What to do with Aviva return?

[spiderbill]

A question for anyone like me who holds Aviva - what are your plans for the money we're about to get back from the consolidation?

I've held on through years of disappointing share price as the dividends were mainly good, and now that there is some hope of them finally getting their act together I'm a bit miffed to find my holding dropping by a quarter.

So buy back in or swap to something else? Already overweight in the obvious Legal & General - indeed I'm famously overweight in insurance in general - but I'm not seeing too much that's at similar yields that aren't struggling a bit at the moment. Financials (like Polar Capital Holdings where I've swung from nice profits to a loss) and house builders (like Taylor Wimpey and Vistry) for instance are both suffering this year - opportunity or longer-term issues?

Any thoughts appreciated.

cheers
Spiderbill

[daveh]

A question for anyone like me who holds Aviva - what are your plans for the money we're about to get back from the consolidation?

I've held on through years of disappointing share price as the dividends were mainly good, and now that there is some hope of them finally getting their act together I'm a bit miffed to find my holding dropping by a quarter.

So buy back in or swap to something else? Already overweight in the obvious Legal & General - indeed I'm famously overweight in insurance in general - but I'm not seeing too much that's at similar yields that aren't struggling a bit at the moment. Financials (like Polar Capital Holdings where I've swung from nice profits to a loss) and house builders (like Taylor Wimpey and Vistry) for instance are both suffering this year - opportunity or longer-term issues?

Any thoughts appreciated.

cheers
Spiderbill

Haven't decided yet. Simplest would be to reinvest back into Aviva which would keep it at median weight and it provides a decent dividend (6.6% according to HYPTUSS). Other possibilities are to top up elsewhere as selected by HYPTUSS, which would be NWG, Vistry or AV.B (Aviva preference shares), the former would two would be a slight increase in income and AV.B would be a similar yield

[Dod101]

A question for anyone like me who holds Aviva - what are your plans for the money we're about to get back from the consolidation?

I've held on through years of disappointing share price as the dividends were mainly good, and now that there is some hope of them finally getting their act together I'm a bit miffed to find my holding dropping by a quarter.

So buy back in or swap to something else? Already overweight in the obvious Legal & General - indeed I'm famously overweight in insurance in general - but I'm not seeing too much that's at similar yields that aren't struggling a bit at the moment. Financials (like Polar Capital Holdings where I've swung from nice profits to a loss) and house builders (like Taylor Wimpey and Vistry) for instance are both suffering this year - opportunity or longer-term issues?

Any thoughts appreciated.

cheers
Spiderbill

I do not hold Aviva for the reason you cite, the never ending story about how things are about to take off...and they never seem to. However, my default position in this situation is to buy back in, because if it was good enough to be held before the capital return they surely are now. In any case of you do buy back in I think you will own a slightly bigger share of the overall cake than you did as the company is now smaller than it was. Otherwise you have been a forced seller.

Dod

[pyad]

With these events I advise against a default position of reinvesting in the same company. I suggest treating the cash as any other new HYP money which has then to compete on your usual criteria such as yield, average holding value, diversification etc. with the other shares in your HYP, or possibly a new holding, for investment. The originating share may turn out to be the optimum decision in your view, but don't assume that in advance.

[kempiejon]

Like daveh not decided yet but I probably would not put the money into Aviva, when the money is there I'll make a call. I've also got TATE bunging me some cash this month and regular, accumulated dividends.
I top up most months with accumulated dividends so this bumper month will cover a few more choices than usual or larger amounts than usual. At a portfolio level I doubt it'll make much difference to my income. As a guideline I like to find shares above current portfolio yield with a history of increasing payouts, avoiding company and sector concentration - I usually can but a decision for a few weeks away.

[Dod101]

With these events I advise against a default position of reinvesting in the same company. I suggest treating the cash as any other new HYP money which has then to compete on your usual criteria such as yield, average holding value, diversification etc. with the other shares in your HYP, or possibly a new holding, for investment. The originating share may turn out to be the optimum decision in your view, but don't assume that in advance.

As a matter of principle I am not sure that it is wise for pyad to use the words 'advise' or 'advice' nor for the site to allow their use. As far as I know neither he nor this site is allowed to give advice. pyad is perfectly entitled to his view on the matter just as everyone of us is but I do not think those words should be used.

Dod

[Itsallaguess]

I suggest treating the cash as any other new HYP money which has then to compete on your usual criteria such as yield, average holding value, diversification etc. with the other shares in your HYP, or possibly a new holding, for investment.

The originating share may turn out to be the optimum decision in your view, but don't assume that in advance.

