Haleon finals

[Grumpsimus]

I had a little think about this. A lowering yield isn't a lowering income. As my HYP is a buying strategy if my portfolio of shares showed good growth of income each year, ahead and growing further ahead of inflation over time but better growth of capital such that a decade or so down the line was now of average or even below average yield I don't think I'd be inclined to sell up. But it's an interesting premise to ponder on further. It'd free up a few years of income from capital, would obviously increase the income and if I was lucky (clever?) enough to have selected such good shares previously I might be just as lucky running it again. Except I like the do nothing but spend dividends bit of HYPing.

I think you are wrong about a lowering of yield isn't a lowering of income. This is only true if the income stays the same and the share price increases. In the case of Haleon/GSK it is a real lowering of income, which was indicated before the share split in July 2022.

It is also true if you keep cutters in your portfolio, the real income received is reduced, it is not just a question of yield, although too many 0% yields are never a good look for any HYP.

I have been thinking about this again and the reason I see see things a little differently is probably age. I am retired and fortunately do not have to live on my HYP as I have other sources of income. However, I do take some income from my HYP, most of which is given away. Therefore, the time horizon is fairly short and I am keen on a rising source of income. I haven't got 30 yrs for things to sort themselves out. I would suggest that how exactly you run your HYP depends partly on age and if you are drawing income.

[kempiejon]

I think you are wrong about a lowering of yield isn't a lowering of income. This is only true if the income stays the same and the share price increases. In the case of Haleon/GSK it is a real lowering of income, which was indicated before the share split in July 2022.

Perhaps I'm not making my point or missing yours about yield. It's not only true if the income stay the same and price increases.
The dividend amount can increase and yield still reduce or increase or still stay the same, it's share prices that influence the yield. The income can stay the same and the yield can decrease, the income can stop and yield decrease. I'm not wrong. There's examples where income lowers as does yield but it's not exclusive.

[daveh]

I think the classic HYP is one that follows the guidelines as offered back in yore by pyad on The Motley Fool. Y'know, rank the big FTSE shares by yield and pick the ones with sustainable looking dividends in different sectors. There is some flex in how you pick those shares, how high is high yield, is it at portfolio or individual level, how many you can find, doubling up in sectors at half weight, all in or gradually collected, going foreign, etc. Ideal holding time forever, don't sell, well hardly ever. As I said the TMF articles being first port of call for me but TLF guidelines as referenced do cover selling, something I'm not inclined to bother with. I have ended up with some shares I didn't buy as a result of corporate actions. I have some shares that today do not look like HYP shares but were when I bought them. The portfolio has developed imbalances and varied yields, it does offer me an income.
I've been through this a few times before as have others so let's not get into discussion of HYP rules.
Others can of course run their HYPs as they see fit.

I do think that if the "classic HYP" results in holding low yielding shares like Haleon for years, it might cause some to question the wisdom of rigidily following it. One share on its own is unlikely to make that much difference to a portfolio. However, if keeps being repeated you are likely to end up with a medium or low yield portfolio. This appears to defeat the main objective of having a HYP, which is having a growing level of income from the portfolio. This can either be reinvested or used as income.

I had a little think about this. A lowering yield isn't a lowering income. As my HYP is a buying strategy if my portfolio of shares showed good growth of income each year, ahead and growing further ahead of inflation over time but better growth of capital such that a decade or so down the line was now of average or even below average yield I don't think I'd be inclined to sell up. But it's an interesting premise to ponder on further. It'd free up a few years of income from capital, would obviously increase the income and if I was lucky (clever?) enough to have selected such good shares previously I might be just as lucky running it again. Except I like the do nothing but spend dividends bit of HYPing.

I had a quick look at my low yielders in my HYPish portfolio. I looked for any original HYP shares or shares divested from HYP shares that are yielding less than 3% according to my HYPTUSS spreadsheet. They are shown in the table below in order of increasing present yield. Together with the total gain over the holding period (which is a long time for some of them so the IRR wouldn't look anywhere near as good) and the yield on cost. There are three real dogs Currys, Mitchel and Butler (though I get a nice discount off my bill in their bars and restaurants) and MKS. S32 may become a dog if its dividend doesn't get back on track and Haleon may need a little time to reduce the debt GSK loaded it with before it can rapidly grow its dividend (I hope). But all the others have done really well and the dividend is low because the share price has gone up a lot not because the dividend has fallen, as shown by the yield on original cost. I could sell and buy a higher yielder and ratchet up the income, but I'm loath to cut my winners at the moment (I might if and when I need the income).




