8th annual HYPertension health check

[CryptoPlankton]

Well, it's that time of year again! I would imagine most readers will be familiar with this hypothetical HYP by now. Originally conceived for some light-hearted Christmas entertainment, it has almost accidentally become another annually updated example of a standard 15 share "untinkered" HYP. The original post on the old Motley Fool boards was kindly saved to the Wayback Machine by the late Gengulphus, but really needn't be read if looking for any pearls of wisdom on the HYP selection process:

https://web.archive.org/web/20161222114 ... sort=whole

Indeed, as alluded to in a comment on a previous update, this portfolio was derived by as close as you can get to the "throwing darts at a board" method! However, hopefully it has some merit in demonstrating the results achieved by simply picking an equally weighted (£5000 each) portfolio of 15 reasonably diverse and high-yielding FTSE 100 shares without any significant research or skill. Of course, it is only one example of this, and should be treated accordingly. As stated, it is a non-tinkering portfolio, but there have been one or two corporate events requiring action. These have been dealt with in the relevant years' updates, and can be found by trawling back via the link at the end of this post (if you're mad or sad enough to want to!).

Anyway, the following table shows the capital and income changes to the individual shares over the past year. The capital values are always determined by the closing prices on 18th December, and income is also generally taken over the twelve months to that date. However, on the odd occasion, the dividend pay dates of a couple of shares have spilled past this date. To be consistent with the corresponding dividends in previous years, the figures include the dividends being paid by Shell and HSBC this week.



* Includes "special"
(FX) Subject to currency effects.

I won't comment much, but it does seem notable that, not for the first time, one cutter (In this case, International Distribution Services, or Royal Mail to you and me!) has more or less wiped out the general increase in dividends across the vast majority of the holdings.

Comparison with City of London IT

City of London IT (CTY) seems to have become the benchmark of choice, so I have compared the annual income generated by HYPertension (HYPT) with a theoretical holding of CTY shares bought for the same amount (£75K) on 18th December 2015:



So, there you have it. HYPT's dividend payout has appeared to stagger along while CTY's dividend has made relatively steady progress, albeit from a lower base. However, to date, HYPT has generated £872 more income than CTY and the portfolio is currently worth £4194 more than the CTY holding (£84920 and £80726 respectively). Make of it all what you will!

I'm not sure how useful this annual update is, but I shall try to keep it going until its 10th anniversary as it does seem to have been of interest to several people.

Until next time then, I wish you a Happy Christmas, and may you all have a healthy and wealthy New Year!

Cheers!

CP



For the bored, a link to last year's update (which links to the previous year's etc...)
viewtopic.php?f=15&t=32602

[moorfield]

Make of it all what you will!

I can smell some low yielders in there. I'll give you the "AEI treatment" this weekend, if I can remember to.

Happy Christmas to you too.

[Luniversal]

Thank you for keeping this portfolio going.

Comparable results for my 'Basket of Eight' UK Equity Income investment trusts:

In 2022-23 revenue rose by 4.1% to £4,086, in line with the annual average increase ; it fell only once, slightly, in 2019-20 during the pandemic. B8 income, totalling £29,537 to date, has risen only by 31.8% since the first year, against 45.4% inflation (RPI). But this is now 5.3% and set to fall further, so dividends may rise in real terms next year.

If the widely accepted 4% safe withdrawal rate had been applied annually plus an uplift for cost of living tied to the RPI, and if the surplus had been held in an income reserve, at the latest year end it would be worth £2,007. That is six months of the current cost of 4%+RPI withdrawal, though two years ago it was eight months' worth. Small calls on the reserve have been required in the past two years, totalling £226.

Realisable value at Dec. 18 was £82,837: a gain of 1.1% in a year and 10.4% since launch. The B8's deflated purchasing power is only three-quarters of what £75,000 could buy in Dec. 2015. Nominal CAGR 2.7%. Capital has underperformed the Footsie and All-Share since the covid panic.

[kempiejon]

I'm not sure how useful this annual update is, but I shall try to keep it going until its 10th anniversary as it does seem to have been of interest to several people.

CP please keep slogging away as long as yo have the inclination, it's always good to see other versions of the theory working over the years. I've found the reviews very interesting over the years. Ta.