Replacing SSE with UU. or SVT?

[Arborbridge]

and the underlying methodology = and my underlying method. FGS

Glad to know this mysterious talisman "Carver" seems to agree with the promoter of HYP, Stephen Bland.

Arb.

[Newroad]

Hi Dod.

Once again, you are more or less accurate.

Nevertheless, I think pseudo-HYP remains the appropriate description. If I were a pure HYP'er, I wouldn't have held my metaphoric nose and bought SGE (my best performer in capital terms thus far, currently only 1.88% yield according to Dividend Data) and BA. (my fourth best performer) to get "technology" sector exposure. The oils are second and third, "packaging" fifth and eighth.

Adding in the dividends to give total return will adjust this order a little, though not first place, but its clear a reasonably strict but non-HYP application of that part of the methodology has helped thus far.

Regards, Newroad

[AsleepInYorkshire]

Thanks AiY.

You're welcome

Hopefully whatever choice you make it will have a positive impact on your portfolio.

AiY(D)

[tjh290633]

Except that it isn't (not allowed, deliberate double negative), is it?

HYP as practiced by several here has travelled a long way from how it was set out, and as a result we have the word salad that is the guidelines which includes:




I suggest Newroad drops the pseudo and just call it a HYP!

I'm sorry, I do not accept that - and neither would most people on the HYP-P board - HYP does not allow selling will-nilly.
It is still an occasional and hopefully rare event in certain restricted circumstances, that's all. The wording was loosened to give succour to those who found they were running pretty strict HYPs but in many years did feel it necessary to clear out a share where the story had changed sufficiently to become disquieting.
Newroad distorts this by saying "voluntary selling is allowed" in a HYP - without adding the whole truth which is that the context needs to be correct. It isn't just that - "Oh, it doesn't matter, I can buy this week and sell next month if I feel like it". Doing this is most definitely at best, a pseudo-HYP.

Arb.

I can think of several situations when a shareholder may wish to sell a holding completely.

First is when a company ceases to pay dividends completely.

Second is when the yield falls because the price has risen so much, and a considerable increase in dividend income can be obtained by selling.

Third is when a company is obviously going down the pan, and something can be salvaged by selling.

Fourth is when a company is being taken over and selling can provide the cash several weeks earlier.

Fifth is when a company is delisting and going private.

I have done all the above in the past.

TJH

[kempiejon]

I can think of several situations when a shareholder may wish to sell a holding completely.....

Yes but one does not have to. It looks to me like Newroad has an investment strategy and a book to refer to, it includes yield as an indicator for purchases and sales and weightings I recall.
I think I run a HYP, it does not have an indicator for sales. I have never (that I can recall) voluntarily sold when experiencing all the situations TJH lists. Takeovers, delistings, etc will release money, cancellations of dividends or run away share prices forcing down yields do not force my hand to sell. A company that is now lower yielding because the sp has risen but has shown an increasing dividend is a good find, I wish I had more. I do some tax planning so sell and tidy the portfolio most Februaries and Marches but that is not really part of the investment strategy but for tax efficiencies.

[tjh290633]

I can think of several situations when a shareholder may wish to sell a holding completely.....

Yes but one does not have to. It looks to me like Newroad has an investment strategy and a book to refer to, it includes yield as an indicator for purchases and sales and weightings I recall.
I think I run a HYP, it does not have an indicator for sales. I have never (that I can recall) voluntarily sold when experiencing all the situations TJH lists. Takeovers, delistings, etc will release money, cancellations of dividends or run away share prices forcing down yields do not force my hand to sell. A company that is now lower yielding because the sp has risen but has shown an increasing dividend is a good find, I wish I had more. I do some tax planning so sell and tidy the portfolio most Februaries and Marches but that is not really part of the investment strategy but for tax efficiencies.

Perhaps I can give a few examples.

1. Indivior was demerged from Reckitt Benckiser, paid two dividends and then stopped completely after its 2015 final. I sold in 2018 after which there was a precipitous fall.

