Very High Yield Shares (2)

[BullDog]

High? You call that high?
Try Diversified Energy at 16%, and buying back stock.

V8 (my largest holding, ooer)

DEC appears to be a hedge fund which owns some second hand oil wells, I'm not sure I really understand how it works. I think they have also been diluting shareholders for a while.

I agree, for me it's approaching if not in bargepole territory. Good luck to DEC holders.

[88V8]

DEC appears to be a hedge fund which owns some second hand oil wells, I'm not sure I really understand how it works. I think they have also been diluting shareholders for a while.

I agree, for me it's approaching if not in bargepole territory. Good luck to DEC holders.

Yes, the diluting is annoying, but they have to keep buying more assets as the existing wells deplete. Of course there will come a time when there are no more wells to buy, nothing lasts for ever, but that is probably far enough hence not to bother me.

There was a good explanation here of how the financial magic works.

V8

[moorfield]

Q. How to you make a million from Vodafone shares ?
A. Start with two million.

Q. Why is investing in Vodafone is worse than a divorce ?
A. You lose half your money, but you're still married.


And so on. I'm here all day.

I've just checked my XIRR on my Vodafone shares, and estimated that I can retire 15 years after I die...

etc. etc.

[Charlottesquare]

Q. How to you make a million from Vodafone shares ?
A. Start with two million.

Q. Why is investing in Vodafone is worse than a divorce ?
A. You lose half your money, but you're still married.


And so on. I'm here all day.

I've just checked my XIRR on my Vodafone shares, and estimated that I can retire 15 years after I die...

etc. etc.

You should have lost faith in them after the Mannesmann deal in 2000, whilst I have had odd flutter since, certainly if I think the share too abused by the markets, I really disliked the large payments/share issues they made to acquire the various entities along the way and totally lost faith in their management.

[Lootman]

I've just checked my XIRR on my Vodafone shares, and estimated that I can retire 15 years after I die...

You should have lost faith in them after the Mannesmann deal in 2000, whilst I have had odd flutter since, certainly if I think the share too abused by the markets, I really disliked the large payments/share issues they made to acquire the various entities along the way and totally lost faith in their management.

To be fair large phone companies have been terrible investments in general. I can recall not so long ago both of the two big US phone shares, AT&T and Verizon, traded around $60. Last I looked Verizon was around $35 and AT&T was below $20. And yes, they have high yields.

They made good money back when they were a virtual monopoly. BT was privatised and AT&T was broken up. Then along came mobile phones and masses of competition. Great for consumers but not so much for the phone companies.

No need to own them in my view.

[XFool]

Verizon and AT&T Shares Slump on Reports Amazon to Offer Wireless to Prime Members

https://www.barrons.com/articles/amazon-wireless-verizon-dish-stock-att-f23cad24

Unfortunately I am still holding some VZ.

[vand]

Was this thread started just to gloat over not owning VOD?

Let he who has never picked a badly performing share be the first to cast a stone.

[moorfield]

Was this thread started just to gloat over not owning VOD?

Let he who has never picked a badly performing share be the first to cast a stone.

On the contrary, I prefer to think of this as:

Let he who has picked many a badly performing share be the first to cast a stone.

We learn from our investment mistakes, and my investment mistakes have taught me that chasing yields > 2*CTY on the average ends with a pay cut sooner rather than later.

CLLN
VOD (2018)
IMB (2020)
SHEL (2020)

There are more.

[vand]

Was this thread started just to gloat over not owning VOD?

Let he who has never picked a badly performing share be the first to cast a stone.

On the contrary, I prefer to think of this as:

Let he who has picked many a badly performing share be the first to cast a stone.

We learn from our investment mistakes, and my investment mistakes have taught me that chasing yields > 2*CTY on the average ends with a pay cut sooner rather than later.

CLLN
VOD (2018)
IMB (2020)
SHEL (2020)

There are more.

I take a sanguine view of things try to follow the principle laid out by Peter Lynch: as an stock picker, your goal should be to bat at 0.6. That is, 6 successful picks out of 10 is a good number to aim for. I have picked many bad shares, and I have picked good ones too - it goes with the territory. If you bat at 0.7 then you move into the super-investor class, and basically nobody is able to bat anywhere near 0.8.

Like just about every other VOD holder, my TR on this is negative, but it could easily be hugely more negative if I had bought it at a frothier time. You can still lose money on value traps, but it is usually less punishing than losing money on growth traps.

[IanTHughes]

Was this thread started just to gloat over not owning VOD?

Let he who has never picked a badly performing share be the first to cast a stone.

On the contrary, I prefer to think of this as:

Let he who has picked many a badly performing share be the first to cast a stone.

We learn from our investment mistakes, and my investment mistakes have taught me that chasing yields > 2*CTY on the average ends with a pay cut sooner rather than later.

