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Dividend Yield on FTSE 100

General discussions about equity high-yield income strategies
Alaric
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Re: Dividend Yield on FTSE 100

#264831

Postby Alaric » November 16th, 2019, 9:21 pm

gryffron wrote:In order to have favourable comparison in overall return, almost certainly, your HYP must generate significantly more dividends than FTSE100, to compensate for the lack of growth.


That's the point really. Is there much point in congratulating yourself on the level of dividends received if all you have done is sacrifice capital value? That shouldn't be a controversial statement, but seems to be if made on the HYP-Practical board. Exception was taken to a statement that following its cut in dividend earlier this year and a certain amount of recovery in its share price, Vodafone now had a dividend yield not much greater than the FTSE 100 as a whole. So there's no compelling high dividend merit in choosing it, particularly as its accounting statements have it as running at a loss and needing to increase borrowings.

IanTHughes
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Re: Dividend Yield on FTSE 100

#264836

Postby IanTHughes » November 16th, 2019, 9:39 pm

Alaric wrote:
gryffron wrote:In order to have favourable comparison in overall return, almost certainly, your HYP must generate significantly more dividends than FTSE100, to compensate for the lack of growth.

That's the point really. Is there much point in congratulating yourself on the level of dividends received if all you have done is sacrifice capital value?

Certainly not which is why I use the HYP strategy. The Capital Value of my HYP after nearly 8 years is ahead of the FTSE 100 and of course my HYP has also enjoyed much higher dividends. The history of HYP1 shown here:

viewtopic.php?p=263959#p263959

shows a huge gain of Capital Value, far superior to the rise in the FTSE 100

Capital
This is irrelevant or very much secondary depending on your viewpoint.

The value is up 2.6% from last year to £159,682 and continues to massacre the FTSE100 over the 19 years, up 112.9 4% against an index up 17.4% and thus outperforming it by 81.3%. This is without reinvesting dividends.

Your assertion that following the HYP strategy will result in an erosion of Capital is simply not borne out by the evidence available to me. Of course, if you have evidence to back up your claims, please do provide it for all of us to benefit. If you cannot or will not provide such contrary evidence, you will just have to accept the evidence that is available.


Ian

Alaric
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Re: Dividend Yield on FTSE 100

#264839

Postby Alaric » November 16th, 2019, 9:48 pm

IanTHughes wrote:Your assertion that following the HYP strategy will result in an erosion of Capital is simply not borne out by the evidence available to me.


I think you are making a claim that you have superior stock picking skills that you can identify shares that will outperform the usual market indexes in the amount of dividend generated whilst at least equalling them in capital value performance.

Actually just one word - Carillion.

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Re: Dividend Yield on FTSE 100

#264840

Postby Breelander » November 16th, 2019, 9:50 pm

gryffron wrote:...your HYP must generate significantly more dividends than FTSE100, to compensate for the lack of growth.


I can't say my HYP's income units show significant 'lack of growth'....

Image

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Re: Dividend Yield on FTSE 100

#264844

Postby Breelander » November 16th, 2019, 10:04 pm

Alaric wrote:I think you are making a claim that you have superior stock picking skills that you can identify shares that will outperform the usual market indexes in the amount of dividend generated whilst at least equalling them in capital value performance.


My HYP shown above is probably one of the least tinkered ones here, so 'stock picking' hardly comes into it. I'm well known for my inertia....

Actually just one word - Carillion.


...yes, I had that one in my HYP.

IanTHughes
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Re: Dividend Yield on FTSE 100

#264847

Postby IanTHughes » November 16th, 2019, 10:08 pm

Alaric wrote:
IanTHughes wrote:Your assertion that following the HYP strategy will result in an erosion of Capital is simply not borne out by the evidence available to me.

I think you are making a claim that you have superior stock picking skills that you can identify shares that will outperform the usual market indexes in the amount of dividend generated whilst at least equalling them in capital value performance.

I have never, ever, made any claim that my stock-picking abilities are anything greater than average, very average. Your assertion that I am making such a claim is an insult! Unless you can point to a post where I said any such thing, you are requested to post a retraction. Your failure to do either will prove to me that you are simply making things up! Par for the course in my view.

Alaric wrote:Actually just one word - Carillion.

