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UKDividendstocks.com portfolio review

General discussions about equity high-yield income strategies
funduffer
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UKDividendstocks.com portfolio review

#440890

Postby funduffer » September 9th, 2021, 10:27 am

I always like to read John Kingham's blogs on value/dividend investment.

His blog is now called UKDividendstocks.com.

Whilst not exactly HYP, it has many lessons and ideas that could be adopted by a HYPer.

The latest portfolio review explains many of them:

https://www.ukdividendstocks.com/blog/d ... ec1b35658a

Whilst his stock selection method is complicated (and you need to be a subscriber to use it), he is not afraid to delve quite deeply into the FTSE 250, and his portfolio management methods are relevant to HYP, I believe. (If not, I don't mind if the mods move this to another board). The commentary is also interesting.

Of particular interest to me in this article were:

His re-balancing rules

How he reduces holdings to concentrate on the best quality holdings

His views on the prospects for dividends.

Hope it is of interest to some

FD

Moderator Message:
Moved from the HYP-P board so as to facilitate better discussion of the amount of trading John Kingham's strategy has entailed, as exemplified by the portfolio review linked to by FD. --MDW1954

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Re: UKDividendstocks.com portfolio review

#441032

Postby MDW1954 » September 9th, 2021, 5:52 pm

Thanks, FD. I've quite a lot of time for John Kingham. I don't read everything that he puts out, but I almost always enjoy and admire those of his writings that I do read.

MDW1954

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Re: UKDividendstocks.com portfolio review

#441237

Postby 88V8 » September 10th, 2021, 12:17 pm

funduffer wrote:I always like to read John Kingham's blogs on value/dividend investment.

Not seen that before, thankyou.

I notice he tries not to have too many holdings... 25ish.

And he rebalances on value rather than income. Which is easier but for an income investor never seems awfully logical.

Reluctantly I just top-sliced Admiral. But later today, OH will undo the process by buying in her ISA.
Despite the good example of tjh, and no doubt John Kingham, I do prefer to run winners.

V8

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Re: UKDividendstocks.com portfolio review

#442883

Postby Arborbridge » September 17th, 2021, 7:28 am

An interesting approach, and as you say, shares some of the characteristics of HYP - though with quite wide differences. Among the biggest differences is that he is more analytical, whereas HYP is for people less able on that side of things who just want a bunch of big shares which mostly look after themselves. The amount of analysis and thinking and rethinking he seems to be doing is beyond what - in my view - HYP was intended to inflict on us.

The other obvious difference is that the yield is far lower - he is after TR by the looks of it, and income is incidental. This is a quite different mandate to HYP. HYP goes for: big; diverse; income; equal weighted; low activity. In that broadest of ways, quite different.

Arb.

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Re: UKDividendstocks.com portfolio review

#442900

Postby dealtn » September 17th, 2021, 9:03 am

Arborbridge wrote:
The other obvious difference is that the yield is far lower - he is after TR by the looks of it, and income is incidental.


Hardly.

"The portfolio’s goals are pretty standard for a UK income and growth portfolio:

High yield:

At a minimum, have a higher dividend yield than the FTSE All-Share

Preferably, have a dividend yield of more than 5%

High total return (measured over at least five years):

At a minimum, have a higher total return than the FTSE All-Share

Preferably, have a total return of more than 10% per year on average"

Leaving aside the fact that all strategies have Total Return, the above suggests income is far from incidental.

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Re: UKDividendstocks.com portfolio review

#442912

Postby Arborbridge » September 17th, 2021, 9:34 am

dealtn wrote:
Arborbridge wrote:
The other obvious difference is that the yield is far lower - he is after TR by the looks of it, and income is incidental.


Hardly.

