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silly yields

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Arborbridge
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silly yields

#443898

Postby Arborbridge » September 20th, 2021, 6:09 pm

Recently there was a conversation about how Carillion's yield had been a warning which some of us (including me, BTW) ignored for too long. Well, with this in mind should we be taking heed of some of these yields? These are my HYP share forecast yields straight from HYPTUSS. Please note that I haven't checked them for "funnies" which can sometimes occur, but on the face of it, there are some quite dangerous yields going around. My average forecast yield as of tonight is 5.39%



To make it clear, I am not currently actively looking to sell any of these, but I thought this might make an interesting topic of conversation.

Actually, there is one share on high yield which is potentially in my top-up zone for the month, and that is Chesnara. Riding for a fall, or an opportunity would you say?

Arb.

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Re: silly yields

#443907

Postby moorfield » September 20th, 2021, 6:32 pm

Well that RIO yield is complete nonsense. I'm guessing it might be assuming the same specials paid this year will be paid again next year? - which is a silly one to be making. I don't use HYPTUSS, if I were that would not be giving me a lot of confidence about how it is working under the covers.

Anyway you know by now how I fix my "floor" and "ceiling", these are the ones I would filter for further DYOR (I will exclude that RIO yield as it is for now).


Arborbridge wrote:

tjh290633
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Re: silly yields

#443909

Postby tjh290633 » September 20th, 2021, 6:43 pm

Here are my calculations, which use the last set of declared dividends, and the current share price:

Share                            EPIC   Q1         Int (p)    Q3        Fin (p)    Total      Price      Gross 

Admiral Group plc ADM 73.100 87.900 22.400 63.600 247.000 3383.00 7.30%
Aviva plc AV. 7.350 14.000 21.350 389.20 5.49%
AstraZeneca plc AZN 64.800 137.400 202.200 8559.00 2.36%
BAe Systems plc BA. 9.900 14.300 24.200 558.00 4.34%
British American Tobacco plc BATS 53.900 53.900 53.900 53.900 215.600 2641.50 8.16%
British Land Co plc BLND 8.400 6.640 15.040 502.00 3.00%
BHP Group plc BHP 72.987 144.378 217.366 1843.80 11.79%
BP plc BP. 3.712 3.953 3.917 3.768 15.350 303.70 5.05%
BT Group plc BT.A 2.500 5.200 7.700 155.30 4.96%
Compass Group plc CPG 0.000 0.000 0.000 1486.00 0.00%
Diageo plc DGE 27.960 44.590 72.550 3437.00 2.11%
GlaxoSmithKline plc GSK 19.000 19.000 19.000 23.000 80.000 1404.00 5.70%
IG Group Holdings plc IGG 12.960 30.240 43.200 850.00 5.08%
Imperial Brands plc IMB 21.060 21.060 48.000 48.010 138.130 1519.50 9.09%
IMI plc IMI 7.900 15.000 22.900 1768.00 1.30%
Kingfisher plc KGF 2.750 5.500 8.250 368.00 2.24%
Legal & General Group plc LGEN 5.180 12.640 17.820 268.80 6.63%
Lloyds Banking Group plc LLOY 0.670 0.570 1.240 43.15 2.87%
Marstons plc MARS 0.000 0.000 0.000 78.50 0.00%
Marks & Spencer Group plc MKS 0.000 0.000 0.000 181.75 0.00%
National Grid plc NG. 17.000 32.160 49.160 956.70 5.14%
Primary Health Properties plc PHP 1.550 1.550 1.550 1.550 6.200 160.00 3.88%
Pearson plc PSON 6.300 13.500 19.800 709.80 2.79%
Reckitt Benckiser Group plc RKT 73.000 101.600 174.600 5925.00 2.95%
Royal Dutch Shell plc B RDSB 12.260 17.380 12.480 11.960 54.080 1430.60 3.78%
Rio Tinto plc RIO 133.280 270.840 66.770 221.860 692.750 4714.00 14.70%
South32 Limited S32 1.007 1.455 2.545 5.007 172.20 2.91%
Segro plc SGRO 7.400 15.200 22.600 1250.50 1.81%
DS Smith plc SMDS 4.000 8.100 12.100 430.50 2.81%
SSE plc SSE 24.000 56.600 80.600 1641.50 4.91%
Tate & Lyle plc TATE 8.800 22.000 30.800 682.80 4.51%
Tesco plc TSCO 3.200 5.950 9.150 254.45 3.60%
Taylor Wimpey plc TW. 4.140 4.140 8.280 166.35 4.98%
Unilever plc ULVR 37.100 36.930 37.460 37.600 149.090 3988.00 3.74%
United Utilities plc UU. 14.410 28.830 43.240 1037.00 4.17%
Vodafone Group plc VOD 3.981 3.834 7.815 114.14 6.85%

