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Back with a Bang

For discussion of the practicalities of setting up and operating income-portfolios which follow the HYP Group Guidelines. READ Guidelines before posting
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JohnnyCyclops
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Back with a Bang

#448512

Postby JohnnyCyclops » October 7th, 2021, 11:57 am

This week saw the reinvestment of a bunch of accumulated dividends and some ‘forced’ sale receipts from the last three years of inertia. As previously posted, the HYP was sitting with around 30% in cash. We’ve also taken the opportunity to sell some ‘rump’ holdings that showed no sign of dividend life, and trim back a couple, recycling lower yields into higher.

The HYP is across two ISAs with II. We made 25 transactions this week, all for free! (except stamp duty). We had three lots of trading fees in each ISA available, so used three in one account to sell rumps, and three in the other account to sell the remaining rump and trim two more. Fortuitous it fell that way.

Then, using the ‘regular investing facility’ which was yesterday, bought six new holdings at the median holding level and topped up another 13 existing ones to just above median. And yes, I’ve turned off again the regular investing so we don’t accidently rebuy everything next month!

That leaves around 5% still in cash for next month as I needed to see how the whole thing rebalanced after so much activity. In doing these transactions we’ve moved forecast yield (from HYPTUSS) from 4.91% to 5.07% (still boosted by the two miners). The full year forecast income is above the 2019/20 year’s actual income, so would represent a recovery from the plunge in 2020/21 from Covid. Although, I suspect income per unit may take a further year or two to catch back up to pre-Covid levels.

The rump sales were : John Wood (held originally as Amec); Centrica; Kier; Stagecoach. There were the first sales in ten years of HYPing (other than disposing the Verizon shares from Vodafone years back).

The two trims, back to 150% median value were : Segro (was 318%) and AstraZeneca (was 245%). They have forecast yields of 2.0% and 2.3% so the monies reinvested help lift the overall portfolio yield.

The six new holdings are bottom of the list below : UU, TW., BDEV, RMG, MONY, SBRY.

Hopefully I’ll get back in the swing and be more frequent (than every three years!) in reinvesting and managing the HYP.

The table shows the variances to the median value and to the median income.


idpickering
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Re: Back with a Bang

#448531

Postby idpickering » October 7th, 2021, 12:57 pm

Great stuff. Thanks for keeping us all up to date. You've done well methinks.

All the best,

Ian.

seagles
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Re: Back with a Bang

#448545

Postby seagles » October 7th, 2021, 2:01 pm

Looks good. Do you have the income % of each of your holdings? It is one of my considerations when buying or rebalancing.

JohnnyCyclops
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Re: Back with a Bang

#448569

Postby JohnnyCyclops » October 7th, 2021, 3:41 pm

seagles wrote:Looks good. Do you have the income % of each of your holdings? It is one of my considerations when buying or rebalancing.


Yes, absolutely. Middle set of columns below. Each set of columns (value, income, invested) sorted high to low.

The rebalance/reinvestment was on a VALUE basis, against a new median value around 15% higher than previous. Presenting the table below, the first set of colums, it's easy to also show the other 13 that were topped up. They sit from rank 9 (TSCO) to 23 (SSE) minus BVIC and NG that were already at or around the new median. The top eight by value got no top-ups; indeed AZN and SEGRO got a trim back. The bottom three also got no new funds - BT I was iffy on, knowing they've committed to a larger dividend in 2022 - some of the remaining cash may go there next month. BBY haven't impressed. HFD was cutting the dividend in 2020 before Covid struck, although 'enjoyed' an interesting lockdown as people took to cycling, it seems.

Invested is also pretty well spread. The table also shows disparities (of course, in equity investing!). E.g. PSON is top for invested at 4.4% yet only 3.1% of value and 1.7% of income. Conversly, ADM 2.2% invested, 4.3% value and 7.6% income.

Tabulating this way helps see why some HYPsters (TJH-Terry?) also top-slice against 'excess' income from a single stock. For us that's RIO, BHP and ADM currently, although the miners are swollen by cyclical additional special dividends unlikely to continue. For ADM that's the 'second' special (capital return), not the 'first' (regular!) special. I don't fiddle with what HYPTUSS drags back from its source.