When are you going to understand that HYP is a Portfolio strategy with diversification criteria specifically included so that the failure of any one holding will not cause the strategy to fail. You have been told often enough so I can only conclude that you are having difficulty in understanding the whole diversification concept.

My portfolio did invest in Carillion and of course the portfolio suffered a complete loss of capital invested, somewhat mitigated by 20% of the value being returned as dividend. This and other capital losses suffered by my HYP have been faithfully recorded and the Capital Value of my HYP Income Units is still ahead of the FTSE 100, despite such setbacks.

Using that one word as evidence of HYP leading to Capital Value erosion is not evidence. It is a complete nonsense!


Ian

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Re: Dividend Yield on FTSE 100

#264848

Postby Alaric » November 16th, 2019, 10:17 pm

Breelander wrote:My HYP shown above is probably one of the least tinkered ones here, so 'stock picking' hardly comes into it.


If you aren't actively managing or reviewing after the initial purchase, then the quality of that initial purchase is highly relevant to the ultimate outcome.

Following Carillion, the light dawned that high yield equalled distressed share price and distressed share price equalled company in trouble (sometimes).

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Re: Dividend Yield on FTSE 100

#264849

Postby Alaric » November 16th, 2019, 10:24 pm

IanTHughes wrote: Your assertion that I am making such a claim is an insult! Unless you can point to a post where I said any such thing, you are requested to post a retraction.


You make repeated claims that what you call the "HYP strategy" delivers superior returns to just investing in a FTSE Tracker.

A FTSE Tracker would give a dividend yield of around 4.5%. A "HYP strategy" perhaps 6.5%. So a 2% out-performance unless it's paid for by inferior capital results.

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Re: Dividend Yield on FTSE 100

#264854

Postby IanTHughes » November 16th, 2019, 10:55 pm

Alaric wrote:
IanTHughes wrote: Your assertion that I am making such a claim is an insult! Unless you can point to a post where I said any such thing, you are requested to post a retraction.

You make repeated claims that what you call the "HYP strategy" delivers superior returns to just investing in a FTSE Tracker.

I have never used that word "superior" in any post to indicate that the HYP Strategy always delivers "superior" returns! If you think I have, just prove it with a link! You do know how to do that don't you?

What I have indicated on a number of occasions, with appropriate evidence of course because, I understand the importance of backing up any claims I do make with evidence, is how my own HYP is progressing. The same has been done by others on the HYP Practical board and of course the regular updates with regard to HYP1. The aggregation of all that evidence does tell me that the HYP Strategy is working for me, some others too and of course for HYP1. HYP has been seen to provide a high and growing income and further, it can do so without Capital Loss. You, on the other hand, have never provided any evidence to back up your claim that HYP is bound to be "inferior" with regard to Capital Value. Will you provide the evidence now or are you making this claim without the benefit of evidence?

Alaric wrote:A FTSE Tracker would give a dividend yield of around 4.5%. A "HYP strategy" perhaps 6.5%. So a 2% out-performance unless it's paid for by inferior capital results.

The extra income is most decidedly not "paid for by inferior capital results". Not according to the evidence that I have seen, and you too have seen by the way, which clearly shows that the HYP Strategy can provide a high and growing dividend income with the affect on Capital Value being no worse than the FTSE 100. No guarantees of course, this is Equity Investing after all, but HYP1 shows a huge improvement in Capital Value, not enjoyed by the FTSE 100. Or do you not see that?


Ian

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Re: Dividend Yield on FTSE 100

#264857

Postby Alaric » November 16th, 2019, 11:05 pm

IanTHughes wrote:The extra income is most decidedly not "paid for by inferior capital results". Not according to the evidence that I have seen, and you too have seen by the way, which clearly shows that the HYP Strategy can provide a high and growing dividend income with the affect on Capital Value being no worse than the FTSE 100.


That's a claim of superior stock picking skills for the "HYP Strategy". Outperforming the FTSE 100 Index.

To me, it now seems obvious that a sort by dividend yield throws up a mixture of dross and recovery. If the stock picking or analysis skills are such that one can tell the difference, it's a winning if risky plan.

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Re: Dividend Yield on FTSE 100

#264860

Postby IanTHughes » November 16th, 2019, 11:27 pm

Alaric wrote:
IanTHughes wrote:The extra income is most decidedly not "paid for by inferior capital results". Not according to the evidence that I have seen, and you too have seen by the way, which clearly shows that the HYP Strategy can provide a high and growing dividend income with the affect on Capital Value being no worse than the FTSE 100.