Totally agree with that.

Dod mentioned earlier that if an investor doesn't buy back in, then in effect they're 'a forced seller'.

Whilst that might well be the case, I think that once that forced-sale has occurred, it makes little sense to then allow yourself to be 'a forced buyer' as well...

Cheers,

Itsallaguess

[seagles]

Am undecided on what to use the money for. I will not be using it for AV though as with LGEN am overweight in the sector. Still have a few weeks and we all know that a lot can change between now and when the money appears.

[spiderbill]

Thanks for the replies so far. Sounds like a few of you are in the same boat as I am.

With these events I advise against a default position of reinvesting in the same company. I suggest treating the cash as any other new HYP money which has then to compete on your usual criteria such as yield, average holding value, diversification etc. with the other shares in your HYP, or possibly a new holding, for investment. The originating share may turn out to be the optimum decision in your view, but don't assume that in advance.

Interesting, and has some good sense to it, as well as removing any emotional reaction to the original share. I'll start doing research now so I have time to consider before the cash comes in. Thanks pyad.

Dod, I appreciate your thoughts and your default position might well make sense for some companies. In this case I also share some of your misgivings about Aviva having promised improvement before and not delivered so maybe it's time to be a bit more dispassionate about them.

cheers
Spiderbill

[Dod101]

I certainly do not want to be controversial. My default position does not necessarily mean I will do that but I start off with a bias in that direction for the reasons I stated. If it was good enough to hold before the 'enforced' sale, then it is surely good enough to be topped up to put me back into roughly the same position as before. Of course there might be a glaringly obvious better deal to be had and it would be silly to ignore that.

Dod

[IanTHughes]

With these events I advise against a default position of reinvesting in the same company. I suggest treating the cash as any other new HYP money which has then to compete on your usual criteria such as yield, average holding value, diversification etc. with the other shares in your HYP, or possibly a new holding, for investment. The originating share may turn out to be the optimum decision in your view, but don't assume that in advance.

I agree absolutely

It is a mystery to me why anyone, claiming to be following the HYP strategy, would not follow the same process for any money being invested. Whether the funds are new money, a Return of Capital - as I believe this to be - or Rolled Up dividends not required for withdrawal, the standard HYP process is to purchase the highest available sustainable yield, subject of course to whatever limitations one imposes upon all selections - Company Size, Value/Income Diversification etc etc

That is my advice anyway


Ian

[tjh290633]

It happens that I shall have to pay for a cruise about the time that the cash is due, so I rather fancy that will be its destination. Othewise I would use my usual method to decide which share gets the money. Here is my top-up table as of tonight:

Top-up          Income                     Cost                
Rank     EPIC   Rank     EPIC   % Income   Rank   Epic   % Cost
     1   ADM+        1   RIO       7.98%      1   IGG     4.70%
     2   RIO+        2   BHP       7.93%      2   BP.     4.58%
     3   TW.         3   ADM       5.56%      3   LLOY    4.49%
     4   KGF         4   IMB       4.74%      4   BT.A    4.41%
     5   LGEN+       5   BATS      4.58%      5   VOD     4.15%
     6   IMB+        6   LGEN      4.22%      6   PSON    4.11%
     7   LLOY*       7   VOD       3.85%      7   SHEL    4.10%
     8   ULVR        8   IGG       3.62%      8   MARS    4.01%
     9   PHP         9   TW.       3.62%      9   MKS     3.70%
    10   AV.        10   BP.       3.30%     10   GSK     3.54%
    11   VOD        11   NG.       3.30%     11   PHP     3.51%
    12   SMDS       12   SSE       3.16%     12   IMB     3.45%
    13   IGG*       13   AV.       2.94%     13   TSCO    3.40%
    14   RKT        14   S32       2.94%     14   BATS    3.37%
    15   TATE       15   BA.       2.80%     15   BLND    3.35%
    16   BATS+      16   BT.A      2.69%     16   AV.     3.26%
    17   BHP+       17   SHEL      2.65%     17   BHP     3.24%
    18   MKS@       18   UU.       2.62%     18   LGEN    3.15%
    19   BLND       19   TSCO      2.55%     19   SSE     3.02%
    20   BT.A*      20   KGF       2.54%     20   KGF     2.74%

As usual I would disqualify any share which, if topped up by 20%, would exceed 5% of either share of income(+) or share of cost(*), and I also disqualify any share not paying dividends(@). That means that TW. would be the likely beneficiary. Note that I have already allowed for AV.'s consolidation in that table.

I certainly shall not be ploughing it back into Aviva. The same goes for TATE.