Currys is only being retained for the loss which might be useful for CGT mitigation and we will have to see what happens with the possible takeovers. MAB because of the shareholder perks (I have received discounts in recent years worth more than the shareholding each year). MKS may go soon as it price has performed well recently but the dividend is still poor.

[csearle]

Yes HYP, as used here is a little wishy-washy so we shouldn't get too hung up about it. There are vague guideines to give us all a steer. Adopting a term like classic HYP is bound to spawn a debate.

Every now and again our pyad pops up to keep us honest.

Chris

I'm a little surprised that you believe "classic HYP" is a term that will spawn debate. It has been used here and on TMF for decades and it has always been accepted without debate. Then this happens! A chance tangential remark Well, I suppose it's good to have one's assumptions questioned, but this felt more like airbrushing history.

I daresay there is some wiggleroom as to what each of us means, but there is no doubt in my mind that when people use the word "classic" or possibly "Pyadic" they mean the original concept as written up by pyad himself.
I you might accept some debate around how many shares, and whether bought over a period or in one block - but essentially "classic" would mean holding without tinkering and allowing market trading to do the work.

Anything else came later and HYP was "watered down" to make it more palatable for us "normal" investors who like meddling.


Arb.

Well I stand corrected. I suppose I was thinking that even pyad uses his nose sometimes when picking shares, and I think there was leeway on the subject of safety factors. I'm pretty sure we have had some very long debates about what constitutes an HYP more generally, maybe I was just remembering some of those.

Chris
PS On the other hand my prediction seems to be coming true!

[Grumpsimus]

I think you are wrong about a lowering of yield isn't a lowering of income. This is only true if the income stays the same and the share price increases. In the case of Haleon/GSK it is a real lowering of income, which was indicated before the share split in July 2022.

Perhaps I'm not making my point or missing yours about yield. It's not only true if the income stay the same and price increases.

The dividend amount can increase and yield still reduce or increase or still stay the same, it's share prices that influence the yield. The income can stay the same and the yield can decrease, the income can stop and yield decrease. I'm not wrong. There's examples where income lowers as does yield but it's not exclusive.

I know how yields work, as I am sure most around here do.

The main point was the absolute amount of income was decreasing in real terms following the GSK/Haleon split. I am still surprised that some running a HYP should be so unconcerned about this and even regard it as acceptable in a classic HYP.

[Arborbridge]

The main point was the absolute amount of income was decreasing in real terms following the GSK/Haleon split. I am still surprised that some running a HYP should be so unconcerned about this and even regard it as acceptable in a classic HYP.

I'm sure one would be concerned about it, to an extent. I was "concerned" when BP cut its divdend too, but that didn't mean I sold it. The mitigating factor is the "portfolio effect" as I call it. I am willing to accept that components of the portfolio have up and down fortunes - that the loss of my BP dividend would be at least partly offset by increases elsewhere.

Behind it all is Pyad's conviction that - as he puts it - we can know "diddly-squat" about what will happen to a company in two years time, so you may as well sit tight, as jump from the frying pan into the fire.
What little observation I've made about my own sell-offs tend to bare this out, with around 50% of these changes not being clearly beneficial after three years or so. It was tediois record keeping with too many variables, so I discontinued it. The great Gengulphus was of the same opinion - that selling out and buying another share doesn't work more than half the time, compared with just sitting tight.

Be that as it may, we are only human and in my case I do make changes, all-be-it in slow motion rather than quickly. Haleon is one such case, which may in time be sold off unless it contributes enough income to be worth writing in a spreadsheet - which is my own particularly eccentric test

Arb.

