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Shell - tinkered then untinkered now thinking of retinkering

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csearle
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Re: Shell - tinkered then untinkered now thinking of retinkering

#451710

Postby csearle » October 20th, 2021, 4:03 pm

Well I've just tinkered. RDSB were 186% median and so I reduced it to 120% and replaced it with GSK, which is now 146% median. At the same time I scooped up some accrued dividends. The result is a £14 increase in my monthly dividend income. Glad this is heading north again. C.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451749

Postby JohnnyCyclops » October 20th, 2021, 6:25 pm

Arborbridge wrote:As regards shortlisting shares for a HYP, I wouldn't mess around with sectors. Far easier to sort the shares in order of yield - this can be done in a moment using one of the spread sheets such as Step-one. This will give a much reduced number of starting shares than the FTSE 350 in seconds. Beginning from those initial potentials cut out a lot of unecessary work - and is actually broadly the moethod Pyad described too.

Admittedly, I haven't done that lately because I haven't needed to, but I cannot see the point of sorting through 350 shares when a moment's work would cut that to, maybe, a couple of dozen. Think about the diversity then.

Arb.


I recently went the other way, in adjusting the HYP after some forced sales and some neglect, which created an imbalance sectorially. I then used the excellent Dividend Data site (https://www.dividenddata.co.uk/) to look for the higher yields in those sectors I might want to add to. Not all sectors turned up high yielding candidates, although quite a few sectors have a number of firms regularly paying a rising dividend but on lower yields that might typically suit a HYP (in General Industrials, DS Smith (2.7%); Mondi (2.6%); Smiths Group (2.5%); Smurfit Kappa (2.4%), Bunzl (2.0%) (as of a month ago).

On Shell, we first bought in 2014 at £25, then added to in 2017 at £20, and earlier this month topped up at £17. With dividends we've got an XIRR of 1.5%, so just above par.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451758

Postby monabri » October 20th, 2021, 7:37 pm

Shell should be raking it in at the moment!

https://www.telegraph.co.uk/markets-hub/commodity/C7

Image

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451760

Postby monabri » October 20th, 2021, 7:48 pm

Dod101 wrote:
monabri wrote:Hope for HSBA then?


Somebody thinks so. They have been around £4.30 for some time now. A beneficiary of higher interest rates if they come I guess, just in the same way that Shell is benefiting from higher oil prices. Other side of that is that I am going to pay a lot more when I order domestic oil to refill my tank later today.

Dod


Could we possibly interest Sir in an Air Source Heat Pump..?


I'll get my coat, as they say... ;)

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451793

Postby JohnnyCyclops » October 20th, 2021, 9:18 pm

Gengulphus wrote:<...>
However, as has been observed many times before, HYP is a portfolio approach - so to judge its success at achieving its aims, one needs to look at the totals for the entire portfolio. And on that, my HYP's net total dividends received to date are a bit over twice its net capital gains/losses to date. Seen from that whole-portfolio perspective, the dividends tortoise doesn't move quickly and it occasionally slows down substantially, but it has never stopped to date or even come close to doing so, and it's guaranteed never to go backwards - whereas the capital gains/losses hare has frequently dashed both backwards and forwards at higher speeds (sometimes much higher speeds), so that the tortoise has been convincingly outstripping it over the long term...
<...>
Gengulphus


This whole post encapsulates how I've come to feel about HYP in the last ten years. The specific paragraph above, and the hare & tortoise metaphor, is spot on. In the decade to 31 March 2021 our lifetime return from dividends is 9x that from capital gains. Turn the clock back to 31 March 2020 and the capital loss (in the wake of the initial market reaction to Covid) was around 50% of the lifetime dividends. In three our of ten years the capital stood at a loss. The nearest capital gains came to catching dividends was to March 2017 when it was a 1.0:1.6 ratio (so ~60%). But, HYP was never a capital machine (or hare).

HYP gives me an income at a yield that betters both annuities and bank savings accounts, at a level of risk (in a ~30 stock portfolio) that's acceptable. Do I expect it will shoot the lights out? No. But then over in my SIPP I've got at least one sorry biotech "punt" that triple-bagged early on before cratering by 98%, and is now such a trivial holding it's not worth the fees to cash it out. I'm not a stock picker for the capital rollercoaster. I've tried trading - it ate time and shredded nerves. HYP gives me peace of mind.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#451836

Postby Dod101 » October 20th, 2021, 11:21 pm

This has the makings of a very interesting discussion. I had forgotten how Johnny C approaches things from a different angle. Will think on it and maybe come back to it tomorrow.

Dod

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Re: Shell - tinkered then untinkered now thinking of retinkering

#452062

Postby Dod101 » October 21st, 2021, 5:22 pm

Dod101 wrote:This has the makings of a very interesting discussion. I had forgotten how Johnny C approaches things from a different angle.Willthink on it and maybe come back to it tomorrow.

Dod


I have not come back on this because although I could do the calcs for a few years anyway I have not had time to dig out the figures. I do not though run a HYP. I suspect that my income from dividends would, over a few years, exceed that from capital. By how much would be interesting to know.