That's a claim of superior stock picking skills for the "HYP Strategy". Outperforming the FTSE 100 Index.

There is no such claim, what rubbish! It is simply a reference to the historical evidence, provided by myself and others, to show that HYP can work in supplying a high and growing income, without damaging Capital Values any more than the FTSE 100.

Alaric wrote:To me, it now seems obvious that a sort by dividend yield throws up a mixture of dross and recovery.

Well of course! The HYP Strategy is not about picking the highest yields without any investigation as to the sustainability of the dividends being paid| What on earth made you think it was?

Alaric wrote:If the stock picking or analysis skills are such that one can tell the difference, it's a winning if risky plan.

Of course! When not using a Fund Manager or an Independent Financial Adviser (IFA), one has to make investment decisions. And yes, there is risk. One has to accept that some of those decisions may turn out to be mistakes. If an investor is not confident of their ability to make such decisions and to accept the consequences, whatever they may be, they should not use the strategy! Are you perhaps suggesting that you know of an Equity Investment strategy not like that?

By the way, am I to assume that you have no evidence to back up any of your claims? You are just making things up?


Ian

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Re: Dividend Yield on FTSE 100

#264864

Postby Alaric » November 16th, 2019, 11:40 pm

IanTHughes wrote:[
There is no such claim, what rubbish! It is simply a reference to the historical evidence, provided by myself and others, to show that HYP can work in supplying a high and growing income, without damaging Capital Values any more than the FTSE 100.


That's a claim that the "HYP Strategy" can outperform an investment in the FTSE 100. As the "HYP Strategy" mostly selects shares from the FTSE 100, it's a claim that the selected shares will out perform those not selected.

When you say "high and growing", does that mean higher and growing more than the FTSE 100?

If the "HYP Strategy" cannot outperform the FTSE 100, why use it?

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Re: Dividend Yield on FTSE 100

#264867

Postby IanTHughes » November 17th, 2019, 12:09 am

Alaric wrote:
IanTHughes wrote:There is no such claim, what rubbish! It is simply a reference to the historical evidence, provided by myself and others, to show that HYP can work in supplying a high and growing income, without damaging Capital Values any more than the FTSE 100.

That's a claim that the "HYP Strategy" can outperform an investment in the FTSE 100. As the "HYP Strategy" mostly selects shares from the FTSE 100, it's a claim that the selected shares will out perform those not selected.

Rubbish! The only claim being made is that, based on the historical evidence provided by various posters on the HYP Practical board, HYP has worked in providing a high and growing income and without damage to the Capital Value invested. It makes absolutely no claim that the selected shares will out perform those not selected. For one thing there is no historical evidence provided about those shares not selected because ..... well ...... they were not selected :) Of course you are claiming that the opposite is the case - a portfolio made up of the shares not selected by HYP will out perform those that are selected. Do you have any evidence or is that another made up claim?

Alaric wrote:When you say "high and growing", does that mean higher and growing more than the FTSE 100?

High and Growing means .... well .... High and Growing. Is there another meaning? Yes, on purchase, the yield for an HYP portfolio as a whole will normally be higher than that offered by a FTSE 100 ETF. So far the historical evidence shows that that income can grow at a rate probably greater than inflation. Whether it is a higher growth rate than the FTSE 100 ETF, only someone who was promoting a FTSE 100 ETF investment strategy will know. Someone such as yourself in fact! So please, do let us know.

Alaric wrote:If the "HYP Strategy" cannot outperform the FTSE 100, why use it?

The only historical evidence so far put forward does indeed show that the HYP Strategy has outperformed the FTSE 100 and therefore, yes, it has been shown that it is possible. What we are singularly lacking is evidence that shows that HYP does not outperform the HYP 100, either for income or Capital Value. Of course in order for you to make the assertions that you do about the HYP Strategy being inferior to the FTSE 100, you must surely be in possession of such evidence. In which case why do you not provide it? Or are you just making it all up?


Ian

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Re: Dividend Yield on FTSE 100

#264868

Postby Alaric » November 17th, 2019, 12:20 am

IanTHughes wrote:Rubbish! The only claim being made is that, based on the historical evidence provided by various posters on the HYP Practical board, HYP has worked in providing a high and growing income and without damage to the Capital Value invested.