CLLN
VOD (2018)
IMB (2020)
SHEL (2020)

There are more.

Here is some data extracted from the Drawdown portfolio selected by pyad in early 2019, and subsequently managed by myself. The latest review of this portfolio, together with links to its whole history, can be found here: viewtopic.php?f=15&t=34668

The following table shows, for each of the current holdings:

- Date of Purchase
- Yield at the time of Purchase
- Annual Return to date (as calculated by Excel’s XIRR formula)
- Year One % of portfolio Income
- Year Two % of portfolio Income
- Year Three % of portfolio Income
- Year Four % of portfolio Income
- To Date % of portfolio Income

Sorted by:

- Yield at the time of Purchase (Descending)

EPIC | Date      | Yield | XIRR    | 1 Inc (%) | 2 Inc (%) | 3 Inc (%) | 4 Inc (%) | Tot Inc (%)
VOD  | 20-Mar-19 | 9.00% |  -8.73% |     5.27% |     9.48% |     6.98% |     5.71% |       6.17%
IGG  | 05-Apr-19 | 8.61% |  13.47% |     8.30% |    13.93% |    10.88% |     9.00% |       9.52%
ABDN | 19-Mar-19 | 7.97% |   1.09% |     8.27% |    13.88% |     7.33% |     5.88% |       8.69%
AV   | 25-Mar-19 | 7.32% |   6.65% |     7.65% |     6.27% |     8.05% |     6.82% |       8.12%
IMB  | 21-Mar-19 | 7.16% |   0.31% |     8.16% |     9.13% |    11.72% |    10.21% |       9.18%
WPP  | 01-Apr-19 | 7.13% |   4.83% |     7.43% |     2.08% |     4.30% |     4.39% |       4.59%
HSBA | 27-Mar-19 | 6.32% |   2.81% |     3.99% |     0.00% |     3.52% |     3.85% |       3.83%
ITV  | 26-Mar-19 | 6.25% |  -9.43% |     6.48% |     0.00% |     0.00% |     4.26% |       3.76%
SHEL | 28-Mar-19 | 6.00% |   2.47% |     3.16% |     1.77% |     1.86% |     1.95% |       2.13%
WDS  | 25-May-22 | 5.90% |  22.88% |     n/a   |     n/a   |     n/a   |     2.38% |       0.64%
BP   | 28-Mar-19 | 5.63% |   0.88% |     3.45% |     4.02% |     2.49% |     2.52% |       2.89%
LAND | 29-Mar-19 | 5.33% |  -5.01% |     1.98% |     1.72% |     1.83% |     2.34% |       2.03%
BLND | 29-Mar-19 | 5.26% |  -7.92% |     2.10% |     1.25% |     1.97% |     2.16% |       1.82%
BHP  | 22-Mar-19 | 5.11% |  18.94% |     6.56% |    11.26% |    14.60% |    13.85% |      10.70%
PNN  | 09-Oct-19 | 5.09% |   6.68% |     1.80% |     8.18% |     3.94% |     3.69% |       3.76%
GSK  | 04-Apr-19 | 5.05% |   1.52% |     3.73% |     8.79% |     6.87% |     4.20% |       5.39%
BA   | 02-Apr-19 | 4.53% |  21.48% |     4.78% |     8.24% |     6.72% |     5.70% |       6.76%
SMDS | 02-Apr-19 | 4.34% |   1.22% |     4.86% |     0.00% |     4.76% |     6.62% |       4.21%
CCL  | 10-Apr-19 | 3.96% |  -8.73% |     4.24% |     0.00% |     0.00% |     0.00% |       1.21%
IBST | 11-Apr-19 | 3.73% |  -6.79% |     3.95% |     0.00% |     2.19% |     3.55% |       3.20%

There are also two further holdings, purchased less than a year ago.

EPIC | Date      | Yield | XIRR    | 1 Inc (%) | 2 Inc (%) | 3 Inc (%) | 4 Inc (%) | Tot Inc (%)
DLG  | 10-Jun-22 | 8.91% | -31.70% |   n/a     |   n/a     |   n/a     |     0.91% |       0.00%
HLN  | 18-Jul-22 | 0.00% |  14.02% |   n/a     |   n/a     |   n/a     |   n/a     |       0.78%

And one final holding, sold early on as a result of an impending takeover of the company.

EPIC | Date      | Yield | XIRR    | 1 Inc (%) | 2 Inc (%) | 3 Inc (%) | 4 Inc (%) | Tot Inc (%)
GNK  | 09-Apr-19 | 5.05% |  73.36% |     3.84% |   n/a     |   n/a     |   n/a     |   n/a      

The Annual Return to date (as calculated by Excel’s XIRR formula) for teh portfolio as a whole is 3.13%

So, what does the above tell me?