2. BG Group, sold in 2006 when the yield fell below 1%.

3. Marconi, sold in 2002 after a dramatic decline in its fortunes.

4. Rexam, taken over in 2016 and was sold in advance of the completion date, close to the offer price. This avoided getting Ball Corp. shares as part of the deal.

5. Mapeley, sold in 2009 after Fortress took a major interest and took them private, after stopping dividend payments. There are people still holding the shares.

TJH

[Newroad]

Morning All.

I said I'd let you know if and when I did the "dirty deed" and that was this morning - Barclays' downgrade of UU. yesterday gave me a convenient relative entry point

At around 8.34 this morning, I sold SSE @ 1630p, then
At around 8.41 this morning, I bought UU. @ 925p

I haven't checked whether I exactly got the very short term top, but as a less relevant aside, 1630p looks a reasonable exit point to have got this morning for SSE.

Genuine thanks for all the constructive input - it helped my thinking process. I am aware this trade could go either way, perhaps more than normal for such defensive stocks, but it's relatively small for me in the big picture and I'd rather maintain the "discipline" and see what happens - as if I may move larger parts of my portfolio towards it later on if it proves suitable.

Regards, Newroad

PS Dividend Data reporting the forward yields as 3.75% and 5.00% respectively as of 28 Sep

[kempiejon]

PS Dividend Data reporting the forward yields as 3.75% and 5.00% respectively as of 28 Sep

UU with 5% yield and 1.18 cover and 2.8% annual dividend growth over 5 and 10 years.
Dividend policy.

Dividend policy to grow by CPIH annually over AMP7
• Maintained the UUG dividend as we transition from AMP6 to AMP7
• AMP7 policy to target dividend growth of CPIH each year, consistent with the
change to CPIH as the basis for indexing allowed revenues
• Underpinned by expected returns from UUW for AMP7 performance, including the
4 per cent (nominal) base equity return, and accumulated outperformance in prior
periods that has been retained by the group after sharing with customers

https://www.unitedutilities.com/globala ... cument.pdf

[Dod101]

Morning All.

I said I'd let you know if and when I did the "dirty deed" and that was this morning - Barclays' downgrade of UU. yesterday gave me a convenient relative entry point

At around 8.34 this morning, I sold SSE @ 1630p, then
At around 8.41 this morning, I bought UU. @ 925p

I haven't checked whether I exactly got the very short term top, but as a less relevant aside, 1630p looks a reasonable exit point to have got this morning for SSE.

Genuine thanks for all the constructive input - it helped my thinking process. I am aware this trade could go either way, perhaps more than normal for such defensive stocks, but it's relatively small for me in the big picture and I'd rather maintain the "discipline" and see what happens - as if I may move larger parts of my portfolio towards it later on if it proves suitable.

Regards, Newroad

PS Dividend Data reporting the forward yields as 3.75% and 5.00% respectively as of 28 Sep

Good luck. I think you will need it.

Dod

[Newroad]

Maybe, Dod.

Maybe

Regards, Newroad

[Newroad]

Interesting first day - though somewhat irrelevant in the long haul of course.

Both stocks were going up first thing, roughly in proportion, maybe SSE slightly faster in percentage terms.

Over the day, SSE retraced a bit, closing at 1610p. UU. stopped for a while then kept going, closing at 948.2p. As an aside, SVT did slightly better again than UU.

Regards, Newroad

[moorfield]

I'm sorry, I do not accept that - and neither would most people on the HYP-P board - HYP does not allow selling will-nilly.

I am about to PM you the name of a well known and frequent contributor to HYP Practical.

Please explain to me (without naming, I would suggest), how that person's long journalled practice of HYP can be described as anything other than "willy nilly"? If you can, then please explain why the OPs intentions should be interpreted any differently? If you can't, I suggest you row back a little...

And what does "willy nilly" even mean ?!

[Dod101]

Interesting first day - though somewhat irrelevant in the long haul of course.