The yields are in the right hand column, just off my screen at the current setting. I don't see how HYPTUSS gets that yield for RIO. Incidentally I put specials in one or both of the quarters in most cases.

TJH

Itsallaguess
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Re: silly yields

#443913

Postby Itsallaguess » September 20th, 2021, 7:10 pm

tjh290633 wrote:
I don't see how HYPTUSS gets that yield for RIO.


The same way it's always done - by looking at the Sharecast page -

https://www.sharecast.com/equity/Rio_Tinto

It's clearly something that needs a close look at in terms of how that figure is being calculated for RIO here, or the validity of it on that page, but I just wanted to point out that HYPTUSS isn't just making stuff up, and I refuse to believe that there's many regulars here that aren't aware of the Sharecast link for these particular Forward Yields...

Don't shoot the messenger...

Cheers,

Itsallaguess

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Re: silly yields

#443914

Postby moorfield » September 20th, 2021, 7:19 pm

I have RIO on a yield of 10.4% , using a dividend of 492.70p excluding the specials. Also excluded as just above my ceiling, it's price fall has been a hard one of late.

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Re: silly yields

#443936

Postby Arborbridge » September 20th, 2021, 8:49 pm

moorfield wrote:I have RIO on a yield of 10.4% , using a dividend of 492.70p excluding the specials. Also excluded as just above my ceiling, it's price fall has been a hard one of late.


Still, it's a yield that fails the Dod-Carillion test, does it not?


Arb.

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Re: silly yields

#443939

Postby Arborbridge » September 20th, 2021, 8:55 pm

tjh290633 wrote:The yields are in the right hand column, just off my screen at the current setting. I don't see how HYPTUSS gets that yield for RIO. Incidentally I put specials in one or both of the quarters in most cases.

TJH


Well, you've arrived at a pretty silly yield for RIO yourself. When I say that, I don;t mean you are silly, just that the yield us unbelievably high whether we take your figure or Sharecast's as reported by the HYPTUSS.

Arb.

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Re: silly yields

#443943

Postby Itsallaguess » September 20th, 2021, 9:16 pm

Arborbridge wrote:
These are my HYP share forecast yields straight from HYPTUSS. Please note that I haven't checked them for "funnies" which can sometimes occur, but on the face of it, there are some quite dangerous yields going around.



It's always worth taking a quick look on the Dividend Data 'Yield History' pages for these types of 'interesting' yields, because it both gives an opportunity to compare the above Sharecast yields with another data-source initially, and also because the Dividend Data 'Yield History' page will almost always contain their own underlying calculations lower down the page, to at least show how they are getting to their own yield figures, and this can often help with these types of 'sanity-check' exercises...

Taking the above Rio example of 17.4%, we can see that Dividend Data are showing a yield-calculation including specials (they also show one without...) that provides them with a yield figure of 14.96%, which isn't a million miles away from the slightly higher Sharecast-based yield figure shown above -

RIO -

Image

Source - https://www.dividenddata.co.uk/dividend-yield.py?epic=RIO



They also show the following calculations and yields for both BHP and Imperial Brands that aren't too far away from the above Sharecast figures either -

BHP -

Image

Source - https://www.dividenddata.co.uk/dividend-yield.py?epic=BHP



Imperial Brands -

Image

Source - https://www.dividenddata.co.uk/dividend-yield.py?epic=IMB


Note that in both the RIO and BHP calculations shown above, an exchange rate of $1 = £0.7324 has been used in the final calculation, and this figure is also given on the relevant links above, under the yield calculations..