"The portfolio’s goals are pretty standard for a UK income and growth portfolio:

High yield:

At a minimum, have a higher dividend yield than the FTSE All-Share

Preferably, have a dividend yield of more than 5%

High total return (measured over at least five years):

At a minimum, have a higher total return than the FTSE All-Share

Preferably, have a total return of more than 10% per year on average"

Leaving aside the fact that all strategies have Total Return, the above suggests income is far from incidental.


That's a matter of interpretation.
I'd say the moderate yield is a device for seeking TR, and he has set a target for TR, whereas HYP does not. HYP is principally a vehicle for high and increasing dividends, and that is quite different to what he has laid out.
Interestingly, he has rarely met his criterion of 5% yield, though I suspect many HYPers will be achieving this most of the time.

Arb.

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Re: UKDividendstocks.com portfolio review

#442941

Postby dealtn » September 17th, 2021, 10:57 am

Arborbridge wrote:
dealtn wrote:
Arborbridge wrote:
The other obvious difference is that the yield is far lower - he is after TR by the looks of it, and income is incidental.


Hardly.

"The portfolio’s goals are pretty standard for a UK income and growth portfolio:

High yield:

At a minimum, have a higher dividend yield than the FTSE All-Share

Preferably, have a dividend yield of more than 5%

High total return (measured over at least five years):

At a minimum, have a higher total return than the FTSE All-Share

Preferably, have a total return of more than 10% per year on average"

Leaving aside the fact that all strategies have Total Return, the above suggests income is far from incidental.


That's a matter of interpretation.
I'd say the moderate yield is a device for seeking TR, and he has set a target for TR, whereas HYP does not. HYP is principally a vehicle for high and increasing dividends, and that is quite different to what he has laid out.
Interestingly, he has rarely met his criterion of 5% yield, though I suspect many HYPers will be achieving this most of the time.

Arb.


I'm not sure what you mean by interpretation. Your claim was income was incidental, that doesn't tally with the aims of the strategy, nor the practice from what little I have seen. I'm not sure how you can call an ambition of a higher than average yield, and a >5% target, as moderate. You are welcome to your opinion but I can't see how that be interpreted as a "device" for Total Return. All strategies have a Total Return, and he is at least honest in recognising that, and utilising rebalancing in the strategy to hopefully achieve a rising income stream.

I'm not sure the relevance to HYP either in your reply. I didn't mention it, nor quote your thoughts about it. I think we both agree its not a HYP strategy, hence why it is discussed here in "General", rather than the other place. (It does look, and perform, like some publicised "tinkering" HYPs that are discussed there though).

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Re: UKDividendstocks.com portfolio review

#443008

Postby Gengulphus » September 17th, 2021, 1:27 pm

Arborbridge wrote:
dealtn wrote:
Arborbridge wrote:The other obvious difference is that the yield is far lower - he is after TR by the looks of it, and income is incidental.

Hardly.

"The portfolio’s goals are pretty standard for a UK income and growth portfolio:

High yield:

At a minimum, have a higher dividend yield than the FTSE All-Share

Preferably, have a dividend yield of more than 5%

High total return (measured over at least five years):

At a minimum, have a higher total return than the FTSE All-Share

Preferably, have a total return of more than 10% per year on average"

Leaving aside the fact that all strategies have Total Return, the above suggests income is far from incidental.

That's a matter of interpretation.

Interpreting those stated goals of John Kingham's is easy: he's stated a minimum level and a preferred level for each of dividend yield and total return, using closely parallel language and no stated priority of either over the other. So he's stated them as two coequal goals.

Arborbridge wrote:I'd say the moderate yield is a device for seeking TR, and he has set a target for TR, whereas HYP does not. HYP is principally a vehicle for high and increasing dividends, and that is quite different to what he has laid out.

Agreed that there's a significant goals difference between his strategy and HYP, but that difference isn't that his strategy's goal is mainly total return, with dividend yield incidental, and HYP just has a dividend income goal - it's that his strategy has dividend yield and total return goals of equal importance and HYP just has a dividend income goal.

