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