Cheers,

Itsallaguess

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Re: silly yields

#443949

Postby onthemove » September 20th, 2021, 9:45 pm

Arborbridge wrote:
tjh290633 wrote:The yields are in the right hand column, just off my screen at the current setting. I don't see how HYPTUSS gets that yield for RIO. Incidentally I put specials in one or both of the quarters in most cases.

TJH


Well, you've arrived at a pretty silly yield for RIO yourself. When I say that, I don;t mean you are silly, just that the yield us unbelievably high whether we take your figure or Sharecast's as reported by the HYPTUSS.

Arb.


I'm not going to bother digging out the link again, but Rio (iirc) announced a few years ago that they had abandoned a progressive dividend policy.

As it's turned out, their earnings have allowed them to keep raising the dividend, but without the need to sustain a progressive policy, don't be under any illusion that the dividend levels are necessarily 'sustainable'. It'll be entirely down to earnings, without any attempt to smooth any cycles, etc.

And this comment rung alarm bells to me in this recent announcement...

"Borrowing to fund the payment of a dividend is a normal commercial practice."
https://www.londonstockexchange.com/new ... t/15137434


I'll admit I've been wrong footed with my expectations that they'll reduce their dividends at some point since they scrapped their progressive policy, but without a progressive policy it surely must be a matter of when and not if.

I just put together my predictions for next year the other week, and I've assumed less than half of the current year's ordinary dividend (and no special), but I've no reason other than I much prefer to under predict and then get a nice surprise if the dividend comes in much higher.

I must admit, I did similar for GSK with the split, etc, and was a bit saddened by how much of a drop just the two companies (Rio and GSK) substantially reducing their dividends would make to my annual dividends. And that's just a drop, not a scrapping of their dividends.

Back to RIO ... I seem to recall reading a few commentaries about the economy in china perhaps starting to pull back and the demand for raw materials now subsiding somewhat, which is expected to reduce prices. I would say that might reduce the dividend next year, but I've been wrong footed with this so many times now (for the better) I'm just going to play it by ear and not make any real predictions.

tjh290633
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Re: silly yields

#443957

Postby tjh290633 » September 20th, 2021, 10:23 pm

Itsallaguess wrote:
tjh290633 wrote:
I don't see how HYPTUSS gets that yield for RIO.


The same way it's always done - by looking at the Sharecast page -

They are obviously using some fictitious information to get at the higher figure.

I have looked at https://www.sharecast.com/equity/Rio_Tinto and that does not reflect the dividends to be paid this week, nor those paid as finals previously. Their system obviously cannot cope with special dividends.

TJH

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Re: silly yields

#443975

Postby Charlottesquare » September 20th, 2021, 11:27 pm

Surely check one is to compare dividend per share with earnings per share, if dividends exceed earnings then a look over last few years' accounts and a check to see what non cash write offs may have been made within same (if any) might make one more or less comfortable. Obviously a single year might not set alarm bells ringing but if it is a recurring pattern further investigation might well be warranted.

The other check might be looking at what is happening with working capital and debt levels, again single years may be misleading but a look over 3-5 might tell you something you ought to at least consider.

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Re: silly yields

#443995

Postby Arborbridge » September 21st, 2021, 7:37 am

tjh290633 wrote:
Itsallaguess wrote:
tjh290633 wrote:
I don't see how HYPTUSS gets that yield for RIO.


The same way it's always done - by looking at the Sharecast page -

They are obviously using some fictitious information to get at the higher figure.

I have looked at https://www.sharecast.com/equity/Rio_Tinto and that does not reflect the dividends to be paid this week, nor those paid as finals previously. Their system obviously cannot cope with special dividends.