Arborbridge wrote:Interestingly, he has rarely met his criterion of 5% yield, though I suspect many HYPers will be achieving this most of the time.

That's a completely different question from what the strategies' goals are - it's about whether / how often the strategies achieve their goals. I.e. it might indicate a flaw in John Kingham's strategy that means it has little chance of achieving its preferred dividend yield goal, and it might well be worth discussing what that flaw might be. But there's no real point in discussing whether it has that preferred dividend yield goal - he's written that it does, and he's the only person who can speak with authority on the matter!

I do actually think his use of dividend yield goals may well be flawed, because I think dividend yield is highly suspect as a goal for any strategy at all. If e.g. I set a dividend yield goal of 5%, buy a portfolio for £100k and find ten years later that it's now worth £200k with a dividend income of £10k, I've achieved that goal - but I've also achieved it if I find ten years later that it's now worth £20k with a dividend income of £1k, and I don't think the latter is anything like as much of a success as the former!

That problem could of course be dealt with by asking for the dividend yield on original cost to be 5%, rather than that the usual dividend yield on current value should be 5% - but then that £100k portfolio simply has a £5k dividend income target no matter how long it's kept, which seems very unambitious...

Basically, I think that if one wants a dividend goal for a strategy, it's far more sensible to make it a dividend income goal than a dividend yield goal. HYP sort-of does that with its "high and increasing dividends", though that really needs quantifying to make it possible to judge whether one has achieved it - e.g. as "dividend income at least equal to 4% of the amount originally invested, increased in line with RPI, and preferably increasing by 1% p.a. more than that". That can of course be restated as a dividend yield goal, by talking about "yield on RPI-adjusted original cost" - but that's just wrapping what's basically a dividend income goal up in a layer of obfuscation...

By the way, I'm not saying anything against high-yield strategies using dividend yields - but use them in the strategy's share-selection criteria, not its goals!

Gengulphus

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Re: UKDividendstocks.com portfolio review

#443085

Postby tjh290633 » September 17th, 2021, 4:47 pm

dealtn wrote:"The portfolio’s goals are pretty standard for a UK income and growth portfolio:

High yield:

At a minimum, have a higher dividend yield than the FTSE All-Share

Preferably, have a dividend yield of more than 5%

High total return (measured over at least five years):

At a minimum, have a higher total return than the FTSE All-Share

Preferably, have a total return of more than 10% per year on average"

Leaving aside the fact that all strategies have Total Return, the above suggests income is far from incidental.

The TR and initial yield of my current holdings might be of interest in this context:

EPIC   Share                            IRR      IRR       Since       Start yld
Tinkered 1 share
ADM Admiral Group plc 17.69% 18.54% 05-Mar-14 6.63%
AV. Aviva plc 6.52% 5.97% 26-Oct-10 6.53%
AZN AstraZeneca plc 15.96% 9.12% 01-Jun-93 4.37%
BA. BAe Systems plc 11.31% 5.47% 26-Nov-99 2.13%
BATS British American Tobacco plc 8.25% 8.61% 19-Feb-10 4.76%
BLND British Land plc 6.09% 5.93% 01-Oct-10 5.50%
BLT BHP Billiton plc 8.65% 5.98% 19-Feb-10 2.86%
BP. BP plc 7.87% 11.10% 09-Nov-79 5.03%
BT.A BT Group plc 9.87% 12.65% 28-Nov-84 5.31%
CPG Compass Group plc 12.93% 8.13% 31-Jan-01 1.18%
DGE Diageo plc 16.07% 16.07% 06-May-09 4.37%
GSK GlaxoSmithKline plc 7.53% 7.57% 28-Sep-10 5.34%
IGG IG Group Holdings plc 8.18% 7.96% 29-Dec-20 4.79%
IMI IMI plc 44.63% 13.39% 30-Mar-09 7.82%
IMB Imperial Brands plc 21.29% 14.56% 01-Oct-96 5.71%
KGF Kingfisher plc 7.90% 7.38% 04-Sep-07 3.47%
LGEN Legal & General Group plc 11.95% 11.96% 14-Jun-16 6.72%
LLOY Lloyds Banking Group plc 16.96% 10.38% 22-Dec-88 5.50%
MARS Marstons plc 3.03% 4.67% 17-Feb-11 5.72%
MKS Marks & Spencer plc 4.10% 11.35% 09-Feb-70 2.06%
NG. National Grid plc 13.64% 10.15% 20-Oct-00 4.73%
PHP Primary Health Properties plc 11.85% 10.90% 25-Mar-20 3.94%
PSON Pearson plc 4.54% 4.08% 22-Oct-09 4.36%
RB. Reckitt Benckiser Group plc 11.44% 9.65% 21-Mar-11 4.08%
RDSB Royal Dutch Shell plc B 4.63% 4.91% 07-Jun-06 3.77%
RIO Rio Tinto plc 34.05% 29.38% 27-Apr-16 6.08%
S32 South32 Ltd 6.01% 9.02% 18-May-15 3.19%
SGRO Segro plc 10.53% -10.42% 04-Sep-07 4.23%
SMDS DS Smith plc 14.18% 8.23% 08-Feb-07 4.09%
SSE Scottish & Southern Energy plc 10.59% 10.04% 28-Sep-10 6.69%
TATE Tate & Lyle plc 12.53% 2.84% 21-Jul-99 5.46%
TSCO Tesco plc 6.03% 7.75% 19-Jun-97 3.08%
TW Taylor Wimpey plc 5.47% -1.49% 30-Aug-05 4.26%
ULVR Unilever plc 10.74% 10.74% 19-Feb-10 3.72%
UU. United Utilities Group plc 10.33% 9.11% 09-Aug-01 7.12%
VOD Vodafone Group plc 5.58% 7.07% 16-Aug-06 6.09%

As you can see, some have been held for a very long time and predate the HYP concept.

TJH

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Re: UKDividendstocks.com portfolio review

#443102

Postby dealtn » September 17th, 2021, 5:32 pm

tjh290633 wrote:The TR and initial yield of my current holdings might be of interest in this context:



Sorry why 2 IRR columns? What do they represent?

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Re: UKDividendstocks.com portfolio review

#443108

Postby Arborbridge » September 17th, 2021, 5:49 pm

dealtn wrote:
I'm not sure the relevance to HYP either in your reply. I didn't mention it, nor quote your thoughts about it. I think we both agree its not a HYP strategy, hence why it is discussed here in "General", rather than the other place. (It does look, and perform, like some publicised "tinkering" HYPs that are discussed there though).



Well, I was answering in the context of the OP which mentioned that this portfolio technique might be of interest to HYPers. I took my cue from that, then compared it with a HYP strategy which was encapsulated in the OP amd pointed out the differences.

The "moderate yield" referred to was what the portfolio has achieved, and it's clear to me from the article that he is interested in TR not income as an end result. He gives a chart of the capital value, then goes on to compare the TR with the chosen FTSE benchmark. It seems to me that he has a belief that a group of income shares will result in a TR which will enable him to outstrip the benchmark, whereas HYP is all about income.

I know nothing of his other articles, but that was my reading of this one and how it compares with HYP philosophy. The OP appeared to be putting up the article for ideas helpful to HYPers so inviting comparison.

Arb.

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Re: UKDividendstocks.com portfolio review

#443122

Postby Itsallaguess » September 17th, 2021, 6:34 pm

Arborbridge wrote:
I know nothing of his other articles, but that was my reading of this one and how it compares with HYP philosophy.

The OP appeared to be putting up the article for ideas helpful to HYPers so inviting comparison.


I got to this bit and lost most of my interest -

Less positively, the dividend yields of both the FTSE All-Share and model portfolio have yet to recover to any meaningful degree.