I've got a version of HYPTUSS that pivot tables these three values and 'red flags' any stock/company >5%, a sector >10%, a super-sector >15% and an industry >20%. With now 32 holdings (prev. 35, following earlier forced sales, the rump sales now and CLLN collapse) the mean average per holding is around 3.4%, so 5.0% represents around 150%. The 5% is not a "trim back" level, rather it's a "don't invest more right now". When I stopped being active in 2018 it was a year after the HYP was 'complete' and we had moved into top-ups which would sort balancing. We also stopped adding new funds in 2018, and have not restarted, as we divert funds to other purposes (house extension!). The recent trims of SGRO and AZN seemed a good housekeeping step, recycling lower for higher yields. I'll do the same again if any holding gets >200% median value.

We should now move to a periodic reinvestment of retained dividends (no income being withdrawn). Monthly seems too fast, but could be done for free on II's regularly investing day. Quarterly might make more sense and less effort.

On top-ups, the only 'red flags' (company > 5%) are the three at the top of income (RIO, BHP, ADM). All the other stocks are in play. The top ranked for top-up are BT, BBY, HFD and then the six new holdings which all ended up slightly under the new median value point.


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Re: Back with a Bang

#448575

Postby seagles » October 7th, 2021, 4:22 pm

In my case RIO and ADM (I do not have BHP) are my concern on Income at 16.73% and 11.82% respectively. In value terms I do not have a problem with them at 6.48% and 8.32% of total value but I only have 18 shares in my HYP now. If I was to top-up today, it would be TW, which is second in list. VOD is first but I have that in my "throwing money at" column. Things change regularly in world of investing so do not usually do too much "in depth" analysis anymore. All income gets "paid away" and used for "the extras", as after last year realised I could live well on just my private and state pension, so dividend income pays for other things, like grandchild, bank of dad, house enhancements and, of course, holidays.

As an aside, I just noticed that I will shortly have had as much dividend income in this tax year as the whole of 20-21. Maybe will have some spare money later this year to consider another punt if all other things go to plan.

Thanks for your recent postings, a ray of sunshine for me.

tjh290633
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Re: Back with a Bang

#448591

Postby tjh290633 » October 7th, 2021, 5:58 pm

JohnnyCyclops wrote:Tabulating this way helps see why some HYPsters (TJH-Terry?) also top-slice against 'excess' income from a single stock.

I do not actually top slice those with high share of income, I just disqualify them from topping up. I top slice those weighted at more than 1.5 times the median holding value.

RIO has paid a big special dividend, so that may disappear.

TJH

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Re: Back with a Bang

#448594

Postby JohnnyCyclops » October 7th, 2021, 6:05 pm

tjh290633 wrote:
JohnnyCyclops wrote:Tabulating this way helps see why some HYPsters (TJH-Terry?) also top-slice against 'excess' income from a single stock.

I do not actually top slice those with high share of income, I just disqualify them from topping up. I top slice those weighted at more than 1.5 times the median holding value.

RIO has paid a big special dividend, so that may disappear.

TJH


Thanks Terry. Same as here then but trimming value above 2.0 median back to 1.5, and using income to disqualify from top up not to trim. Many thanks. I’m sure I learned that method from you!!

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Re: Back with a Bang

#448598

Postby JohnnyCyclops » October 7th, 2021, 6:40 pm

seagles wrote:In my case RIO and ADM (I do not have BHP) are my concern on Income at 16.73% and 11.82% respectively. In value terms I do not have a problem with them at 6.48% and 8.32% of total value but I only have 18 shares in my HYP now. If I was to top-up today, it would be TW, which is second in list. VOD is first but I have that in my "throwing money at" column. Things change regularly in world of investing so do not usually do too much "in depth" analysis anymore. All income gets "paid away" and used for "the extras", as after last year realised I could live well on just my private and state pension, so dividend income pays for other things, like grandchild, bank of dad, house enhancements and, of course, holidays.

As an aside, I just noticed that I will shortly have had as much dividend income in this tax year as the whole of 20-21. Maybe will have some spare money later this year to consider another punt if all other things go to plan.

Thanks for your recent postings, a ray of sunshine for me.


