Portfolio summary - Any advice?

[NickNick]

All,

I've been following a HYP strategy for several years but still consider myself very much a novice when it comes to analysing the options. I'd appreciate any advice on what to do next with my portfolio.

A couple of notes to pre-empt the obvious questions -
- Outside the HYP I have more than double median value holding of BP.L hence underweight in oil & gas within the HYP.
- My strategy is broadly HYP with minimum dealing/tinkering but I will dump a share that shows no signs of paying a dividend and I will top slice if something is overweight. Typically that's averaged about 2 full or partial sales per year which go back into the reinvestment pot.
- I'm still putting money in each year and reinvesting all dividends - no draw-down at this time. The combination of dividends plus new cash plus cash from tinkering allows me to spend about 3x median holding each year which is typically 1 or 2 new companies plus 2 or 3 top-ups.
- The HYP is actually split across 2 ISA wrappers (my wife and mine). I review as a single portfolio but each share is only represented in one ISA so I don't always buy the top pick (if for example my wife's ISA has cash but the target share sits in my ISA not hers).
- You'll see some of the usual suspects created from corporate actions.


Like many people I perpetually struggle with some recurring questions
- should I double down on the dogs?
- when is high yield too high to believe (and when is a simple cover calculation not enough)
- is my largely-passive portfolio balanced enough or do I need to be more active in my tinkering?
- are there any key gaps or opportunities I'm missing?
- have I got too many stocks and slipped into diworsification?






Thanks in advance for any feedback.

[spiderbill]

All,
I've been following a HYP strategy for several years but still consider myself very much a novice when it comes to analysing the options. I'd appreciate any advice on what to do next with my portfolio.

From a look over your portfolio it seems mostly pretty good and personally I wouldn't say it was unbalanced, though other more purist HYPers might disagree. I hold many of those, though there are some I wouldn't touch for various reasons which I won't bore you with as they're more personal.

should I double down on the dogs?
Depends on the dog. Is it a dog due to bad management or due to a temporary shift in market conditions or market sentiment?

when is high yield too high to believe (and when is a simple cover calculation not enough)
That's a biggy. Few of us here haven't had our fingers burnt with pushing for just a little too much yield - even while trying not to! I try to look at the company first and then think - if the yield is too high, what am I missing. If I'm sure of the company (e.g. Legal & General) then I'll be more relaxed about a high yield, but if I'm not sure then I'll take the HY as a red flag that the market may know more then I do. But none of this is exactly a science!

is my largely-passive portfolio balanced enough or do I need to be more active in my tinkering?
As stated above I think it's mostly ok apart from the answers to the next question. At another time I might be inclined to add a gold miner, but with the gold price soaring at the moment this probably isn't the time for that.
The one other thing I'd say is be careful about the tobaccos - the income is nice but the capital has dropped alarmingly in the last few years and could do so again. Depends a bit how much you paid for them how comfortable you might be.

are there any key gaps or opportunities I'm missing?
You're very light on both housebuilding and construction. Housebuilding has been hit hard by interest rates and political idiocy but seems to be recovering while still offering some bargains. You could look at a few options there like Taylor Wimpey or Barretts. I'm currently in the red on TW but expect them to recover. Like you I had Galliford Try and got Vistry in their sale. Galliford seem to be revitalised now and I was thinking of maybe adding a few more myself.

have I got too many stocks and slipped into diworsification?
You've got 32. I've got 35. I've got a few real dogs in that but you seem to have avoided most of them so I'd say you're doing better than me on that score.

On your specific share questions:
I don't trust aberdeen's management and wouldn't buy them - my biggest worry is that they bought interactive investor, one of my brokers.

On WPP they've been far too up and down for me, and seemed dependent on a previous main man who left.

Never been a fan of BT but haven't kept up with it recently so not a reliable commentator.

Is HLN a HY share? - No (though on other threads some disagree). Could it be worth holding it in another portfolio? - Maybe. I've got some and am holding on for the moment to see what happens once their new management has had a chance to forge their own path.

Vistry - again I'm holding on to see how things develop. The price has improved again after a worrying drop and if the divi comes back then they may be ok.

I considered top slicing BA but for now I'm probably going to hold on as I think there's still some scope for further rises (not a very HYP attitude perhaps) though I do have some outside shelter so might just sell those for CGT purpose given that the allowances are being halved for next year,

Similarly I think HSBA has more to come in its recovery so I'm hanging on and even topped up during the recent drop. You are overweight but not massively.

AZN is not one I hold so won't give an opinion on, merely note that you're well overweight and the dividend is low, so you could rotate it into something with more income. Your decision.

Hope that helps, but remember that IDNHACB (I do not have a crystal ball) so all this is just opinion.

Good luck with your decisions and thanks for showing us your portfolio - always interesting.

cheers
Spiderbill

[IanTHughes]

Like many people I perpetually struggle with some recurring questions
should I double down on the dogs?

Define a “dog”. If you simply mean a holding on which your portfolio has so far lost value, then yes! Just so long as the share in question offers the highest yield then available, and a dividend that you consider to be sustainable.

when is high yield too high to believe (and when is a simple cover calculation not enough)

When you do not believe that the dividend on offer is sustainable

is my largely-passive portfolio balanced enough or do I need to be more active in my tinkering?

No “tinkering” is necessary. You are still building this portfolio, so all that is needed is a limit on Holding/Sector income concentration, beyond which you feel that the income from a Holding/Sector is overweight. If such a limit is/will be breached, find another choice for that top-up.

are there any key gaps or opportunities I'm missing?

Diversification does not mean that every Holding/Sector must be present. 15 – 20 Sectors is plenty of diversification, so no worries there.

have I got too many stocks and slipped into diworsification?

No! Assuming of course that each “new” Holding/Sector was purchased as a result of being, at the time of purchase, “the highest sustainable yield” then available.

Enjoy!


Ian

[funduffer]

On Vistry (VTY), I too hold as my housebuilder and they have opted for buy-backs rather than dividends recently, but have not ruled out dividends in the future.

The share price has recently recovered strongly, so I can foresee that they may return to dividends if the share price remains high.

I am holding for now and await the results on 14th March.

FD

[NickNick]

Thanks to you all for the feedback.

If anyone has a crystal ball going cheap let me know

[kempiejon]

Thanks to you all for the feedback.

If anyone has a crystal ball going cheap let me know

I have a crystal ball, turns out it's not very good. I do wish I hadn't traded all my magic beans for it, I worry I over paid.

Your portfolio might well do OK for income, I hope so as I've a lot of those picks in mine. Did I miss the current yield? I'm rarely inclined to sell so keep my low/no yielders and do not top slice. New money goes to underweight, high yield with good income prospects.

- when is high yield too high to believe (and when is a simple cover calculation not enough)

The yield isn't the question, that's just a function of share price and last dividends. Sometimes the share price is too high or low, sometimes just right. The question is whether the dividend is sustainable, if it is the sp is too low. I use cover, debt and other trends I spot for company information in the interweb domain.

[tjh290633]

Just a comment. Make sure that you don't duplicate holdings in both portfolios. Although you treat it as a single portfolio, in practice they are separate and you cannot switch cash from one to the other if needed. I had this problem when you could not amalgamate PEPs and ISAs. We have a lot of holdings in common, and I keep looking at those with a low yield, having ditched Compass and M&S when I needed to release some cash for roof repairs.

As you are still building the portfolios, you can address imbalance to some extent by where you reinvest dividends and what you do with new money. You can be more tolerant at this stage unless there is a wide divergence.

TJH