TJH


I'm don't think the difference between a unbelievable 17% or and unbelievable 14% makes much difference to me :lol: Neither do I conclude that throwing missiles at HYPTUSS - whereas it isn't HYPTUSS but sharecast that produces the numbers - in one or two particular cases undermines the whole.
The fact is that HYPTUSS is a useful tool which gives me a reasonable look ahead at what my income will be in the following year - global pandemics excepted. It has always been accepted that for any particular case in which one is considering topping up or selling, one should always check the basis of the numbers - HYPTUSS is, after all, an automatic process which is intended as a first cut view of one's portfolio. It has never pretended to be anything more, but goodness, it saves a lot of work.
Treat it as a tool, like any other.

Arb.

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Re: silly yields

#444009

Postby monabri » September 21st, 2021, 8:23 am

tjh290633 wrote:
Itsallaguess wrote:
tjh290633 wrote:
I don't see how HYPTUSS gets that yield for RIO.


The same way it's always done - by looking at the Sharecast page -

They are obviously using some fictitious information to get at the higher figure.

I have looked at https://www.sharecast.com/equity/Rio_Tinto and that does not reflect the dividends to be paid this week, nor those paid as finals previously. Their system obviously cannot cope with special dividends.

TJH



The RIO interim dividend to be paid this week according to Sharecast looks correct to me...

(Data from Sharecast...link is shown at the top of the picture).

Image

The Sharecast financial pages show previous dividends...

( Data from Sharecast...link is shown at the top of the picture).

Image

Arborbridge
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Re: silly yields

#444016

Postby Arborbridge » September 21st, 2021, 8:55 am

onthemove wrote:
I'm not going to bother digging out the link again, but Rio (iirc) announced a few years ago that they had abandoned a progressive dividend policy.

As it's turned out, their earnings have allowed them to keep raising the dividend, but without the need to sustain a progressive policy, don't be under any illusion that the dividend levels are necessarily 'sustainable'. It'll be entirely down to earnings, without any attempt to smooth any cycles, etc.

And this comment rung alarm bells to me in this recent announcement...

"Borrowing to fund the payment of a dividend is a normal commercial practice."
https://www.londonstockexchange.com/new ... t/15137434


I'll admit I've been wrong footed with my expectations that they'll reduce their dividends at some point since they scrapped their progressive policy, but without a progressive policy it surely must be a matter of when and not if.



It seems that they are almost facing in two different directions. On the one hand abandoning the "progressive" policy relieves them of paying out unrealistically (a change, which to my mind is very sensible) - but then they spoil it by borrowing money to fund the dividend. What?

But I'm reminded also of the opinion often shared in TMF days: when wanting steady dividends, beware of nasty cyclicals. If we invest in them, then we must be sanguine about the inevitable booms and busts.

Arb.

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Re: silly yields

#444044

Postby ReformedCharacter » September 21st, 2021, 9:51 am

Arborbridge wrote:
It seems that they are almost facing in two different directions. On the one hand abandoning the "progressive" policy relieves them of paying out unrealistically (a change, which to my mind is very sensible) - but then they spoil it by borrowing money to fund the dividend. What?

But I'm reminded also of the opinion often shared in TMF days: when wanting steady dividends, beware of nasty cyclicals. If we invest in them, then we must be sanguine about the inevitable booms and busts.

Arb.

Yes, but the link given referred to borrowing in 2015. Yes, if you want a steady flow of dividends then miners are to be avoided. But if one can tolerate the cyclical nature of the income then miners can be a profitable investment over time. My simplistic view is that demand for metals has lasted for thousands of years and that is likely to continue into the foreseeable future and profitably so for those who invest in companies who produce them.

RC

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Re: silly yields

#444068

Postby moorfield » September 21st, 2021, 10:31 am

Arborbridge wrote: Neither do I conclude that throwing missiles at HYPTUSS - whereas it isn't HYPTUSS but sharecast that produces the numbers - in one or two particular cases undermines the whole.



Thanks for explaining this, I hadn't grasped that. Nonetheless I don't use HYPTUSS because I don't need to - as you may know I work with the numbers I already have from my horses mouths, until updated otherwise by their interim and final reports etc.