TJH

[spiderbill]

I certainly do not want to be controversial. My default position does not necessarily mean I will do that but I start off with a bias in that direction for the reasons I stated. If it was good enough to hold before the 'enforced' sale, then it is surely good enough to be topped up to put me back into roughly the same position as before. Of course there might be a glaringly obvious better deal to be had and it would be silly to ignore that.

Dod

Not controversial in the slightest as far as I'm concerned Dod. Despite it being opposite to what pyad suggested there's a good deal of sense in your approach and I can see situations when it would be my choice. Just that in this particular case I think I have some emotional baggage that needs to be ignored and buying something else may be the way to do that, as well as rebalancing some insurance holdings into other areas.

cheers
Spiderbill

[spiderbill]

It happens that I shall have to pay for a cruise about the time that the cash is due, so I rather fancy that will be its destination. Othewise I would use my usual method to decide which share gets the money.

TJH

Enjoy your cruise Terry, but make sure they keep the ventilation up to scratch and don't catch anything.

From a brief survey of my current holdings in HYPTUSS the main candidates so far are City of London Investment, which I only recently took a small position in and which has dropped a little since then, Vistry, which I got from the sale from Galiford Try and really need to either bring up to decent levels or sell out of, with a possible outlier in Imperial Brands, which I topped up in March for the first time since it lost half its value a couple of years back and is slowly recovering.

Most of my old watch list for anything new is looking uninspiring right now, so time I reviewed it and cleared out the dross. Then look for any other candidates.

cheers
Spiderbill

[monabri]

One could elect to reinvest a certain percentage back into Aviva, maybe 50% and do something else with the residual?

[MDW1954]

With these events I advise against a default position of reinvesting in the same company. I suggest treating the cash as any other new HYP money which has then to compete on your usual criteria such as yield, average holding value, diversification etc. with the other shares in your HYP, or possibly a new holding, for investment. The originating share may turn out to be the optimum decision in your view, but don't assume that in advance.

As a matter of principle I am not sure that it is wise for pyad to use the words 'advise' or 'advice' nor for the site to allow their use. As far as I know neither he nor this site is allowed to give advice. pyad is perfectly entitled to his view on the matter just as everyone of us is but I do not think those words should be used.

Dod

Dod is perfectly correct. But this point is covered by the site's rules. "Advice" may be offered, but should not be interpreted as constituting professional advice from an FCA-qualified person.

Stephen may be a well-respected poster, but in the eyes of the FCA, we are all equal.

MDW1954

[Arborbridge]

My view is that the cash will go in to my "pot" and find its way to the best candidate in time - which may be an individual HYP share, or something else.

That's my view on how to process in this case*.


Arb.

*I try to avoid the use of the word "advice" but as MDW says, there's no reason why Pyad or anyone else should be hauled over the coals for doing using the word. Anyone here giving a strong opinion could be said to be offering advice - even though legalistically the word "advice isn't used, but implied ("if I were you, this is what I'd do") - and Pyad is not doing so as a fund manager, so he is free from any obligation as regards the semantics.

[idpickering]

My view is that the cash will go in to my "pot" and find its way to the best candidate in time - which may be an individual HYP share, or something else.

That's my view on how to process in this case*.

Arb.

.

I agree with your tactic Arb. I have no holding in AV., but am getting the Special from TATE on 16 May 22. I will be doing the same as you regarding just adding that dividend to my cash pot in my ISA, ready for investing next month. That won't be back into TATE either, Persimmon are in my sights for next month's dollop of new cash. I'll make my mind up nearer that time. FWIW, I agree with your later comment in your post (not quoted in my extract above ), and that of Malcom too, regarding the word "advice" hereabouts.

Ian.

[Arborbridge]

My view is that the cash will go in to my "pot" and find its way to the best candidate in time - which may be an individual HYP share, or something else.

That's my view on how to process in this case*.

Arb.

.

I agree with your tactic Arb. I have no holding in AV., but am getting the Special from TATE on 16 May 22. I will be doing the same as you regarding just adding that dividend to my cash pot in my ISA, ready for investing next month. That won't be back into TATE either, Persimmon are in my sights for next month's dollop of new cash. I'll make my mind up nearer that time. FWIW, I agree with your later comment in your post (not quoted in my extract above ), and that of Malcom too, regarding the word "advice" hereabouts.

Ian.

Once this goes through, Aviva might well be near the top of my rankings anyway, as it is now 7th in my list and already on the radar.

Arb.

[scrumpyjack]

HL confirmed this morning that the cash is paid on May 19th. We don't have to wait til the 31st.