floyd3592 wrote:Thinking of divesting my holding of BT in my HYP following it’s suspension of divis for the foreseeable & I’m also I’m not confident about its long term ability to recover its share price from it’s current slump. I’m currently sitting on a 48% capital loss and thought I could be better, rather than ‘locking in’ my losses, by purchasing some more of the other shares in my HYP with similar losses but with better dividend paying and overall prospects than BT.
I am currently sitting on losses of 50% for RDSB, 43% for IMB, 47% for HSBC & 27% for Aviva. Would any of these make a better home for my money than BT? Or are there any other candidates who’s share price has dropped lately but might be a better home for my dosh?
Not sure there has been much focus on your question in the answers you have received on HYP-P, as I cannot post there under the guidelines I have to split the thread in order to respond.
Like you, my HYP investment has resulted in some eye watering capital losses. Like you I have been thinking if the current Covid-19 situation presents an opportunity to trade some of the worst businesses for some that have a bit more faith in. I have therefore ranked all the holdings that I bought before I threw in the towel on the value destroying HYP path to see where we are now versus two comparison dates, the 1st January and 20th February (which I consider the day the FTSE started to really respond to Covid-19).
Based on yesterday's close I make the loss on BT since 20th February a smidge over 22%. There are several companies in the portfolio I would be happier to hold long term that have fallen by less and for your purposes a couple of them still pay a dividend. The top two candidates in my mind are Shell and Legal & General. Since 20th February Shell has fallen by about 33% and Legal & General by about 31%, this means you would get more Shell or Legal and General shares from the proceeds of a BT sale. They both continue to pay a dividend though of course the Shell one is reduced.
The problem with BT though is that unlike many other shares it had already fallen quite a bit ahead of 20th February, hence why I also look at the drop since January 1st. Since January 1st BT has dropped by about 38%. Legal & General has only fallen by 28% and Shell has fallen by roughly 42%. I think this is because the COvid-19 outbreak hit China and therefore oil prices and therefore oil company share prices earlier than a lot of other company share prices.
So, if, as it seems the exam question is how do you not lock in a paper capital loss, increase long term recovery prospects and get some income back, my recommendation is Shell. However, two words of caution. First, I have only done this for shares I own, so there may be other candidates I do not track. Second, I am not bullish for a quick recovery in Shell as I have heard predictions that oil prices will take a long time to recover.
Hopefully that is of help.
