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Arb HYP adjustment

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Dod101
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Re: Arb HYP adjustment

#444370

Postby Dod101 » September 22nd, 2021, 11:10 am

I understand the problem with cash being released in the 'wrong' broker account but I must say that I would not be topping up abrdn. Haven't they announced a dividend freeze for at least a couple of years? That of course reflects the fact that as a business it is not really very good. Chesnara I would marginally prefer. Good income but capitalwise it has gone nowhere for quite some time.

Dod

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Re: Arb HYP adjustment

#444468

Postby Arborbridge » September 22nd, 2021, 3:38 pm

Dod101 wrote:I understand the problem with cash being released in the 'wrong' broker account but I must say that I would not be topping up abrdn. Haven't they announced a dividend freeze for at least a couple of years? That of course reflects the fact that as a business it is not really very good. Chesnara I would marginally prefer. Good income but capitalwise it has gone nowhere for quite some time.

Dod


I will look into the dividend freeze - I can't say I remember much about anything these days :? It may not be a good business - I have no real idea about that - but the TR I've had is greater than my HYP average. However, I see the point on the income side, which is more in hope than actuality, and has been held then slashed - but is that uniquely bad amongst shares in the past two years? - or is abdrn just being realistic when others aren't? Normally, that would rule it out from topups, so I'll have to think carefully about it.

The alternative would be for the capital just to leak away into my IT basket, or transfer to a different ISA if the choices are any better.

I know you've never liked aberdeen (so much easier to type the full word!) but I also note you would only marginally prefer Chesnara, which suggests you are turning away from that former favourite.

No rush!

Arb.

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Re: Arb HYP adjustment

#444506

Postby Dod101 » September 22nd, 2021, 5:19 pm

Chesnara continues to increase its dividend but as you will see its capital performance has been very disappointing. Three years ago the shares were around £4, now they seem to struggle to maintain £3. That is not good, no matter how good the yield (around 7.2%) Surely there is scope for a rerating but I have been saying that for a while.

As for abrdn, in August there was an item in the IC discussing them. It said that in the half year results, they indicated that the dividend will be held until the cover is up to about 1.5 times. They point out that the cost to net income ratio is currently a very high 79% and that is the key to raising the dividend cover. Schroders by contrast has a ratio of only 67%. Apparently at least some of that can be explained by the mix of assets under management and abrdn has too much in money market funds and fixed income where the fees are small.

Of the two, I would plump for Chesnara without any great enthusiasm but I think it a better bet than abrdn. As you will know I hold Chesnara but not abrdn.

For what its worth.

Dod

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Re: Arb HYP adjustment

#444510

Postby Arborbridge » September 22nd, 2021, 5:29 pm

Dod101 wrote:Chesnara continues to increase its dividend but as you will see its capital performance has been very disappointing. Three years ago the shares were around £4, now they seem to struggle to maintain £3. That is not good, no matter how good the yield (around 7.2%) Surely there is scope for a rerating but I have been saying that for a while.

As for abrdn, in August there was an item in the IC discussing them. It said that in the half year results, they indicated that the dividend will be held until the cover is up to about 1.5 times. They point out that the cost to net income ratio is currently a very high 79% and that is the key to raising the dividend cover. Schroders by contrast has a ratio of only 67%. Apparently at least some of that can be explained by the mix of assets under management and abrdn has too much in money market funds and fixed income where the fees are small.

Of the two, I would plump for Chesnara without any great enthusiasm but I think it a better bet than abrdn. As you will know I hold Chesnara but not abrdn.

For what its worth.

Dod


Thanks for that: food for thought. On the whole, I approve of a cover target of 1.5 - if only they can keep it going! Chesnara gives me a slight problem in that I have already invested quite a lot in it, and one might say I am backing what has so far been a loser rather than a winner. Perversely, Aberdeen, in this context, is the winner as its return has been nicely positive.
I can do little more than picker over it, or toss a coin :roll: I will probably end up doing my usual: "a bit o' this and a bit o' that".

The HYPer's epitaph: I was playing the long game. Or, I lived in hope.
Arb.

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Re: Arb HYP adjustment

#444558

Postby JohnnyCyclops » September 22nd, 2021, 8:37 pm

Always curious about stocks I don't know.

Abrdn, from half-year results, 10 August. Does read like they are locked into a flat dividend at 14.6p until the cover improves.