Yes, many companies that suspended their dividends during the pandemic have reinstated them, but dividends are mostly paid twice each year so this recovery has yet to flow through into actual dividend payments.

Because of that, the dividend yield on the FTSE All-Share in September was 2.6% and the model portfolio’s yield was only fractionally better at 2.8%.

Historically, the All-Share’s yield has been closer to 3% and the model portfolio’s yield closer to 4%, so as I’ve said, both have yet to recover fully.


If I squint a bit, I can almost see the major attraction for the UK market with regards to income-investment, because there are often fairly chunky yields on offer that often outstrip sensible comparable options elsewhere, but if he's only aiming for an overall portfolio yield of around 4%, then I would have to ask why an income-investor would then still purposefully limit themselves to UK markets, when comparable global options *are* often available around that more moderate yield, and often in more 'growthy' areas of the global market that might deliver better TR-based returns overall as well...

With that said, I'd even then have to ask why there'd be a need to stick with an income-portfolio of single-company UK shares at that yield level anyway, when there are many comparable Investment Trust options available at around the same yield, which would have been likely to have ridden out the bulk of the COVID-induced dividend-blip that has affected his own single-company income-portfolio.

An odd approach all round, in my opinion...

Cheers,

Itsallaguess

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Re: UKDividendstocks.com portfolio review

#443149

Postby tjh290633 » September 17th, 2021, 8:34 pm

dealtn wrote:
tjh290633 wrote:The TR and initial yield of my current holdings might be of interest in this context:



Sorry why 2 IRR columns? What do they represent?

Sorry, I missed a heading. The first is the IRR of my holding, as tinkered, the second is the IRR of the first share purchased, as if that was my only one held. I have inserted the headings now.

TJH

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Re: UKDividendstocks.com portfolio review

#443228

Postby Arborbridge » September 18th, 2021, 7:50 am

Arborbridge wrote:
dealtn wrote:
I'm not sure the relevance to HYP either in your reply. I didn't mention it, nor quote your thoughts about it. I think we both agree its not a HYP strategy, hence why it is discussed here in "General", rather than the other place. (It does look, and perform, like some publicised "tinkering" HYPs that are discussed there though).



Well, I was answering in the context of the OP which mentioned that this portfolio technique might be of interest to HYPers. I took my cue from that, then compared it with a HYP strategy which was encapsulated in the OP amd pointed out the differences.

The "moderate yield" referred to was what the portfolio has achieved, and it's clear to me from the article that he is interested in TR not income as an end result. He gives a chart of the capital value, then goes on to compare the TR with the chosen FTSE benchmark. It seems to me that he has a belief that a group of income shares will result in a TR which will enable him to outstrip the benchmark, whereas HYP is all about income.

I know nothing of his other articles, but that was my reading of this one and how it compares with HYP philosophy. The OP appeared to be putting up the article for ideas helpful to HYPers so inviting comparison.

Arb.


BTW, I'm not particularly bothered whether I am "right" or "wrong" about this - I was just trying to explain how I it looked to me. We are all just expressing a POV and it's all quite inconsequential 8-) . If you like the result of his portfolio, or can take something from it, that's all that really counts.
In any case, the OP gave an interesting link whatever you think of it.


Arb.

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Re: UKDividendstocks.com portfolio review

#443245

Postby Gengulphus » September 18th, 2021, 9:55 am

Itsallaguess wrote:
Arborbridge wrote:
I know nothing of his other articles, but that was my reading of this one and how it compares with HYP philosophy.

The OP appeared to be putting up the article for ideas helpful to HYPers so inviting comparison.

I got to this bit and lost most of my interest -

Less positively, the dividend yields of both the FTSE All-Share and model portfolio have yet to recover to any meaningful degree.

Yes, many companies that suspended their dividends during the pandemic have reinstated them, but dividends are mostly paid twice each year so this recovery has yet to flow through into actual dividend payments.

Because of that, the dividend yield on the FTSE All-Share in September was 2.6% and the model portfolio’s yield was only fractionally better at 2.8%.

