I see VOD is now below 200p

[88V8]

Personally I would select VOD into a new HYP now on its yield (5.8%) and industry (telecoms).

With no reference to safety factors? I doubt whether many of your 100 HYPers would do the same
I also doubt whether many would suggest VOD as a new pick right now owing to those safety factors. As I remember it, pyad wrote that when topping up, one should look at the safety factors in the same way as you would for a new share.

Quite.
Reference to Vod's past glories are meaningless. It ain't the same company and has no established divi record and rotten cover.
Buying it is a gamble. Fine, with one's eyes open.

Not for me. I have enough duffers already.

Question is, how did it get into the wife's HYP. My idea? Ummm, oh, really?

V8

[kempiejon]

As for over-tinkering - I don't believe I do that, but I guess it's all a question of degree. My last voluntary complete sells were RSA and BBY in July 2015. I'd been quite patient with both and eventually decided to move elsewhere.
So, I would say I am a slow tinkerer.

Arb.

Just not patient enough, although excluded from more cash as income offenders both Balfour Beatty and Royal Sun Assurance are increasing my income this year and estimated for more of the same. In my large diversified 40+ HYP other shares picked up their slack.

[moorfield]

With no reference to safety factors? I doubt whether many of your 100 HYPers would do the same

Well a newbie reading pyads original selection rules today (and perhaps unaware of the Verizon history) sees a high yielding FTSE100 share with a 5 year dividend history of 9.52, 10.19, 11, 11.22 and 11.45p.

As I wrote, 100 different opinions ... I'm happy to apply a little strategic ignorance to VOD.

[Arborbridge]

Moorfield, VOD had a rising dividend history but then it sold off the company which produced some of that dividend.

The dividend being paid out at present is twice what can be supported by profit. That cannot last, so either you must be happy that there is a new source of income, or happy that the company ramps up borrowing to pay your dividend, or happy that the dividend may be slashed.

Now, I'm not saying that the future is impossibly bleak: I'm just asking the question whether anyone has any idea where the future dividends are coming from, or whether they know if these figures are wrong for some accounting technicality. So far, no one has answered. I've had bluster, or I've had people saying they wouldn't take a chance on VOD, but what I haven't had is any reasoned answers telling me how the dividend will be paid in future.

In normal circumstances, I would be all for leaving it to the management, but this situation is rather unusual. And I'm also a little biassed owing to VOD's history of hubris.

[Arborbridge]

Jon,
Not patient enough? Maybe, but I had owned RSA since 1999, and I finally lost patience. There comes a time when things fall into place and one wants to make a change of tack. I had owned this duffer for long enough and in any case had several other companies in the insurance sector. The dividend was radically slashed which presented a good enough reason. By hindsight, one can say that the dividend has been restored relatively quickly, but our friend Dod would argue that this is the exception rather than the rule.

BBY I had only five years, but got out at a profit. I wanted to re-invest in something less cyclical and more on the stalwart wing of HYP. I sold some time after the news that the dividend was suspended.

It's always difficult to know if such decisions lead to a better position, which I why I do it rarely. My patience, is clearly your view of impatience

[moorfield]

I'm just asking the question whether anyone has any idea where the future dividends are coming from, or whether they know if these figures are wrong for some accounting technicality. So far, no one has answered. I've had bluster, or I've had people saying they wouldn't take a chance on VOD, but what I haven't had is any reasoned answers telling me how the dividend will be paid in future.

That's the point of applying pyad's strategic ignorance principle surely? We could start very similar discussions about Shell (RDSB) and the oil price, and AstraZeneca (AZN) and pharma patents, to pick a couple of other examples.

If you want more certainty of where your future dividends are coming from, I would suggest to buy some cumulative preference shares As I've already pointed out elsewhere Aviva (AV.A) have outperformed HYP1 over the same 16 year period. But don't get me started on those again here .....

[Horsey]

Now, I'm not saying that the future is impossibly bleak: I'm just asking the question whether anyone has any idea where the future dividends are coming from, or whether they know if these figures are wrong for some accounting technicality. So far, no one has answered. I've had bluster, or I've had people saying they wouldn't take a chance on VOD, but what I haven't had is any reasoned answers telling me how the dividend will be paid in future.

From reading the latest results, VOD management predicts free cash flow next year (following completion of Project Spring) in excess of 4 billion, more than covering the 3 billion paid out in dividends.

Problem solved.

[Arborbridge]

From reading the latest results, VOD management predicts free cash flow next year (following completion of Project Spring) in excess of 4 billion, more than covering the 3 billion paid out in dividends.

Problem solved.

Thanks for that! That begins to make some more sense and at least give some promise of rectifying the position.

Disclosure: I'm not good at keeping up with company statements - but then you seem to be the only one to have reported this peice of good news in this thread, so others may be as bad as I am.

[Horsey]

To quote directly from them.....