"Rebased dividend of 14.6p per annum until adjusted capital generation reaches 1.5x cover."

and

"We take a disciplined approach to capital allocation with a focus on building returns for shareholders. Dividends have been rebased to a sustainable level of 14.6p and we intend to grow the dividend once it is 1.5x covered by adjusted capital generation."

and

"We are at the start of the journey. At abrdn we are building a new future, starting from now. Stephen Bird. Chief Executive Officer "

and, this longer extract with the specifics, such as they are:

Dividends
As disclosed in the Annual report and accounts 2020, it is the Board's current intention to maintain the total annual dividend at 14.6p (with the interim and final both at 7.3p per share), until it is covered at least 1.5 times by adjusted capital generation, at which point the Board will seek to grow the dividend in line with its assessment of the underlying medium term growth in profitability.

The Board has accordingly declared an interim dividend for 2021 of 7.3p (H1 2020: 7.3p) per share which will be paid on 28 September 2021 to shareholders on the register at close of business on 20 August 2021. The dividend payment is expected to be £154m.

Adjusted capital generation in the half year of £176m, was 1.14 times the dividend payment.

The adjusted capital generation trend and dividend coverage is shown below:

H1 2020: £176m at 0.65x the dividend
H2 2020: £159m at 1.02x the dividend
H1 2021: £176m at 1.14x the dividend


Source : https://www.investegate.co.uk/abrdn-plc ... 00040777I/

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Re: Arb HYP adjustment

#444619

Postby Arborbridge » September 23rd, 2021, 8:14 am

JohnnyCyclops wrote:Always curious about stocks I don't know.

Abrdn, from half-year results, 10 August. Does read like they are locked into a flat dividend at 14.6p until the cover improves.

"Rebased dividend of 14.6p per annum until adjusted capital generation reaches 1.5x cover."

and

"We take a disciplined approach to capital allocation with a focus on building returns for shareholders. Dividends have been rebased to a sustainable level of 14.6p and we intend to grow the dividend once it is 1.5x covered by adjusted capital generation."

and

"We are at the start of the journey. At abrdn we are building a new future, starting from now. Stephen Bird. Chief Executive Officer "

and, this longer extract with the specifics, such as they are:

Dividends
As disclosed in the Annual report and accounts 2020, it is the Board's current intention to maintain the total annual dividend at 14.6p (with the interim and final both at 7.3p per share), until it is covered at least 1.5 times by adjusted capital generation, at which point the Board will seek to grow the dividend in line with its assessment of the underlying medium term growth in profitability.

The Board has accordingly declared an interim dividend for 2021 of 7.3p (H1 2020: 7.3p) per share which will be paid on 28 September 2021 to shareholders on the register at close of business on 20 August 2021. The dividend payment is expected to be £154m.

Adjusted capital generation in the half year of £176m, was 1.14 times the dividend payment.

The adjusted capital generation trend and dividend coverage is shown below:

H1 2020: £176m at 0.65x the dividend
H2 2020: £159m at 1.02x the dividend
H1 2021: £176m at 1.14x the dividend


Source : https://www.investegate.co.uk/abrdn-plc ... 00040777I/


Very useful, thanks. I have mixed feelings about this, naturally enough. If we are worried about "culture", it seems to me what they are saying here is all virtuous - we won't increases dividends beyond what can be prudently afforded. I'd prefer that to companies who borrow to pay out and their macho management cannot admit the problem. People here often comment that cutting the dividend in this prudent way makes a company more investable, not less.

On the other hand, it is also true that unless this company raises its game, dividends will not pick up - indeed it could be a long time until dividends return to their former unaffordable size.

We are back at making a judgement once more about an unknowable future - as they all are! The question is whether buy more and to wait for this future which develops, or stick (or even sell) and join some other unknowable future. (Even companies which have made "promises" about dividends, also have unknowable futures).

Dod might advise selling and moving on, but in contrast I notice that TJH held on to BT shares despite knowing the future for its dividends was bleak - actually bleaker than Aberdeen's statement I remember.

Arb.

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Re: Arb HYP adjustment

#446330

Postby Arborbridge » September 29th, 2021, 3:58 pm

My top up took place today, but it wasn't Abrdn as expected, because that company was in a different account to the cash! Therefore, I took the next valid company where the cash was, Chesnara, and that received some of the cash liberated from my trim of Admiral. Chesnara is now x1.27 median for capital weight, provides 4.5% of my income, and lies 20th in the table for topups. It is therefore unlikely to receive anymore cash for a while. It has already received 4.45% of the HYP capital and sits at a 20% loss. Whether this is called backing a loser remains to be seen, but I expect it to bounce back in due course.

The HYP now looks like this in terms of capital weight:-



How the balance of my Admiral cash will be used, I haven't yet decided.

Arb.