Anyway, any takers for RIO at 10.3% ? (excluding specials)

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Re: silly yields

#444097

Postby 88V8 » September 21st, 2021, 11:41 am

Arborbridge wrote:....I'm reminded also of the opinion often shared in TMF days: when wanting steady dividends, beware of nasty cyclicals.

Yes , it's interesting to see them all arrayed like that.

Cyclicals.... I just ordered a bike for OH.... I recall Valuemargin on TMF - what happened to him - eulogising Antofagasta and their regular specials, which were indeed very nice until they weren't.

In Arb's table, I hold twelve of the top fourteen, omitting Aviva and Persimmon.
Luni's danger zone begins at 160% of the FTSE.

What to do, as this is Practical ... sell the outliers? Or just not top up.
Safety first.
Plod.

Carillion was cooking the books and went bust. Any of these going bust? Or just anomalous pricing.
Perhaps it should be a bold shopping list.

We know the miners divis will not last.
Chesnara and their doppelganger Phoenix have seen steady falls in SP, but their divis have been strong.
Imps and BATS have, as the saying goes, been paying me divs out of my capital for a while.
I trimmed Admiral last week, then my wife bought them 3% lower in her ISA.
We know GSK are going to cut, so they're off the menu.
Legal & General are a buy for me, or would be other than existing weight.

We need some decent divis to balance the plodders.
Rejoice, as the lady said.

If there are any future Carillions in this lot, they're hiding.

V8

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Re: silly yields

#444118

Postby Gengulphus » September 21st, 2021, 12:22 pm

moorfield wrote:Anyway, any takers for RIO at 10.3% ? (excluding specials)

Not me - but its yield has nothing to do with that decision. The actual reason for it is that RIO and BHP each account for 7%+ of my HYP's forecast income, putting the mining sector's forecast income well over my 10% concentration limit on individual sectors. But its total capital value is a bit under 7% of the HYP's capital value, well within the 10% concentration limit on that measure and close to the fair percentage for 2 shares in a 30-share HYP (or put another way, on capital value both holdings are close to the average holding size for the HYP).

So the question for me isn't "Should I buy more?", but "Should I top-slice to get properly within my concentration limits?". So far, my answer is "No" - but it is a fairly close decision, and if the forecast dividends come down, the market starts to believe them a bit more (though almost certainly not totally!) and the share prices rise as a result, it wouldn't take all that much to trigger some top-slicing.

Edit:

88V8 wrote:What to do, as this is Practical ... sell the outliers? Or just not top up.

Saw this after I'd submitted the post, but the main thing I would say about this is that existing weightings in one's HYP are likely to affect people's answers, with HYPers whose existing weightings differ markedly quite reasonably coming to very different answers. This may create the impression of disagreements that don't really exist - so please state the existing weightings you're working from if you answer this question.

Gengulphus

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Re: silly yields

#446972

Postby ElectronicFur » October 1st, 2021, 2:36 pm

Gengulphus wrote:So the question for me isn't "Should I buy more?", but "Should I top-slice to get properly within my concentration limits?".


That is the question for me too, and I should really be top-slicing the likes of RIO. But the problem I have at these high yields is that if I top-slice, there is nothing else I could buy instead with an equivalent yield. So I've held off top-slicing to avoid a drop in overall income.

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Re: silly yields

#447547

Postby Arborbridge » October 3rd, 2021, 6:28 pm

ElectronicFur wrote:
Gengulphus wrote:So the question for me isn't "Should I buy more?", but "Should I top-slice to get properly within my concentration limits?".


That is the question for me too, and I should really be top-slicing the likes of RIO. But the problem I have at these high yields is that if I top-slice, there is nothing else I could buy instead with an equivalent yield. So I've held off top-slicing to avoid a drop in overall income.


If you are slicing because you feel a yield is "silly", isn't the desire to invest in a lower (less silly) yield? Therefore go for a yield you feel is within the framework you have in mind. I can't see why you would want an equivalent yield in that circumstance.

Arb.


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