[moorfield]

Haleon is teasing me. I have an unwritten rule that if a HYP share is producing so little income that it's not worth getting out of bed to log the dividends, then I sell it. I know it's not official HYP policy - but I usually operate this "back 'em or sack 'em" idea. Unfortunately, at under 2% yield HLN is hardly ever likely to make the cut, yet I like the idea of a "big beast" that is in this sort of sector - I'm even reminded of its universality when I clean my teeth - the toothpaste tube has a little haleon logo on it.

To sell or not - well, let's be honest, it won't make any material difference either way. It would just be a matter of tidying up.

Lest we forget HYP1 continues to hold Haleon which contributed 0.2% of overall income last year.

I think this thread well illustrates what has become a lost HYP art over the years, that of sitting on one hands. It seems to me the reason that theme has largely been abandoned boils down to folk here either thinking they know better, or having a bad case of dontjuststandtheredosomethinganythingitis. HYP wasn't aimed at them. I suggest Arb is suffering from the latter, am I being unreasonable?

[tjh290633]

Lest we forget HYP1 continues to hold Haleon which contributed 0.2% of overall income last year.

I think this thread well illustrates what has become a lost HYP art over the years, that of sitting on one hands. It seems to me the reason that theme has largely been abandoned boils down to folk here either thinking they know better, or having a bad case of dontjuststandtheredosomethinganythingitis. HYP wasn't aimed at them. I suggest Arb is suffering from the latter, am I being unreasonable?

But one of the failings of HYP1 was its rigid adherence to avoiding interfering, particularly when there were takeovers. This resulted in gross imbalance, never corrected.

I guess that HYP1 now has a rump holding of Haleon. as nothing will have been added to the holding. I see that I increased my holding of HLN almost 4-fold, to bring it up to the then median weight. Currently it is about 90% of the median, while GSK, having been topped up by 20% to compensate for the loss of HLN, is just over the median at 103%.

There is no point in having a nominally equally weighted portfolio and then sitting on rump holdings. We don't know what the future will bring, but in a few years time, HLN may well be behaving differently.

It's not that we know better, it's that we can see where HYP1 has gone awry.

TJH

[Grumpsimus]

Lest we forget HYP1 continues to hold Haleon which contributed 0.2% of overall income last year.

I think this thread well illustrates what has become a lost HYP art over the years, that of sitting on one hands. It seems to me the reason that theme has largely been abandoned boils down to folk here either thinking they know better, or having a bad case of dontjuststandtheredosomethinganythingitis. HYP wasn't aimed at them. I suggest Arb is suffering from the latter, am I being unreasonable?

Well I think of Haleon being in HYP1 as a warning about rigidly following a very mechanical strategy, In general I see HYP1 not as an exemplar, but something to be avoided, very unbalanced, liable to shocks from just a few shares. How many would wish to put a large part of their personal wealth into it? I certainly wouldn't wish to rely on it for income in old age.

csearle was right, pyad certainly did bend his own rules in later HYPs. Why did he and many others do this, because they are human and you always have to excercise some judgement when investing. Not all requirements can be meet by the HYP1 model, TJH has already mentioned balancing a portfolio. I want an easy to manage portfolio, not one cluttered up with low capital value, low yielders like Haleon.

Personally I can't share your nostalgia for the past glory days of HYPs, when everyone was a purist, I don't think they all were. Also, your are being unreasonable to Arb, who doesn't really behave in the way you suggest.

[Arborbridge]

Haleon is teasing me. I have an unwritten rule that if a HYP share is producing so little income that it's not worth getting out of bed to log the dividends, then I sell it. I know it's not official HYP policy - but I usually operate this "back 'em or sack 'em" idea. Unfortunately, at under 2% yield HLN is hardly ever likely to make the cut, yet I like the idea of a "big beast" that is in this sort of sector - I'm even reminded of its universality when I clean my teeth - the toothpaste tube has a little haleon logo on it.

To sell or not - well, let's be honest, it won't make any material difference either way. It would just be a matter of tidying up.

Lest we forget HYP1 continues to hold Haleon which contributed 0.2% of overall income last year.

I think this thread well illustrates what has become a lost HYP art over the years, that of sitting on one hands. It seems to me the reason that theme has largely been abandoned boils down to folk here either thinking they know better, or having a bad case of dontjuststandtheredosomethinganythingitis. HYP wasn't aimed at them. I suggest Arb is suffering from the latter, am I being unreasonable?