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Re: Arb HYP adjustment

#459258

Postby Arborbridge » November 19th, 2021, 12:21 pm

This week there was a topup of Primary Healthcare Properties. This was the first qualifying share in a broker account which had some cash to invest. Under more normal circumstances, this share would have been ruled out as at 4.1% the forecast yield is under 90% of my average, which I usually use as a target for selection. However, PHP is a steady share and the yield is enough to live on, so I gave it the nod.

Afterwards, the top of the table looks like this:-



UKW or abbrrddnn seem likely recipients next time there is cash, although that may well alter. At present, the cash pot in my SIPP is down to my self-impose lowest level, and December is usually a poor month. It could be some time before there is any more free cash in that account as my pension is drawn from it.
Incidentally, my forecast yield at the mo is 5.2%.

Arb.

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Re: Arb HYP adjustment

#459315

Postby idpickering » November 19th, 2021, 3:18 pm

Thanks for the update Arb. As I mentioned elsewhere PHP are my likely top up next month, and coincidently, UKW are in the frame for my January top up currently, but the later might change by then.

Ian.

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Re: Arb HYP adjustment

#459326

Postby monabri » November 19th, 2021, 3:57 pm

It would be nice if the miners delivered that level of yield but I don't think they will ( iron ore prices).

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Re: Arb HYP adjustment

#459335

Postby Arborbridge » November 19th, 2021, 4:24 pm

monabri wrote:It would be nice if the miners delivered that level of yield but I don't think they will ( iron ore prices).


Probably not, but it'll evolve as time goes on. Worried? -not worried 8-)

I doubt they will receive any more cash (even if there were any!) for the moment.

Arb.

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Re: Arb HYP adjustment

#459339

Postby Dod101 » November 19th, 2021, 4:33 pm

Arborbridge wrote:This week there was a topup of Primary Healthcare Properties. This was the first qualifying share in a broker account which had some cash to invest. Under more normal circumstances, this share would have been ruled out as at 4.1% the forecast yield is under 90% of my average, which I usually use as a target for selection. However, PHP is a steady share and the yield is enough to live on, so I gave it the nod.

Afterwards, the top of the table looks like this:-



UKW or abbrrddnn seem likely recipients next time there is cash, although that may well alter. At present, the cash pot in my SIPP is down to my self-impose lowest level, and December is usually a poor month. It could be some time before there is any more free cash in that account as my pension is drawn from it.
Incidentally, my forecast yield at the mo is 5.2%.

Arb.


The yield on the tobaccos is ridiculous!

Dod

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Re: Arb HYP adjustment

#459419

Postby Arborbridge » November 19th, 2021, 8:34 pm

Dod101 wrote:The yield on the tobaccos is ridiculous!

Dod


Sorry Guv, don't blame me :lol: It's the market what done it.

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Re: Arb HYP adjustment

#459421

Postby Dod101 » November 19th, 2021, 8:36 pm

Arborbridge wrote:
Dod101 wrote:The yield on the tobaccos is ridiculous!

Dod


Sorry Guv, don't blame me :lol: It's the market what done it.


It does though amaze me that in a world of very low interest rates, people are not snapping up tobacco shares. The dividends look at least secure at current levels (if not likely to increase!)

Dod

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Re: Arb HYP adjustment

#459423

Postby monabri » November 19th, 2021, 8:41 pm

Dod101 wrote:
Arborbridge wrote:
Dod101 wrote:The yield on the tobaccos is ridiculous!

Dod


Sorry Guv, don't blame me :lol: It's the market what done it.


It does though amaze me that in a world of very low interest rates, people are not snapping up tobacco shares. The dividends look at least secure at current levels (if not likely to increase!)

Dod


I bought a few IMB last week. My next top up will be BATS unless something else ''pickers'' into view.

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Re: Arb HYP adjustment

#459429

Postby Arborbridge » November 19th, 2021, 8:58 pm

monabri wrote:
Dod101 wrote:
Arborbridge wrote:
Sorry Guv, don't blame me :lol: It's the market what done it.


It does though amaze me that in a world of very low interest rates, people are not snapping up tobacco shares. The dividends look at least secure at current levels (if not likely to increase!)

Dod


I bought a few IMB last week. My next top up will be BATS unless something else ''pickers'' into view.


I'd assume that the existential threat to smoking is behind the silly yields. The market is telling us it will end in tears, and we are for our part taking higher risks. As I've just commented elsewhere, HYP is a high risk strategy, whether some realise it or not. It only becomes less risky if one assume that capital does not matter, to the extent we do not intend to realise it. This is the part which ordinary investors cannot understand and where Pyad was unusual.