Both stocks were going up first thing, roughly in proportion, maybe SSE slightly faster in percentage terms.

Over the day, SSE retraced a bit, closing at 1610p. UU. stopped for a while then kept going, closing at 948.2p. As an aside, SVT did slightly better again than UU.

Regards, Newroad

Come come. Short termism is all very well but I would have thought you might leave any judgement about the success or otherwise of your switch for say five years?

Dod

[moorfield]

Come come. Short termism is all very well but I would have thought you might leave any judgement about the success or otherwise of your switch for say five years?

Do I need to PM you too?

[Newroad]

Morning, Dod.

I would have thought what you quoted itself answered your (rhetoric?) question?

In case not, the success (or otherwise) of the methodology will only get judged over a long period and won't be based on the performance of a single stock. Most likely just short of 10 years, but might be less than that (depends on when I retire - which is when I'll have to make the key decisions). Thus far, the Pseudo-HYP is faring poorly versus our Global 60/40'ish portfolios over around 18 months or so.

The above said, I am both interested and human. I thought given the useful discussion about companies based on water utilities, the Barclays downgrade etc, that the relative behaviour of the stocks was relevant (the interest part). Also, I've had plenty that have moved against me just after purchase, which always annoys slightly, even though equally irrelevant over the long term. Hence, there is always a small smile when one starts moving in the right direction for a change (the human part).

Regards, Newroad

[Dod101]

Morning, Dod.

I would have thought what you quoted itself answered your (rhetoric?) question?

In case not, the success (or otherwise) of the methodology will only get judged over a long period and won't be based on the performance of a single stock. Most likely just short of 10 years, but might be less than that (depends on when I retire - which is when I'll have to make the key decisions). Thus far, the Pseudo-HYP is faring poorly versus our Global 60/40'ish portfolios over around 18 months or so.

The above said, I am both interested and human. I thought given the useful discussion about companies based on water utilities, the Barclays downgrade etc, that the relative behaviour of the stocks was relevant (the interest part). Also, I've had plenty that have moved against me just after purchase, which always annoys slightly, even though equally irrelevant over the long term. Hence, there is always a small smile when one starts moving in the right direction for a change (the human part).

Regards, Newroad

Ok. For my part I will leave it at that as I think we both know where the other stands. Interesting discussion.

Dod

[monabri]

https://www.telegraph.co.uk/business/20 ... arly-jump/

"Millions of Severn Trent customers will see their water bills surge by more than £100 a year after the company launched a £12.9bn turnaround plan.The utility giant on Friday confirmed plans to raise bills by 37pc by the end of the decade as it looks to raise cash to invest in reducing sewage spills and fixing pipes across its network."

"The announcement is the first in what is likely to be an industry-wise jump in bills. All 17 water companies across England and Wales have until midday on Monday to submit their five-year business plans to the regulator Ofwat, which are expected to include increases in bills to cover the costs of environmental works."

That should please the Qatari government who hold significant investment in SVT!

I'm a polluter, if you want me to clean up my act, you will have to pay! Pity BP didn't try that one!

[Arborbridge]

https://www.telegraph.co.uk/business/2023/09/29/water-bills-millions-households-face-139-pound-yearly-jump/

"Millions of Severn Trent customers will see their water bills surge by more than £100 a year after the company launched a £12.9bn turnaround plan.The utility giant on Friday confirmed plans to raise bills by 37pc by the end of the decade as it looks to raise cash to invest in reducing sewage spills and fixing pipes across its network."

"The announcement is the first in what is likely to be an industry-wise jump in bills. All 17 water companies across England and Wales have until midday on Monday to submit their five-year business plans to the regulator Ofwat, which are expected to include increases in bills to cover the costs of environmental works."

That should please the Qatari government who hold significant investment in SVT!

I'm a polluter, if you want me to clean up my act, you will have to pay! Pity BP didn't try that one!

But who is it that produces the sewage in the first place?