Historically, the All-Share’s yield has been closer to 3% and the model portfolio’s yield closer to 4%, so as I’ve said, both have yet to recover fully.


If I squint a bit, I can almost see the major attraction for the UK market with regards to income-investment, because there are often fairly chunky yields on offer that often outstrip sensible comparable options elsewhere, but if he's only aiming for an overall portfolio yield of around 4%, ...

He's not - he says himself that he's aiming for 5%, and since there is no-one else who can speak with any authority about what he's aiming for, that's basically got to be accepted. One might believe (as I do and argue for above) that portfolio yield is not a very sensible investment goal, or one might believe that it is a sensible investment goal if one uses a suitable definition (*) but he's not pursuing that goal in a way that is likely to achieve it, or one might believe that it is a sensible investment goal and he's pursuing it in a way that is likely to achieve it but has suffered setbacks over the last year or two (**) - something that has doubtless happened to vast numbers of investors over the last year or two. Each of those ideas can be the basis of a reasonable discussion - but the idea that he's aiming for something other than what he says he is can't, because showing any evidence that that idea is true is very hard (as well as on distinctly dubious ground with regard to TLF's site rules).

To be clear, I haven't quoted your subsequent comments on UK vs global options for income investors or responded to them simply because I don't currently have anything I want to say about them. I just think that you've based them on very shaky foundations and have much more stable foundations available, albeit ones that need presenting in more detail.

(*) An arguably-suitable definition is to calculate the rate of return over the period being looked at with dividend income regarded as appearing outside the portfolio (as is done by income units or by calculating the Internal Rate of Return treating withdrawn dividends as non-cashflows and reinvested dividends as cashflows into the portfolio), and also calculate the rate of return with dividend income regarded as appearing inside the portfolio (as is done by accumulation units or by calculating the Internal Rate of Return treating withdrawn dividends as cashflows out of the portfolio and reinvested dividends as non-cashflows). Then treat the difference between those two rates of return as an average dividend yield over the period, which it generally will be provided one recognises that it's an average in the sense of being a not-unreasonable 'central' value for the dividend yield over the period, but not any of the standard named averages such as the arithmetic mean, the geometric mean, the harmonic mean, weighted versions of any of those, the median, the mode, etc. But that definition does stray quite a long way from the standard definition of yield as dividend divided by price, especially with regard to simplicity of calculation - so I'm only saying that it's arguably suitable, not that it's definitely suitable!

(**) I should say that I haven't yet looked at more of the portfolio's history than is revealed in the OP's link. I probably will at some point, but it will be a point at which I can investigate his site thoroughly using his 14-day free membership trial option properly, cancel the trial and then decide whether to sign up properly at my leisure - and that point isn't now!

Gengulphus

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Re: UKDividendstocks.com portfolio review

#443275

Postby Itsallaguess » September 18th, 2021, 11:35 am

Gengulphus wrote:
Itsallaguess wrote:
If I squint a bit, I can almost see the major attraction for the UK market with regards to income-investment, because there are often fairly chunky yields on offer that often outstrip sensible comparable options elsewhere, but if he's only aiming for an overall portfolio yield of around 4%, ...


He's not - he says himself that he's aiming for 5%, and since there is no-one else who can speak with any authority about what he's aiming for, that's basically got to be accepted.


Well when he said that -

Historically, the All-Share’s yield has been closer to 3% and the model portfolio’s yield closer to 4%, so as I’ve said, both have yet to recover fully.

I think we're within our rights to think that he's aiming for a 'recovery' back to a model portfolio yield closer to 4%...

If he's got other aims beyond that, which I'm not even sure he's actually met yet given the above statement, then that might well be the case, but taking his statement above at face value, then I think he's got at least one stated aim of a portfolio yield recovery to 4%...