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Re: Arb HYP adjustment

#459431

Postby Dod101 » November 19th, 2021, 9:26 pm

Arborbridge wrote:
monabri wrote:
Dod101 wrote:
It does though amaze me that in a world of very low interest rates, people are not snapping up tobacco shares. The dividends look at least secure at current levels (if not likely to increase!)

Dod


I bought a few IMB last week. My next top up will be BATS unless something else ''pickers'' into view.


I'd assume that the existential threat to smoking is behind the silly yields. The market is telling us it will end in tears, and we are for our part taking higher risks. As I've just commented elsewhere, HYP is a high risk strategy, whether some realise it or not. It only becomes less risky if one assume that capital does not matter, to the extent we do not intend to realise it. This is the part which ordinary investors cannot understand and where Pyad was unusual.


I certainly take that on board. The capital is simply a means to an end although for me that is difficult to accept as it goes against all my instincts.

Dod

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Re: Arb HYP adjustment

#459471

Postby Arborbridge » November 20th, 2021, 7:41 am

Dod101 wrote:
Arborbridge wrote:
monabri wrote:
I bought a few IMB last week. My next top up will be BATS unless something else ''pickers'' into view.


I'd assume that the existential threat to smoking is behind the silly yields. The market is telling us it will end in tears, and we are for our part taking higher risks. As I've just commented elsewhere, HYP is a high risk strategy, whether some realise it or not. It only becomes less risky if one assume that capital does not matter, to the extent we do not intend to realise it. This is the part which ordinary investors cannot understand and where Pyad was unusual.


I certainly take that on board. The capital is simply a means to an end although for me that is difficult to accept as it goes against all my instincts.

Dod


or me that is difficult to accept as it goes against all my instincts.
- me too, and we are quite normal in that! It took me about three years before I "got it" and stopped being too concerned about capital in the way I had previously. Of course, reading these boards and measuring my HYP as part of my own experiment with it had the effect of unnecessarily reminding me of capital performance - so I never quite achieved the required Zen state of unconcern about capital which Pyad did with HYP1 (but then, for him it probably wasn't real money? - we;ve never actually been told, AFAIK, whether he invested real capital).

Following the classical HYP line completely is very difficult indeed, unless one becomes almost entirely detached. Who here has achieved that???? - and if they had would they be writing here anyway? (examples might be Bree and Miner 1000)

Arb.

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Re: Arb HYP adjustment

#459648

Postby Breelander » November 20th, 2021, 5:04 pm

Arborbridge wrote:.... I never quite achieved the required Zen state of unconcern about capital which Pyad did with HYP1 (but then, for him it probably wasn't real money? - we;ve never actually been told, AFAIK, whether he invested real capital).

He did....

pyad (2006) wrote: ...it's been a while since I wrote about my personal HYP, so here's an update.
https://web.archive.org/web/20071102081 ... rlier.aspx

Following the classical HYP line completely is very difficult indeed, unless one becomes almost entirely detached. Who here has achieved that???? - and if they had would they be writing here anyway? (examples might be Bree and Miner 1000)

Another example could be JohnnyCyclops....

JohnnyCyclops wrote:I’ve just come back to our HYP (and back to TLF) after being an ‘absentee landlord’ for over three years. The HYP’s not in too bad a shape, all things considered.
viewtopic.php?f=15&t=30999

Letting go and achieving Zen is remarkably liberating, but even I have been known to fall from grace ;)
viewtopic.php?p=185259#p185259

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Re: Arb HYP adjustment

#459666

Postby Arborbridge » November 20th, 2021, 6:06 pm

Breelander wrote:
Arborbridge wrote:.... I never quite achieved the required Zen state of unconcern about capital which Pyad did with HYP1 (but then, for him it probably wasn't real money? - we;ve never actually been told, AFAIK, whether he invested real capital).

He did....

pyad (2006) wrote: ...it's been a while since I wrote about my personal HYP, so here's an update.
https://web.archive.org/web/20071102081 ... rlier.aspx

Following the classical HYP line completely is very difficult indeed, unless one becomes almost entirely detached. Who here has achieved that???? - and if they had would they be writing here anyway? (examples might be Bree and Miner 1000)

Another example could be JohnnyCyclops....

JohnnyCyclops wrote:I’ve just come back to our HYP (and back to TLF) after being an ‘absentee landlord’ for over three years. The HYP’s not in too bad a shape, all things considered.
viewtopic.php?f=15&t=30999

Letting go and achieving Zen is remarkably liberating, but even I have been known to fall from grace ;)
viewtopic.php?p=185259#p185259


Thank you - I had unfairly overlooked JC.

Arb.


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