So has it out performed a default strategy of investing in the Index? If it has that's saying that a subset of the Index has outperformed the whole. Entirely feasible if the "HYP strategy" is a superior stock selection methodology.

If it isn't, then what's the point? One could deliberately select the lower yielders and benefit from superior capital performance. A LYP strategy perhaps.

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Re: Dividend Yield on FTSE 100

#264869

Postby IanTHughes » November 17th, 2019, 12:48 am

Alaric wrote:
IanTHughes wrote:Rubbish! The only claim being made is that, based on the historical evidence provided by various posters on the HYP Practical board, HYP has worked in providing a high and growing income and without damage to the Capital Value invested.

So has it out performed a default strategy of investing in the Index?

HYP1 has indeed outperformed investing in the FTSE 100. The Capital Value of my own HYP Dividend Units is also ahead of the FTSE 100 and I do believe that my HYP has received more income than would have been received from a FTSE 100 ETF. Of course, in order to know for sure about that higher income I need someone who has studied FTSE 100 ETFs in detail to show me the results of such a study, Will you do that?

Alaric wrote:If it has that's saying that a subset of the Index has outperformed the whole. Entirely feasible if the "HYP strategy" is a superior stock selection methodology.

If you believe that then so be it. For myself I simply consider the HYP Strategy to be offering the possibility of better results but more evidence is required. The HYP Strategy only suggests a methodology for stock selection, which is of course geared towards income production. There are of course no guarantees with HYP, any more than any other strategy.

Alaric wrote:If it isn't, then what's the point? One could deliberately select the lower yielders and benefit from superior capital performance. A LYP strategy perhaps.

Of course one could. But, you must remember that in drawdown, the aim of an HYP portfolio is to provide a high and growing income, capital performance is very much secondary, if not irrelevant.

Forgetting drawdown for now, you appear to be suggesting that selecting a portfolio of "lower yielders" will mean one will surely "benefit from superior capital performance". Once again I must ask you to show some evidence to back up such a bold claim or did you just make that up, like all your other claims?


Ian

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Re: Dividend Yield on FTSE 100

#264879

Postby Itsallaguess » November 17th, 2019, 6:13 am

Alaric wrote:
Following Carillion, the light dawned that high yield equalled distressed share price and distressed share price equalled company in trouble (sometimes).


Alaric,

I've got to be brutally honest, because you seem to be wilfully and persistently missing the clear and important point that writing off a portfolio income strategy because you are able to point to instances where some sub-components of such a strategy might stumble as part of the natural business lifecycle is less about a 'light dawning' on the strategy itself, and very much more about the 'light dawning' on your own lack of understanding of it....

Value investing will have sub-components that stumble. Does that enable you to write off value investing as a strategy?

Momentum investing will have sub-components that stumble. Does that enable you to write off momentum investing as a strategy?

Every investment strategy will have sub-components that stumble.....

Can you see where I'm going here?

It's your logic that is flawed, and not, per-se, a particular investment strategy, whether that be HYP, Value, Momentum, or any other investment strategy that, by investing in the stock market in the first place, is almost guaranteed to pick some sub-components that stumble....

But the HYP strategy isn't just about those sub-components, it's about the wider income-portfolio itself, that holds those sub-components, and so long as the income-portfolio itself can cope with those inevitable 'sub-component stumbles', then overall, the strategy can, and clearly does given the evidence presented to you here, provide satisfactory results for those using it.

Your wilful persistence in not recognising this specific point, even after it's been pointed out to you many, many times, and your continued insistence on holding up single sub-components such as Carillion when trying to suggest that the whole HYP strategy is a failure, whilst at the same time ignoring portfolio-level evidence that the HYP strategy itself, at portfolio level, is quite capable of *coping* with such 'sub-component stumbles' does not, unfortunately, have a good explanation behind it...

In addition to the above, the icing on the cake with your arguments against the HYP strategy now seems to be that you think a better approach might be to simply buy a FTSE tracker and enjoy market-equalling returns, including a yield of around 4%.

So just to be clear then, you're decrying a self-select income-strategy because it will in all probability select a few duds in it's investment-lifetime, and you would propose to replace that approach with one that definitely will contain all the duds in that market.....