Guidance for the 2017 financial year

· Move to euro reporting for the year ending 31 March 2017, as previously announced

· Organic EBITDA growth in the range of 3-6%, implying €15.7 - 16.2 billion (£12.4 - 12.8 billion) at guidance FX rates

· Free cash flow after capex, before M&A, spectrum and restructuring costs of at least €4.0 billion (£3.2 billion)

· Post Project Spring capital intensity expected to be in the mid-teens as a percentage of annual revenue

· Dividends to be declared in euros for the year-ending 31 March 2017 and thereafter; intention to grow dividends per share annually (relative to a 2016 'baseline' of 14.48 eurocents per share), demonstrating confidence in future cash flow generation

[Arborbridge]

That's the point of applying pyad's strategic ignorance principle surely?

I'm sure Dod would counter, there is a difference between strategic ignorance and burying one's head in the sand.

In this case (VOD) we know we have a potential problem which has hung around for quite some time. SI does not tell you to ignore such problems, only that the medium future is impossible to predict. VOD cover of 0.5 isn't the the future, it is now.
I'm just asking ... well you know what I'm asking, and Horsey has made a good contribution to answering the question, rather than ignoring it or finding a rationalisation for doing so.

Gengulphus could give us some very good notes on SI, and I'd expect he may say that omitting to notice VOD's cover is dangerously low, does not come within the remit of SI.

There are other cases, as you say, but this thread is concerning VOD.

[kempiejon]

http://shares.telegraph.co.uk/fundamentals/?epic=vod
I've recently been taken with the way telegraph display their fundamentals however the data is 2nd hand and could be rubbish. It shows VOD gearing of 40 something %, and cover of 1.41.
Morningstar show dividend cover of -1.10 this year and estimates of 0.35 and 0.50 for the next couple of years estimated. It looks like this is one for the company accounts.

[StepOne]

The bottom line for me is that the analysts are still forecasting dividend increases, and the CEO is making the right noises about it. I don't think I've got any greater insight to the future earnings potential of Vodafone than any of those, and if you were asking me my layman's perspective I would say that global demand for mobile data is likely to grow in the medium term. That's about as detailed as I go on any of my HYP holdings.

[Dod1010]

would VOD pass the safety requirements of a pyadic HYP now? If not, there's a good reason for questioning it's continued inclusion in a HYP. That is also true of other shares, of course, and a HYP is a sum of its components: there's a valid argument that each component should be examined from time to time, especially so within a tinkering HYP.

But Arb, if you were running a pyadic HYP, you would not be tinkering. A pyadic HYP never sells anything. OTOH your sentiments are more like mine.

[toofast2live]

The analysts, who are closer to this company than any of us divide as follows:

17 say outperform, or buy
8 say hold
2 say underperform
0 say sell.

Thats a big improvement on a year ago when 5 said underperform.

But of course their focus is TR not soley dividend return!

[Arborbridge]

But Arb, if you were running a pyadic HYP, you would not be tinkering.

I never claimed to be a pure pyadic HYPer - as you know I use TJH's method of tinkering.

I any case, even trying to be pyadic, for those who are, is a little like being a strict Christian: a hard road to tread with many temptations on the way

Arb.

[Arborbridge]

It looks like this is one for the company accounts.

I would have a better chance of trying to understand a book by reading it in a coal cellar.

Broker ratings are a small comfort, but I've had a few experiences when the buy ratings carry on up until a dividend cut, then carry on afterwards also - presumably because when the price has crashed the company is an even better buy.

Arb.

[Gengulphus]

With no reference to safety factors? I doubt whether many of your 100 HYPers would do the same

Well a newbie reading pyads original selection rules today (and perhaps unaware of the Verizon history) sees a high yielding FTSE100 share with a 5 year dividend history of 9.52, 10.19, 11, 11.22 and 11.45p.

If that newbie reads pyad's original selection rules properly, he or she also checks for market cap > £1.5b (no problem for VOD) and gearing < 50% (which might be more of a problem).

As the quote you give indicates, the safety factors are also an important part of a HYP strategy. You don't have to use those two, but you ought to have some safety factors - things that boost your confidence that the company will maintain or grow its dividend.

Gengulphus

[kempiejon]

My last voluntary complete sells were RSA and BBY in July 2015. I'd been quite patient with both and eventually decided to move elsewhere.
So, I would say I am a slow tinkerer.

Arb.

Arb, I'm a holder and try not to voluntarily sell, it looks like you impatience paid off. Since July 2015 I have bought Standard Chartered, Amlin, BAe, Tate and Pennon for my HYP, I guess my income would have improved.

[Arborbridge]

With regard to the dividend cover:
In this case (figures from HL site) the adjusted eps is 5.04p and the dps is 11.45p giving a cover of 0.44.

If you use the unadjusted eps, the cover would by -15.08/11.45, giving -1.31: either way it's not good.

How one arrives at 1.4x I'm not sure, but neither am I convinced it's correct or relevant.

Whatever, VOD represents a recovery play and a massive hope in the future. It is the world's biggest mobile network operator, they claim, so that should help - like it helped RBS being the world's biggest bank (?).


Arb.

[tjh290633]

I should point out that my top up ranking system applies to shares which you already hold and which you have no reason to sell. The criteria for selling are either a yield below about half the Market yield due to price increases, or ceasing to pay dividends. Otherwise you continue holding.

TJH