PYAD HYP 2019_04 REINVEST: Year Five - Commentary

[IanTHughes]

The latest update for this HYP constructed by pyad, as recorded on this thread: viewtopic.php?f=15&t=16868&start=140

Has been posted here: viewtopic.php?f=15&t=39071&p=587942#p587942

Further details of how updates are to be made to this portfolio can be found on this thread: viewtopic.php?p=218513#p218513

Comments are of course welcome although it would be appreciated if they were confined to this thread, leaving the main thread to simply record all actions taken and the progress of the portfolio

Enjoy!


Ian

[Davidsb]

Ian - I picked Woodside back in April, so no complaints from me about your selection.

I confess to having macro concerns about the Australian economy - the pollies appear to have grasped Net Zero with both hands, and are also embracing the Indigenous Peoples movement which seems to be a mechanism for mineral rights to be handed over to the aboriginal population..... However, I also have a couple of South Africa-weighted companies in my HYP, so I guess I can stand a bit of political instability.

[csearle]

Thanks for taking the time and trouble to do this Ian. C.

[funduffer]

Ian,

I think a wise decision to pass on VOD this time!

The comments from the CEO were interesting, and I feel there is a long way to go before VOD turns itself around.

I am certainly passing on VOD for top-ups even though it is number 1 in my HYPTUSS top-up ranking.

FD

[kempiejon]

October short list, Phoenix, M&G and VOD, I too have misgivings about VODs ability to grow income been flat for 5 years following a cut. Like Ian a double digit yield or any multiple of an arbitrary number isn't an impediment to further investigation. I think I have commented before that MNG only had a comparatively short history of increasing dividends first paying in 2019, I prefer 5 years rising so now I think that hurdle has been passed as my forecast is for around 5% increase based on interim. Sharecast https://www.sharecast.com/equity/MG-855633 have negative cover for MNG that would rule them out for me but perhaps that number deserves investigation. PHNX 1.6 current 1.4 forecast though who knows how to value these financials' financials?
First pass it looks like PHNX is higher yield with better cover. Over 5 years neither MNG nor PHNX has shown note worthy capital appreciation, and look to have made losses and seen assets decline ye2022. data from HL provided by Digital Look Ltd.

[MickR]

Hi,

Thanks for this. You obviously opted for WDS, but what was your rationale behind MNG missing out

Mick

[IanTHughes]

Hi,

Thanks for this. You obviously opted for WDS, but what was your rationale behind MNG missing out.

With any dividend re-investment, starting with the highest yield, I check through each candidate until I find what I am looking for - the highest yield that I consider sustainable. Once I have found what I am looking for, the search ends. M & G Plc (MNG) did not “miss out” as you suggest, rather the search ended after the selection of Woodside Energy Grp Ltd (WDS).

With regard to MNG, I have not changed my opinion from when it was selected for the re-investment in September 2023. You will find the appropriate posts further up this thread.

A solid HYP choice in my view, simply beaten this time by three higher yields - only two if one excludes the "passed over" Vodafone Grp (VOD).

Enjoy!


Ian

[funduffer]

Presumably this HYP is modelled as an example of how to generate a capital sum prior to retirement and subsequent withdrawal of income, as it re-invests all the dividends? (In contrast to it's sister HYP where all income is withdrawn.)

I just did a quick look at how it is doing as a wealth accumulator from inception (April 2019) to current date (as of 10/10/23 as shown in Ian's thread with the details). In round numbers:

This HYP has grown from £254907 at inception to £303736, a growth of 19%.

The FTSE 100 TR has grown from 6053 to 7649, a 26% increase

A World (acc) tracker has grown by 46% in the same period.

So far this HYP is not doing too good a job at accumulating wealth for a retirement pot.

That is not to say that when the income tap is turned on it won't generate a good income, of course.

I just wonder what the value of a HYP is when no income is withdrawn.

FD

[88V8]

I just wonder what the value of a HYP is when no income is withdrawn.

An entirely valid question, but for Strategies if you like to start a new topic, not here.

V8

[moorfield]

I just wonder what the value of a HYP is when no income is withdrawn.

How HYP1 might have grown with dividend reinvestment

[MDW1954]

I just wonder what the value of a HYP is when no income is withdrawn.

How HYP1 might have grown with dividend reinvestment

It's not clear to me if there's any appetite for a revised LLLS chart or not. Happy to do it, if people would like it.

MDW1954

[IanTHughes]

Presumably this HYP is modelled as an example of how to generate a capital sum prior to retirement and subsequent withdrawal of income, as it re-invests all the dividends? (In contrast to it's sister HYP where all income is withdrawn.)

I just did a quick look at how it is doing as a wealth accumulator from inception (April 2019) to current date (as of 10/10/23 as shown in Ian's thread with the details). In round numbers:

This HYP has grown from £254907 at inception to £303736, a growth of 19%.

The FTSE 100 TR has grown from 6053 to 7649, a 26% increase

A World (acc) tracker has grown by 46% in the same period.

So far this HYP is not doing too good a job at accumulating wealth for a retirement pot.

That is not to say that when the income tap is turned on it won't generate a good income, of course.

I just wonder what the value of a HYP is when no income is withdrawn.

The reason that I set up this portfolio and continue to re-invest the “virtual” dividends, was precisely in order to test whether the High Yield Portfolio (HYP) strategy can be used in such a way, and with how much success.

The comparison with FTSE FT100 TR (TFTSE) is one that I monitor, and you are quite correct in that the HYP’s value is still somewhat behind that particular index. However, a comparison of my own HYP started in 2012, and still not in drawdown, shows the value of my HYP comfortably ahead of this same index.

Of course, my own HYP was set up at a particularly benign, even beneficial, time when the markets were rising and dividends too. It is not entirely surprising, to me at least, that such a period would give a greater benefit to the higher yield. Contrarily, this latest of pyad’s HYPs was set up just before the economic storms of lockdowns and war. It is not entirely surprising, to me at least, that such a period would give a greater downturn to the higher yield. Indeed, the lead in value of my own HYP during this downturn, while still remaining, was significantly reduced. It is now once again, pulling away.

Furthermore, I also monitor a comparison of this “virtual” HYP to the results of the same “virtual” investment into various Investment Trusts, whereby the dividends are simply re-invested in the purchase of more units of the same Investment Trust. Many of these “virtual” Investment Trust portfolios fall short of this HYP, some of them well short.

At this point it should be pointed out that no-one is claiming that HYP is the best strategy, whether for Income Drawdown or Capital Appreciation. It is simply mooted that HYP is “relatively” simple for Amateur Investors to implement. In my experience at least, HYP does indeed hold its own against other possible “relatively” simple investment strategies that might otherwise be followed by such Amateur Investors.

Anyway, thank you for taking an interest in this project, and I hope the above has explained more fully what it is all about.

Enjoy!


Ian