If not an HYP then what?

[Wizard]

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OUTLOOK

LuniHYP 250 holds more than twenty well-differentiated midcaps. It does not seem too rose-coloured, evaluating each company's mood music in bulletins since Feb., to envisage that only Brown, Cineworld and Marston's should struggle to resume dividends within the strategic ignorance horizon of 24 months forward. Not that all payouts will return fast or in full former glory; experience teaches that boards adore 'macro' excuses for cuts, and that restoration is apt to be slow and grudging.

But on the derisking forecast that receipts halve in 2020-21, the portfolio will still prospectively yield above the joke returns of a bond or cash deposit, and with inflation protection from the income reserve. Windfalls may arise: for instance in lapsed rights if a company tries to repair its finances. So it was in the last blitz, 2009-11. There may be rescue bids which enable recycling into dividend providers. However, that is counting chickens. I would not start a High Yield Portfolio today.

Luni

Thank you for an excellent write up of this long term reference HYP. As nobody can 'bite' on HYP-P where the original thread was posted, I thought I would quote it here and ask what seems to me an obvious question. If you would not start an HYP today, what would you do?

[TheRIT]

Luni

Thank you for an excellent write up of this long term reference HYP. As nobody can 'bite' on HYP-P where the original thread was posted, I thought I would quote it here and ask what seems to me an obvious question. If you would not start an HYP today, what would you do?

My plan. A selection of low cost trackers covering UK equities, International inc EM equities, Property, Gold, Bonds and 3 years of expenses in 'cash' re-balanced periodically with as much wrapped up in NS&I, ISA's and Pensions as possible. Then live off 85% of the distributions.

[G3lc]

A selection of ITs

[moorfield]

A selection of ITs

Indeed. A selection of Trustworthy ITs. TITs, if you prefer acronyms. But choose with care, because many are just Portfolios of High Yield Shares in disguise. PHYS.

[tjh290633]

A selection of ITs

Indeed. A selection of Trustworthy ITs. TITs, if you prefer acronyms. But choose with care, because many are just Portfolios of High Yield Shares in disguise. PHYS.

Disguise? That's an odd comment to make about ITs with higher yields.

,TJH

[1nvest]

My plan. A selection of low cost trackers covering UK equities, International inc EM equities, Property, Gold, Bonds and 3 years of expenses in 'cash' re-balanced periodically with as much wrapped up in NS&I, ISA's and Pensions as possible. Then live off 85% of the distributions.

Similar here.

Own a home so you don't have to find/pay rent
Stocks
Gold/Bonds/Cash (all broadly much the same thing)
Pension(s)

Diversify income sources/streams. For me for instance I'd rather 50/50 stock/gold and draw a 2% SWR from that along with dividends rather than holding all stock and spending perhaps 4% dividends alone. Gains can arise out of price appreciation, income production, volatility capture (trading) - where trading can be as simple as yearly rebalancing the portfolio back to target weightings.

HYP is a stock selection method, above average yield can equate to Value, sign of distress/share price down/potential rebound. For some in distress however they stay down, or even decline further. Yield paid out costs firms, its taken direct off the bottom line (book value declines by the amount of dividend paid) - which has the tendency to slow share price growth compared to another stock that retained more of dividends. Limiting yourself to selecting stocks from one particular category (idiosyncratic risk) avoids the free lunch that diversification is suggested to provide.

[1nvest]

HYP is a stock selection method, above average yield can equate to Value, sign of distress/share price down/potential rebound. For some in distress however they stay down, or even decline further. Yield paid out costs firms, its taken direct off the bottom line (book value declines by the amount of dividend paid) - which has the tendency to slow share price growth compared to another stock that retained more of dividends. Limiting yourself to selecting stocks from one particular category (idiosyncratic risk) avoids the free lunch that diversification is suggested to provide.

Just posted some data that indicates that ... here viewtopic.php?f=56&p=326371#p326371