Dod

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Re: Shell - tinkered then untinkered now thinking of retinkering

#452094

Postby JohnnyCyclops » October 21st, 2021, 7:31 pm

Dod101 wrote:
Dod101 wrote:This has the makings of a very interesting discussion. I had forgotten how Johnny C approaches things from a different angle. Will think on it and maybe come back to it tomorrow.

Dod


I have not come back on this because although I could do the calcs for a few years anyway I have not had time to dig out the figures. I do not though run a HYP. I suspect that my income from dividends would, over a few years, exceed that from capital. By how much would be interesting to know.

Dod


I'm glad I gave food for thought. As many HYPsters pay attention to average or median holding values (for those topping-up, adding new monies or reinvesting dividends, if they don't want to create an over reliance or an over investment in a subset of stocks), there's an interesting moment when the annual dividends exceeds the median holding value. It will differ by the number of stocks held - we currently hold 32, and peaked at 35.

Mentally you get that warm "I could buy an entire new holding with the dividends" moment. Looking back, that happened in our fifth HYP year (to 31 March 2016) when total dividends were around 110% of the then median holding value. One can make the case, that without material capital growth then that "milestone" may lack some lustre. I.e. if the stock prices doubled every few years then the annualised dividends would probably not catch up.

On an individual stock holding basis, assuming no capital change or corporate actions, then a stock yielding 5% will generate enough dividends over 20 years to fully cover the original investment. Another "nice" milestone. One of our earliest HYP holdings, Aviva (AV.) bought in 2011 now has dividends representing 72% of the initial price (not counting the top-up earlier this month). Inflation ignored.

I do the dividend vs capital calculation a little crudely, I would add. I do know the exact figure of the dividends. I know the HYP value at the start and end of each year. So, I see the change (increase) vs the sums invested. If I deduct off the value of the dividends then the rest must be capital changes (or similar - e.g. special dividends (often capital returns following divestments)), as well as the cost of the ISA fees.

Dod101
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Re: Shell - tinkered then untinkered now thinking of retinkering

#452118

Postby Dod101 » October 21st, 2021, 10:22 pm

I am not sure that it shows or proves very much but my annual dividends comfortably exceed my median holding value and equate to about 120% or will do for this year unless we get a huge upsurge in capital values by year end. I do not expect that. I had not thought of that before and neither do I see that it proves much. I do not even have a portfolio which conforms to HYP rules nor do I go for anything like the highest yielders.

Dod

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Re: Shell - tinkered then untinkered now thinking of retinkering

#452124

Postby csearle » October 21st, 2021, 10:51 pm

Dod101 wrote:I do not even have a portfolio which conforms to HYP rules nor do I go for anything like the highest yielders.
Sacré bleu! ;)

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Re: Shell - tinkered then untinkered now thinking of retinkering

#452150

Postby Arborbridge » October 22nd, 2021, 7:46 am

Total Income to end 2020 is 1.54x average holding value

Total Income YDT 2021 is 1.73x average holding value - both having increased compared with 2020.

Interesting. but I'm quite sure why I would need to know this, or whether I could use it to good effect.


Arb.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#452151

Postby MrFoolish » October 22nd, 2021, 7:51 am

JohnnyCyclops wrote:This whole post encapsulates how I've come to feel about HYP in the last ten years. The specific paragraph above, and the hare & tortoise metaphor, is spot on. In the decade to 31 March 2021 our lifetime return from dividends is 9x that from capital gains.


But then again, the typical HYP share is high yield, low growth, so this is not exactly surprising.

There are high growth shares out there (which I won't discuss here) and you don't have to actively trade them.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#452162

Postby Dod101 » October 22nd, 2021, 8:49 am

Arborbridge wrote:Total Income to end 2020 is 1.54x average holding value

Total Income YDT 2021 is 1.73x average holding value - both having increased compared with 2020.

Interesting. but I'm quite sure why I would need to know this, or whether I could use it to good effect.


Arb.


If your numbers are anything like typical for HYPers that illustrates the effect of our different approaches, but I am puzzled to see that it otherwise gets us very far. It is though an interesting exercise.

Dod

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Re: Shell - tinkered then untinkered now thinking of retinkering

#452167

Postby Gersemi » October 22nd, 2021, 8:57 am

Dod101 wrote:
Arborbridge wrote:Total Income to end 2020 is 1.54x average holding value

Total Income YDT 2021 is 1.73x average holding value - both having increased compared with 2020.

Interesting. but I'm quite sure why I would need to know this, or whether I could use it to good effect.


Arb.


If your numbers are anything like typical for HYPers that illustrates the effect of our different approaches, but I am puzzled to see that it otherwise gets us very far. It is though an interesting exercise.

Dod


Surely the main thing it illustrates is how many holdings an individual has, as that will have a major effect of the value of the average holding size relative to total dividends?

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Re: Shell - tinkered then untinkered now thinking of retinkering

#452170

Postby Dod101 » October 22nd, 2021, 9:11 am

Gersemi wrote:
Dod101 wrote:
Arborbridge wrote:Total Income to end 2020 is 1.54x average holding value

Total Income YDT 2021 is 1.73x average holding value - both having increased compared with 2020.

