year were exceptional circumstances and I am willing to allow them until the next interim to see if they are going to reinstate the dividend.

I do realise that HYP is more concerned with capital rather than income, but by selling when the cut occurred you were able to buy less income producing shares than if you had waited a bit.

I haven't lost any capital. I'd have to look, but I didn't take the money out and spend it.
Instead I reinvested it, so it still has market exposure (which has been generally up in that time) and I have had dividends from it.
Therefore I'm better off having not left it in John Wood.

This is the big HYP flaw as I see it.
If a company stops paying out altogether with no immediate prospect of reinstating dividends, that is not a high yield share.
Do people assume you take the money out and spend it as opposed to reinvesting it in something with a yield?
Reinvesting it in something else with a suitable yield (and still having that capital exposed to the market) seems very sensible.

EDIT
I sold on 11 August at 227.4p. And they are up 19% on that now.
I bought IG at 752p. Now up 13% plus a yield of about 6% or so. I'm no worse off, plus I get future IG dividends while WG is still not paying.
Granted, I could have bought another dog that proceeded to sink and cut dividends, but I didn't.

My other choice was Direct Line. Had I done that, the the capital would have been down 3% but the circa 8% yield would still have been profitable. Plus the forward non-zero yield.

absolutezero wrote:EDIT
I sold on 11 August at 227.4p. And they are up 19% on that now.
I bought IG at 752p. Now up 13% plus a yield of about 6% or so. I'm no worse off, plus I get future IG dividends while WG is still not paying.
Granted, I could have bought another dog that proceeded to sink and cut dividends, but I didn't.

absolutezero wrote:This is the big HYP flaw as I see it.
If a company stops paying out altogether with no immediate prospect of reinstating dividends, that is not a high yield share.

Exactly. That is why those that run a "tinkering" HYP (as many, many of us do) might well divest themselves of such shares and use their HYP selection criteria to select a substitute candidate, so not really a flaw at all?

Chris

idpickering wrote:

With respect to you, a slip of the tongue/finger there I think/suspect? HYP is all about the income. Capital gains/losses are very much secondary.

Ian.

Hi Ian, a total slip of the fingers and brains there by me there. As I am in NZ, it was not me waiting for breakfast, but maybe after 2 nice glasses of red wine.

Regards

John

absolutezero wrote:

johnw11 wrote:

absolutezero wrote:Thank God I dumped this one when the dividend disappeared.

EDIT
I sold on 11 August at 227.4p. And they are up 19% on that now.
I bought IG at 752p. Now up 13% plus a yield of about 6% or so. I'm no worse off, plus I get future IG dividends while WG is still not paying.
Granted, I could have bought another dog that proceeded to sink and cut dividends, but I didn't.

The dividend cut was announced on 2nd April, which was when I was thinking you had sold them and taken the larger hit, not delayed it until August when the price was better.

I do agree that normally if a company stops paying dividends then I will sell and buy a dividend producing company, it just the timing for when I do that. 2020 was a truly exceptional year and nearly all my holdings have reinstated their dividend, albeit some of them at a reduced level. WG is one of the exceptions and I waiting for the next intermim announcement to see if they start again.

John

johnw11 wrote:

idpickering wrote:

With respect to you, a slip of the tongue/finger there I think/suspect? HYP is all about the income. Capital gains/losses are very much secondary.

Ian.

Hi Ian, a total slip of the fingers and brains there by me there. As I am in NZ, it was not me waiting for breakfast, but maybe after 2 nice glasses of red wine.

Regards

John

No worries. Thanks for taking my comment in the light-hearted manner I intended it.

Ian.