Well, it does not tell me anything useful as to whether a “High Yield” is likely to be less successful than a “Low Yield”, or vice versa. As a result, I guess it probably does tell me that portfolio diversification is important, whether selecting High or Low Yield.

I suppose one could say that, generally, the higher yields have outperformed the lower yields, certainly with regards to Income. With the notable exception of BHP Group (BHP), the majority of Income has been provided by the “High Yield” shares. Total Return too, could also be said to have been driven by the “High Yield” shares, but that is a bit of a stretch. No, the only serious conclusion that one can draw is that …..

….. some you win some you lose, whatever yield is selected.

I should also point out that the above is very much in line with other “real” portfolios under my management, the only further conclusion that I would add being: the longer one holds, the better the results seem to be. Long Term Buy and Hold seems to work, at least that is my experience.

Of course, it must be accepted that the above conclusion (or lack thereof), is solely based on what is a very small data set, and only four years of history. Although, to be fair, it is better than the research that moorfield has reported here, thanks of course to my reporting on all yields (High and Low), and all results (Success or Failure).

If only moorfield would report on the “High Yield” successes, together also with the “Low Yield” results (Success or Failure). There must surely have been such research and reporting it would certainly allow for a better understanding of the decision to choose what, without full research, must remain an arbitrary “High Yield” limit.

If anyone wants to do some further research in this area, and fully report it here, I would be very grateful. But any such research must look at purchases of both “High Yield” and “Low Yield”, and the results of both “Successes” and “Failures”.

Furthermore, as well as ensuring that more complete data is used, such research should not include the results of investing in any holding that would not have been selected for whatever reason other than yield. In other words, whatever selection of shares is used as the data set for such research, there must have been a filtering out of all holdings that would have failed the selection criteria.

There is little point in claiming a share would have been a “Yield Trap”, or conversely claiming a ”Yield Success”, when the share in question would never have been selected in the first place, for reasons unrelated to the Yield on offer.

Obviously, the best way to ensure the foregoing conditions of any research are met, is to report on the full results of “actual” High Yield portfolios, whether “real” or “virtual”. But even then, one is faced with the fact that different people will have differing selection criteria. For example, there are I believe many persons, posting on this board and/or the High Yield Portfolio (HYP) Practical board who, investing for income, did not and would not invest in Vodafone Group (VOD). Others myself included did.

Conducting such research is a huge task but, without it being properly undertaken, all one can possibly end up with, is maybe a conclusion that a “High Yield“ is more or, who knows, maybe less risky, than a “Low Yield”. We all know that, without doing any research to filter out shares that should never be selected, irrespective of the yield on offer, we will not be in any position to conclude which strategy, investing in “High Yield” or “Low Yield”, is likely to provide a better portfolio return, whether that be measured as Total Return, or Income alone. Well, most of us know that.

In conclusion I would suggest that, without such detailed research using more complete data, any results are frankly pretty meaningless. In my view, such incomplete research, does not provide any serious basis upon which to make investment decisions.

Enjoy!


Ian

[taken2often]

I only hold American hares in my Sipp due to tax. I also hold some in my company portfolio and pay 15% tax. I can neither buy or sell these shares unless I pay the corrupt Global Reporting system. A Registration Fee and an Annual Fee. Why if I only buy through a British Stockbroking company should I be on a Global Index.
Dont start me on KID even worse

Bovb

[SalvorHardin]

Agreed. American REITs have been hammered in the last few years, particularly those whose business is offices. I'm taking the view that the fears that work from home (WFH) will destroy the market for offices are overblown, with lots of American companies now insisting on a return to work as the loss of productivity caused by WFH becomes clear. Also WFH staff are realising that they are first in the line to be made redundant and last to be considered for promotion.

I've invested a further 4% split between two other very high yielding American REITs. SL Green Realty Corp. is the largest office landlord in Manhattan, with a mere 14.4% yield. Highwoods Properties mostly owns offices, in more sensible parts of America (Texas, Georgia, Florida and the Carolinas), which is reflected in its much smaller yield of 9.9%. Brandywine is mostly in Philadelphia and Austin, Texas, with a portfolio that is mostly residential (31%) and life science facilities (41%). A major concern for all REITs is the need to refinance in the next few years at much higher interest rates (but if this wasn't the case, the shares would yield a lot less).

For a real basket case, look at Hudson Pacific Properties. West Coast offices and film studios, with a lot in San Francisco where the local authorities have mostly given up on law enforcement and where the city centre now hosts open air drug markets and roadside homeless encampments. Hudson Pacific's shares currently yield 21.8% even after the dividend was cut by 50% last month. I might buy a few if the share price halves from its current level, purely as a punt on the citizens of San Francisco and Los Angeles getting their act together and demanding that the authorities take their side rather than that of the criminals and wasters.