It seems that we're to wait for 'the light to dawn' on that particular approach too then.....

Cheers,

Itsallaguess

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Re: Dividend Yield on FTSE 100

#264891

Postby Arborbridge » November 17th, 2019, 9:21 am

IanTHughes wrote:When funduffer mentioned the aim of "most HYP proponents" I assumed that was a reference to those that follow the High Yield Portfolio (HYP) strategy. My mistake, sorry.


Ian


He was.

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Re: Dividend Yield on FTSE 100

#264892

Postby Arborbridge » November 17th, 2019, 9:39 am

Alaric wrote:
IanTHughes wrote: Your assertion that I am making such a claim is an insult! Unless you can point to a post where I said any such thing, you are requested to post a retraction.


You make repeated claims that what you call the "HYP strategy" delivers superior returns to just investing in a FTSE Tracker.

A FTSE Tracker would give a dividend yield of around 4.5%. A "HYP strategy" perhaps 6.5%. So a 2% out-performance unless it's paid for by inferior capital results.


You seem a little distracted by capital returns or TR. I'm not.
I'm investing for income and I am happy to let the capital look afer itself to an extent - I certainly won't obsess about it. If my income is increasing, then I am sanguine about the possibility for my capital which, incidentally, I do not intend ever to use apart from income generation or to pass on to my children. I'm not interested in "superior returns" only "sufficient returns". In my investing lifetime, I have witness all types of go-faster investment theories and HYP isn't intended to be one of them.

My aim is: a high and increasing income with a good chance of my capital keeping up with RPI.

This purpose has been fulfilled by my particular HYP over ten years, and other HYPs have progressed even better - HYP1 I think may be an example.
If one's aim is high capital growth, or to beat the rest of the various investments schemes, then don't be surprised if the HYP mood doesn't suit you. I think you know this quite well, but persist in banging on about tangential matters which simply becomes tedious.

If one's aim aligns with HYP as I've interpreted it above, then one will be satisfied.

Arb.

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Re: Dividend Yield on FTSE 100

#264894

Postby Alaric » November 17th, 2019, 9:41 am

Itsallaguess wrote:I've got to be brutally honest, because you seem to be wilfully and persistently missing the clear and important point that writing off a portfolio income strategy because you are able to point to instances where some sub-components of such a strategy might stumble as part of the natural business lifecycle is less about a 'light dawning' on the strategy itself, and very much more about the 'light dawning' on your own lack of understanding of it....


I'm not writing off the portfolio strategy of seeking dividend income, rather I'm highlighting the risks of selecting stocks mostly by reference to current yield. I regard the Carillion accounting presentation as near fraud given the way it was taking profits from the future and paying dividends on the strength of them. It's failure is not then part of a natural business lifecycle.

How do Companies get to be high yield in the first place? It's the experience of recent years that those Companies such as Diaego and Unilever that report growth in profits and pay a growing dividend have share prices that send the dividend yield below the average, whilst Companies with poor share performance can drift into higher yield territory as the share price declines.

As regards comparison with a Market index, if you assume that all Companies making up an index will do equally well, those with dividend yield above the average would be expected to lose out in capital value terms. If that's not accepted as a premise, it's making the belief that the higher yielding ones will out perform the lower yields. They will by virtue of the higher dividends, provided the capital performance is the same.

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Re: Dividend Yield on FTSE 100

#264902

Postby Itsallaguess » November 17th, 2019, 9:59 am

Alaric wrote:
I'm not writing off the portfolio strategy of seeking dividend income, rather I'm highlighting the risks of selecting stocks mostly by reference to current yield.


But you're 'highlighting those risks' by selecting individual companies that have had issues in the past.

And yet you're consistently and repeatedly being told by people that have owned portfolio's of HYP shares for many, many years that those individual-company risks are mitigated by the portfolio-approach that the HYP strategy takes.

Your approach to 'highlighting the risks' would, I'd suggest, be very much improved if you can point out the portfolio-level failures that taking such an investment approach has delivered, and yet we're still waiting for you to point out a single example of that, and that is whilst being regularly presented with examples where people are quite happy with the performance of such a strategy at portfolio level....

Alaric, I'm afraid to say that you're simply overplaying your cards here....

Cheers,

Itsallaguess


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