Given the amount of trading he seems to be doing, along with the relatively moderate portfolio yield, I'll stick to my view that such an 'active' income-strategy focussed solely on UK equities to achieve such a relatively moderate yield looks a little like too much hard work to me, with a focus on single-market risk that's perhaps unnecessary in today's investment environment...

But then, I strongly suspect that it's difficult to maintain an on-line presence and a meaningful number of followers with a low-maintenance approach to these things...

Cheers,

Itsallaguess

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Re: UKDividendstocks.com portfolio review

#443284

Postby Arborbridge » September 18th, 2021, 12:12 pm

Itsallaguess wrote:
Well when he said that -

Historically, the All-Share’s yield has been closer to 3% and the model portfolio’s yield closer to 4%, so as I’ve said, both have yet to recover fully.

I think we're within our rights to think that he's aiming for a 'recovery' back to a model portfolio yield closer to 4%...



Itsallaguess


He may have installed a recent aim of 5%, but the truth is that the portfolio is historically returned much power than that. I think my description of his portfolio having a "moderate yield" is quite justified, irrespective of his new 5% target. In my view, a High Yield portfolio would be giving something like my HYP at 5.3% or Mrs Arb's HYP at 5.1%, and my income IT portfolio 4.2% (and that include a couple of sub 3% ITs)
The conclusion must be he is not serious about a high yield, but uses yield in the believe that a moderate yield will return a better TR.

Arb.

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Re: UKDividendstocks.com portfolio review

#443301

Postby Gengulphus » September 18th, 2021, 1:25 pm

Itsallaguess wrote:
Gengulphus wrote:
Itsallaguess wrote:If I squint a bit, I can almost see the major attraction for the UK market with regards to income-investment, because there are often fairly chunky yields on offer that often outstrip sensible comparable options elsewhere, but if he's only aiming for an overall portfolio yield of around 4%, ...

He's not - he says himself that he's aiming for 5%, and since there is no-one else who can speak with any authority about what he's aiming for, that's basically got to be accepted.

Well when he said that -

Historically, the All-Share’s yield has been closer to 3% and the model portfolio’s yield closer to 4%, so as I’ve said, both have yet to recover fully.

I think we're within our rights to think that he's aiming for a 'recovery' back to a model portfolio yield closer to 4%...

No, all that says is that recovery is needed to get back to the model portfolio's historical yield - nothing about what his aims are. What he does say about what his yield aims is:

The portfolio’s goals are pretty standard for a UK income and growth portfolio:

   1. High yield:

      1. At a minimum, have a higher dividend yield than the FTSE All-Share

      2. Preferably, have a dividend yield of more than 5%

Immediately before the sentence you've quoted, he said "Because of that, the dividend yield on the FTSE All-Share in September was 2.6% and the model portfolio’s yield was only fractionally better at 2.8%.". A fair conclusion from putting all of those quotes together is that he's achieved his minimum aim (though not by much), he's aiming for 5%+, and so a 'recovery' to historical yield levels would get closer to his aim but by no means get all the way to it.

Itsallaguess wrote:If he's got other aims beyond that, which I'm not even sure he's actually met yet given the above statement, then that might well be the case, but taking his statement above at face value, then I think he's got at least one stated aim of a portfolio yield recovery to 4%...

I'll believe that if you can quote him stating that aim explicitly. Otherwise, it's quite simply not a "stated aim" of his - it's an aim you've stated, not one he's stated.

You can of course reasonably deduce that getting to such a yield is an essential step on the way to the aim he has stated, but the aim he has explicitly stated indicates that he's not only aiming for 4% - so what you said after "if he's only aiming for an overall portfolio yield of around 4%" isn't well-founded.