Probably correct - perhaps I need "correction" on the naughty step. However, note I am pickering - as yet I've done nothing about HLN except hold on, and I've had as much flak from posters for holding on as I have from thinking aloud about it.
Arb.

[MrFoolish]

I want an easy to manage portfolio, not one cluttered up with low capital value, low yielders like Haleon

In my experience, ignoring a share in my electronic account involves no work whatsoever.

[Arborbridge]

I guess that HYP1 now has a rump holding of Haleon. as nothing will have been added to the holding. I see that I increased my holding of HLN almost 4-fold, to bring it up to the then median weight. Currently it is about 90% of the median, while GSK, having been topped up by 20% to compensate for the loss of HLN, is just over the median at 103%.

There is no point in having a nominally equally weighted portfolio and then sitting on rump holdings. We don't know what the future will bring, but in a few years time, HLN may well be behaving differently.

It's not that we know better, it's that we can see where HYP1 has gone awry.

TJH

I see that I increased my holding of HLN almost 4-fold, to bring it up to the then median weight.

I hadn't realised you had done that. I find that a bit surprising given the low yield and as yet untested payment record. Why? You must have had better candidates, so I would have guessed that you would leave HLN as a rump for the time being.

Arb.

[Arborbridge]

Well I think of Haleon being in HYP1 as a warning about rigidly following a very mechanical strategy, In general I see HYP1 not as an exemplar, but something to be avoided, very unbalanced, liable to shocks from just a few shares. How many would wish to put a large part of their personal wealth into it? I certainly wouldn't wish to rely on it for income in old age.

csearle was right, pyad certainly did bend his own rules in later HYPs. Why did he and many others do this, because they are human and you always have to excercise some judgement when investing. Not all requirements can be meet by the HYP1 model, TJH has already mentioned balancing a portfolio. I want an easy to manage portfolio, not one cluttered up with low capital value, low yielders like Haleon.

Personally I can't share your nostalgia for the past glory days of HYPs, when everyone was a purist, I don't think they all were. Also, your are being unreasonable to Arb, who doesn't really behave in the way you suggest.

It's interesting how you are putting a different slant on these events. HYP1 is an experiment, but it does show what Pyad postulates is correct. One can buy a group of shares and just let them run for decades with minimal interference and achieve an satisfactorily increasing income and capital. It worked well - even to some self-rebalancing over the years (though not as quickly as us fidgetty human would like).

Another slight slant from you - I don't believe Pyad "bent" his rules (which he always called guidelines, I believe). He later allowed the possibility of selling a share when it had stopped paying dividends and had no visibility on when they might resume. I remember he did that reluctantly only to satisfy some critics, rather than because he believed the system had failed. The other change was hardly bending his rules - he wrote the possibility of building up a HYP over a period of time, for those who had to do that.

The fact that he chose to HYP1 going is an affirmation of his believe in those principles and guidelines which he had proposed.

As for the glory days nostalgia - I think you are being inventive. I don't sense any of that: people are just discussing what has happened and reporting on how they have reacted to Haleon, in this case.

Arb.

[Arborbridge]

I want an easy to manage portfolio, not one cluttered up with low capital value, low yielders like Haleon

In my experience, ignoring a share in my electronic account involves no work whatsoever.

I think that's a good point, and it all depends how one does the "paperwork". Having HLN instead of the single GSK holding isn't what I would have wanted, but it isn't actually doing any harm, nor is it cluttering anything.
I could just choose to ignore it completely - my choice!

Whatever I do, the dividends from my HYP keep arriving and keep body and soul together. Any playing about with spreadsheets or worrying about imbalance is purely voluntary. I suspect I need never look at my portfolio from now on and not much would happen except a build up of cash.

Arb.