A quick follow up. Most American REIT share prices have risen by quite a bit since I wrote the above on 2nd June, with today's news that American inflation has fallen to just 3.0% (link below) providing a further boost. This is a good example of why IMHO restricting yourself to the classic HYP strategy of only buying British shares hampers your returns and severly limits your ability to diversify.

https://edition.cnn.com/2023/07/12/economy/cpi-inflation-june/index.html

Whilst British REITs and property companies continue to struggle, in America after some really big falls we've seen a fairly dramatic rebound. Of the shares mentioned above since 2nd June: SL Green Realty +45.4% (yield now 10.0%). Brandywine Realty +23.0% (yield now 16.1%). Highwood Properties +20.1% (yield now 7.9%). Beware; these are high risk shares, just like many British REITs nowadays.

Hudson Pacific Properties is up 7.4%, despite the best efforts of the Californian authorities to make their central business districts even more unwelcoming by effectively decriminalising burglary and assault whilst tolerating open drug use and defecating in the streets. I've seen comments that some office blocks in San Francisco have been on the market for several months at less than 25% of their pre-lockdown price, with no interest.

(I must point out that the yield for Hudson Pacific in my original post was wrong, it's now 9.5% (an error on the website I was using, I didn't spot it at the time because I didn't own any Hudson Pacific shares).

[Dod101]

It may be that our inflation will also fall sharply (who knows?) and that may allow some of our REIT prices to rise.

Your comments about the US market indicate that a good deal of research is required if delving into domestic shares in the US (or I guess elsewhere for that matter) If Buffett cannot get it right with his occasional investment into the UK market what chance has the average UK investor in the US one unless sticking to the well known international US companies.

Dod

[Charlottesquare]

It may be that our inflation will also fall sharply (who knows?) and that may allow some of our REIT prices to rise.

Your comments about the US market indicate that a good deal of research is required if delving into domestic shares in the US (or I guess elsewhere for that matter) If Buffett cannot get it right with his occasional investment into the UK market what chance has the average UK investor in the US one unless sticking to the well known international US companies.

Dod

Not sure inflation is the only rock tied to the leg of UK Reits.
I appreciate our commercial portfolio is hardly British Land's but we are seeing tenants looking to unwind their office leases/downsize as their leases draw to an end, so irrespective of inflation, interest rates, valuations and expensive money available in market to purchase, we are also experiencing a real drop in underlying demand.

At least we are one of the few property cos with no debt at all to deal with and we have no interest in selling what we hold so we do not face all the Horsemen of the Apocalypse, just one- low tenant demand re offices (so will likely repurpose some)

[Dod101]

It may be that our inflation will also fall sharply (who knows?) and that may allow some of our REIT prices to rise.

Your comments about the US market indicate that a good deal of research is required if delving into domestic shares in the US (or I guess elsewhere for that matter) If Buffett cannot get it right with his occasional investment into the UK market what chance has the average UK investor in the US one unless sticking to the well known international US companies.

Dod

Not sure inflation is the only rock tied to the leg of UK Reits.
I appreciate our commercial portfolio is hardly British Land's but we are seeing tenants looking to unwind their office leases/downsize as their leases draw to an end, so irrespective of inflation, interest rates, valuations and expensive money available in market to purchase, we are also experiencing a real drop in underlying demand.

At least we are one of the few property cos with no debt at all to deal with and we have no interest in selling what we hold so we do not face all the Horsemen of the Apocalypse, just one- low tenant demand re offices (so will likely repurpose some)

Indeed but by no means all UK REITS are office landlords. Irrespective of interest rates and so on, I have felt for a long while that office landlords are in a difficult place and have said so more than once. I am thinking of companies like Segro, PHP and I guess the ‘big box’ property companies which ought to see some recovery as interest rates stabilise and hopefully fall a bit as inflation falls.

Dod

[SalvorHardin]

It may be that our inflation will also fall sharply (who knows?) and that may allow some of our REIT prices to rise.

Your comments about the US market indicate that a good deal of research is required if delving into domestic shares in the US (or I guess elsewhere for that matter) If Buffett cannot get it right with his occasional investment into the UK market what chance has the average UK investor in the US one unless sticking to the well known international US companies.

Dod

Quite a good chance IMHO. For one thing Buffett can't realistically invest in smaller companies because he has too much money to invest (he needs to make large investments to have any chance of outperforming).

Nowadays British investors can easily buy shares in smaller American companies, and get decent information and analysis online.

For British investors considering American and Canadian companies, I strongly recommend Seeking Alpha (link below). The site hosts a mixture of private investors, professional investors, advisers and managers writing about investment.

Almost every public company has articles and discussions there. Like TMF USA in the late 1990s, but with more comprehensive articles. And it's free!

https://seekingalpha.com/

SL Green page
https://seekingalpha.com/symbol/SLG

Seeking Alpha benefits from America's larger population and that Americans are much more interested in the stockmarket than us Brits.