Interesting. but I'm quite sure why I would need to know this, or whether I could use it to good effect.


Arb.


If your numbers are anything like typical for HYPers that illustrates the effect of our different approaches, but I am puzzled to see that it otherwise gets us very far. It is though an interesting exercise.

Dod


Surely the main thing it illustrates is how many holdings an individual has, as that will have a major effect of the value of the average holding size relative to total dividends?


This is all getting a bit non HYPish so I had better leave it there.

Dod

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Re: Shell - tinkered then untinkered now thinking of retinkering

#452171

Postby Arborbridge » October 22nd, 2021, 9:13 am

Gersemi wrote:Surely the main thing it illustrates is how many holdings an individual has, as that will have a major effect of the value of the average holding size relative to total dividends?


I'm not sure that follows, but I expect Gengulphus will be along to tell us ;)

The "major effect" will only happen if new additions are in some way "majorly" different to the few starting holdings - or if there is an outsize number of either failures or successes in both capital and income terms.

It's not clear to me how this is a function of the number of holdings within reason (say, 15-30 holdings) unless one is heavily into diworsificaion for the sake of it! Maybe it's a function of how much gardening one does? *

Arb.

*actually, having typed that, I realise it has a meaning both ways. Gardening for real, meaning one does not touch one's HYP for months at a time, or "gardening" of the HYP itself by cutting out dead wood and replacing.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#452188

Postby pyad » October 22nd, 2021, 10:33 am

Arborbridge wrote:
Gersemi wrote:Surely the main thing it illustrates is how many holdings an individual has, as that will have a major effect of the value of the average holding size relative to total dividends?


I'm not sure that follows...


Gersemi is correct. You can see it with an example:

£100,000 portfolio in 10 shares, income £5,000pa, average holding size £10,000 so div/holding ratio is 50%

This is then reorganised into 20 shares with no new money but same total income and portfolio size. Average holding is now £5,000 so div/holding ratio becomes 100%.

Ad absurdum, a one share portfolio worth £100,000 and £5,000 yield. Ratio now 5%, same as portfolio yield.

Clearly the more holdings there are, for a given total portfolio value and income, the higher will be this ratio simply because the average holding value falls whilst the income is constant.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#452196

Postby idpickering » October 22nd, 2021, 11:00 am

pyad wrote:
Gersemi is correct. You can see it with an example:

£100,000 portfolio in 10 shares, income £5,000pa, average holding size £10,000 so div/holding ratio is 50%

This is then reorganised into 20 shares with no new money but same total income and portfolio size. Average holding is now £5,000 so div/holding ratio becomes 100%.

Ad absurdum, a one share portfolio worth £100,000 and £5,000 yield. Ratio now 5%, same as portfolio yield.

Clearly the more holdings there are, for a given total portfolio value and income, the higher will be this ratio simply because the average holding value falls whilst the income is constant.


Thanks for your input Stephen. Always good to hear from you. Don’t be a stranger.

Ian.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#452207

Postby Arborbridge » October 22nd, 2021, 11:40 am

pyad wrote:
Arborbridge wrote:
Gersemi wrote:Surely the main thing it illustrates is how many holdings an individual has, as that will have a major effect of the value of the average holding size relative to total dividends?


I'm not sure that follows...


Gersemi is correct. You can see it with an example:

£100,000 portfolio in 10 shares, income £5,000pa, average holding size £10,000 so div/holding ratio is 50%

This is then reorganised into 20 shares with no new money but same total income and portfolio size. Average holding is now £5,000 so div/holding ratio becomes 100%.

Ad absurdum, a one share portfolio worth £100,000 and £5,000 yield. Ratio now 5%, same as portfolio yield.

Clearly the more holdings there are, for a given total portfolio value and income, the higher will be this ratio simply because the average holding value falls whilst the income is constant.


Well that's clear enough, simple arithmetic. Why state the obvious? which is why I took it that he was suggesting something deeper was at work in having 10 £5000 shares or 20 £5000 shares.


Arb.

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Re: Shell - tinkered then untinkered now thinking of retinkering

#452218

Postby CryptoPlankton » October 22nd, 2021, 12:11 pm

Arborbridge wrote:
pyad wrote:
Arborbridge wrote:
I'm not sure that follows...


Gersemi is correct. You can see it with an example:

£100,000 portfolio in 10 shares, income £5,000pa, average holding size £10,000 so div/holding ratio is 50%

This is then reorganised into 20 shares with no new money but same total income and portfolio size. Average holding is now £5,000 so div/holding ratio becomes 100%.

Ad absurdum, a one share portfolio worth £100,000 and £5,000 yield. Ratio now 5%, same as portfolio yield.

Clearly the more holdings there are, for a given total portfolio value and income, the higher will be this ratio simply because the average holding value falls whilst the income is constant.


Well that's clear enough, simple arithmetic. Why state the obvious? which is why I took it that he was suggesting something deeper was at work in having 10 £5000 shares or 20 £5000 shares.


Arb.

From where I'm sitting, it looked like somebody needed to "state the obvious"... ;) :)


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