[kempiejon]

So Haleon's dividend is up by 150% year on year, first year only one dividend offered which was the final of 2.4p, this year the final was 4.2p, for a 6p total. 150% of not much is still not much. Not having GSK I don't know the details of the corporate action but looks like a consolidation, spin off but no cash bung. GSK offered 80p before the split, then 57/8p so about 20p reduction on holders' income.
But this is all very much to be expected from a portfolio of income bearing shares, income up here, down there and so on. We diversify and hope the system keeps the income rolling in. I'd hope gsk holders, no doubt long jaded by the static and now reduced dividend and lack lustre capital performance could take the Haleon money and trust the other shares do there bit. The HYP plan doesn't need work.
I did hold GSK long ago now, one of those shares held unsheltered that didn't make it back in once ISAd because they'd lost HYP attraction. If they'd been in the ISA all along I think I'd be nonchalant about this outcome.

[Grumpsimus]

I want an easy to manage portfolio, not one cluttered up with low capital value, low yielders like Haleon

In my experience, ignoring a share in my electronic account involves no work whatsoever.

Well you could ignore it and all your other shares and go for for the ultimate dorisian portfolio.

However, judging from the people who post on this board, most like to take an interest in their investments. People keep spreadsheets and do regular checks on the balance of the portfolio and income. News about popular HYP is regularly posted and discussed.

To me just ignoring a share is a failure to take a decision, to either keep or dispose of it. I took a decision to dispose of Haleon, it was too small to be worth bothering with in the context of my portfolio.

[Bubblesofearth]

To me just ignoring a share is a failure to take a decision, to either keep or dispose of it.

How can ignoring a share be a failure to keep it?

BoE

[Grumpsimus]

It's interesting how you are putting a different slant on these events. HYP1 is an experiment, but it does show what Pyad postulates is correct. One can buy a group of shares and just let them run for decades with minimal interference and achieve an satisfactorily increasing income and capital. It worked well - even to some self-rebalancing over the years (though not as quickly as us fidgetty human would like).

Another slight slant from you - I don't believe Pyad "bent" his rules (which he always called guidelines, I believe). He later allowed the possibility of selling a share when it had stopped paying dividends and had no visibility on when they might resume. I remember he did that reluctantly only to satisfy some critics, rather than because he believed the system had failed. The other change was hardly bending his rules - he wrote the possibility of building up a HYP over a period of time, for those who had to do that.

The fact that he chose to HYP1 going is an affirmation of his believe in those principles and guidelines which he had proposed.

As for the glory days nostalgia - I think you are being inventive. I don't sense any of that: people are just discussing what has happened and reporting on how they have reacted to Haleon, in this case.

Arb.

I am well aware that HYP1 was a demo/experiment. It was also a first attempt and I always thought that your were meant to learn something from the results and modify it for future attempts at the same experiment. I have looked at HYP1 over the years and it has attracted a fair amount of criticism over time. I suggest that anyone setting up a similiar HYP experiment today would make a number of changes. However. this probably not the place to discuss this.

It seems you are very resistant to the idea that Pyad ever "bent" the rules, don't you remember the "smell test"? This enabled Pyad to avoid a share he was not happy with for some reason and I consider it was quite reasonable for him to do this. I prefer guidelines to rules, which gives a better feel for what was intended. Pyad also changed things as HYP developed, number of shares, selling shares that stopped paying dividends. The reason he made changes hardly matters, he made changes.

The real interest in HYP1 is because it has been being updated for so long. It was of course developed during a series articles for motley fool, as were HYP2,3 and 4.

The nostatagia comment was in relation to one particular post lamenting how things had got worse. We all know things vere better in the old days, even if they weren't.

[Grumpsimus]

To me just ignoring a share is a failure to take a decision, to either keep or dispose of it.

How can ignoring a share be a failure to keep it?

BoE

In the case of Haleon the shares arrived in your account via a share split. My contention is you need to a decision on whether to keep them for some reason or to sell. I don't think the do nothing option is a good way to run any investment portfolio.

Unfortunately all of us, including myself at times, all to often take the do nothing option. We are are all human!

[Bubblesofearth]

In the case of Haleon the shares arrived in your account via a share split. My contention is you need to a decision on whether to keep them for some reason or to sell. I don't think the do nothing option is a good way to run any investment portfolio.

Why not? You have no evidence that do nothing gives any worse returns than do something.

Or do you?

BoE