Similar here on income. In Oct the 21/22 income will surpass the Covid-depressed 20/21 (both to 31 Mar). That will further accelerate over the next 15 months as being back ‘fully invested’ works its dividend magic.

We’ve thrown money at PSON but even that’s (just) in positive XIRR prior to this latest top up.

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Re: Back with a Bang

#454991

Postby JohnnyCyclops » November 1st, 2021, 10:23 pm

Following last month's "big reset" of the HYP, this month sees one further new purchase, and a small top-up.

Having jiggled the HYP last month, there was enough left over for a new holding, plus I needed to see the new concentration levels. By moving REITs out of the Financial industry group that leaves enough headroom to add a new sector there - Investment Banking/Brokerage Services. We already have one bank (HSBC) and three insurers (Aviva, L&G, Admiral).

We've opted for Schroders (SDRC - the non-voting share) that looks to be on 4.6% yield, and starting to grow the dividend again after a few years standstill. I also looked at M&G and Abrdn but preferred Schroders.

We'll also be topping up BT.

This should all go through on II's free regularly trading day on Weds 3rd Nov.

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Re: Back with a Bang

#455027

Postby Arborbridge » November 2nd, 2021, 7:14 am

JohnnyCyclops wrote:Following last month's "big reset" of the HYP, this month sees one further new purchase, and a small top-up.

Having jiggled the HYP last month, there was enough left over for a new holding, plus I needed to see the new concentration levels. By moving REITs out of the Financial industry group that leaves enough headroom to add a new sector there - Investment Banking/Brokerage Services. We already have one bank (HSBC) and three insurers (Aviva, L&G, Admiral).

We've opted for Schroders (SDRC - the non-voting share) that looks to be on 4.6% yield, and starting to grow the dividend again after a few years standstill. I also looked at M&G and Abrdn but preferred Schroders.

We'll also be topping up BT.

This should all go through on II's free regularly trading day on Weds 3rd Nov.


SDRC - good choice, though the dividend has a static record for four years which is beginning to look a little "GSK-like". Covid has made us more tolerant, but let's hope the statis does not foretell a cut as it does sometimes.

Arb.

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Re: Back with a Bang

#455032

Postby kempiejon » November 2nd, 2021, 7:31 am

Arborbridge wrote:SDRC - good choice, though the dividend has a static record for four years which is beginning to look a little "GSK-like". Covid has made us more tolerant, but let's hope the statis does not foretell a cut as it does sometimes.

Arb.


As JC noted the most recent interim is up from 35p to 37p having been fixed for 3 pay-outs. I bought into them 4 or 5 years back where the annual dividend increase had been double figures, the price then stumbled and dividend remained fixed - which seems about par for my choices.
Isn't this a business with a family interest which some presume they have a conservative longer term view to sustainable income?

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Re: Back with a Bang

#455046

Postby Arborbridge » November 2nd, 2021, 8:29 am

kempiejon wrote:
Arborbridge wrote:SDRC - good choice, though the dividend has a static record for four years which is beginning to look a little "GSK-like". Covid has made us more tolerant, but let's hope the statis does not foretell a cut as it does sometimes.

Arb.


As JC noted the most recent interim is up from 35p to 37p having been fixed for 3 pay-outs. I bought into them 4 or 5 years back where the annual dividend increase had been double figures, the price then stumbled and dividend remained fixed - which seems about par for my choices.
Isn't this a business with a family interest which some presume they have a conservative longer term view to sustainable income?


I hadn't noticed the increase - probably because it hasn't occurred yet ;) Hopefully Schroders is on the way back, and I agree with you that hopefully the conservatism is just good sense rather than a sign of a real problem.

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Re: Back with a Bang

#455063

Postby monabri » November 2nd, 2021, 9:56 am

Have Schroders been granted permission to operate independently in China rather than in partnership with a Chinese company? It was mooted last year and again in February this year and the signs were looking promising.

(Not Schroders + BOCOM . Work on a joint venture with Bank of Communications in Shanghai is ongoing according to their half year report

https://www.schroders.com/en/sysglobala ... script.pdf )


Schroders are clearly recognising the future potential to make money in China. Meanwhile, other companies can't seem to decide what they want and spend lots of money rebranding, or should I say "rbrndng".


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