I do suspect that you could probably produce a well-founded argument that his stated 5%+ dividend yield aim simply isn't a realistic one - his statement that the portfolio's dividend yield has historically been "closer to 4%" suggests that it's generally been under 4% (if it had generally been in the region of 4%, "closer to 4.5%" would be justifiable...). And it's not very believable that it's had just a few years to achieve its yield aim historically and those few years have been especially unlucky ones for the portfolio, as it's been going for at least ten years (there's a statement about "the portfolio’s average return since 2011 of 9% per year"). Furthermore, it's a high enough yield target relative to normal FTSE 250 yields that even if one only selected shares with that yield or better for a generally-long-term-holding portfolio, I suspect that the portfolio yield wouldn't stay that high for long after initial purchases, due to the tendency of the companies subsequently either to do well and experience strongly-rising share prices or do badly and experience dividend cuts - both of which lower their company dividend yields and so drag the portfolio dividend yield down.

So:

Itsallaguess wrote:Given the amount of trading he seems to be doing, along with the relatively moderate portfolio yield, I'll stick to my view that such an 'active' income-strategy focussed solely on UK equities to achieve such a relatively moderate yield looks a little like too much hard work to me, with a focus on single-market risk that's perhaps unnecessary in today's investment environment...

That's something I think you have a good chance of making a good argument for - but if so, I think the good argument is likely to be based not on his goals being other than he has explicitly stated them to be, but on his "preferably" dividend yield goal not being a realistically achievable one.

Gengulphus

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Re: UKDividendstocks.com portfolio review

#443570

Postby funduffer » September 19th, 2021, 1:47 pm

John Kingham is a value investor, with the aim of accumulating a large pot, rather than one aimed at generating a regular income.

Of course, value and high yield are related, although his method involves many more criteria than just yield. However, it is interesting that he has renamed his blog as UKDividends rather than ValueInvestor as it used to be, suggesting he rates dividends highly as a means of generating return from value shares.

He aims to keep shares for a long time (until the value is obtained), and he generally makes about one trade per month, so definitely not a day trader, but probably not as LTBH as some HYPers.

The interest in this to me is how he manages the portfolio, and some of the criteria he uses for selecting shares (analogous to some of the safety factors used in HYP).

Value investing in the UK stock market won't be for everyone, and it will be interesting to see if he can generate returns as good as a world tracker for example over the long term. Personally, for me, building a pot over several decades is probably better achieved by just choosing a tracker, unless you have special skill (which I haven't!).

As for investing for a regular income - that is a different story.

FD

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Re: UKDividendstocks.com portfolio review

#443785

Postby Arborbridge » September 20th, 2021, 10:38 am

funduffer wrote:John Kingham is a value investor, with the aim of accumulating a large pot, rather than one aimed at generating a regular income.

Of course, value and high yield are related, although his method involves many more criteria than just yield. However, it is interesting that he has renamed his blog as UKDividends rather than ValueInvestor as it used to be, suggesting he rates dividends highly as a means of generating return from value shares.

He aims to keep shares for a long time (until the value is obtained), and he generally makes about one trade per month, so definitely not a day trader, but probably not as LTBH as some HYPers.

The interest in this to me is how he manages the portfolio, and some of the criteria he uses for selecting shares (analogous to some of the safety factors used in HYP).

Value investing in the UK stock market won't be for everyone, and it will be interesting to see if he can generate returns as good as a world tracker for example over the long term. Personally, for me, building a pot over several decades is probably better achieved by just choosing a tracker, unless you have special skill (which I haven't!).

As for investing for a regular income - that is a different story.

FD


Well, that does rather confirm my own conclusions from reading that particular article, so that's nice to have.

I have found the problem with value investing - something which has greatly appealed to me in the past - is that value can take a long time to "out", and sometimes "never" is nearer the mark! Just think of poor Tony Dye who waited years, was sacked, died and then was proved to be at lest half right. Or Alisdair Mundy who left Temple Bar last year as the crew couldn't wait for his values to out (and of course, he may have been just plain wrong as well!). It's a tricky approach which is liable to attract brickbats and missiles from all sides.

Value is more an independent person's game with a very long time scale, which suits very few of us and even fewer professional investment houses.

Arb.


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