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Somewhat Dorisian HYP Review

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Gilgongo
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Somewhat Dorisian HYP Review

#283551

Postby Gilgongo » February 11th, 2020, 9:36 am

I have a HYP, the eventual fate of which is intended to provide some dividend income in my retirement (some 5 years away perhaps). I’m a bit of a LTBH person, but it occurs to me that things might be in need of some attention:



In terms of yield, there are obviously a few laggards, a couple of which are also underwater, notably Standard Chartered and FirstGroup, both down about 60% since I got them.

Of the low-yielders, there are also a couple of that have appreciated quite a lot in value too, notably Diageo and Segro, both up over 150% since I bought them.

The others I think I’m broadly happy with (with the exception of Dixons, but it’s lost so much value it’s hardly worth selling). I’ve not added any new holdings for several years.

Sector diversity seems generally OK, but I’d like to keep an eye on it. So far, I’ve tried to stick to the formula of any company already making up more than 5% of the portfolio, a sector that makes up more than 10% of the portfolio, or a major group of sectors (e.g. financials) that makes up more than 20% of the portfolio is excluded from to-ups.

Anyway, any thoughts are welcome. I’m thinking maybe I should take the hit and sell FirstGroup (waving goodbye to transport and leisure) and Standard Chartered (I’m a bit overweight on the banking super-sector perhaps), and maybe top-slice Segro (currently at 180% of average value).

(BTW I also have CME Group, left over from some kind of action a while ago, apparently. I don’t regard it as a HYP share but it’s grown quite a lot so I’ll think I’ll sell half now and see what the rest does. It’s a Yank too, so W8-BEN and all that.)

Quite what to do with the proceeds I’m not sure though.

G

tjh290633
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Re: Somewhat Dorisian HYP Review

#283570

Postby tjh290633 » February 11th, 2020, 10:52 am

I think you should get rid of First Group. If you want to stay in that sector, arguably Go Ahead Group GOG, is the pick of the bunch, or Stagecoach SGC as an alternative. Otherwise not much to add to your thoughts. I am still waiting for Tesco to get on with it. The other tiddlers could be dumped, or added to in the case of Dixon's before deciding whether to stick or twist.

TJH

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Re: Somewhat Dorisian HYP Review

#283582

Postby spiderbill » February 11th, 2020, 11:19 am

Gilgongo wrote:Anyway, any thoughts are welcome. I’m thinking maybe I should take the hit and sell FirstGroup (waving goodbye to transport and leisure) and Standard Chartered (I’m a bit overweight on the banking super-sector perhaps), and maybe top-slice Segro (currently at 180% of average value).

Quite what to do with the proceeds I’m not sure though.


Your thinking is almost exactly what I was thinking as I read through your table. (I'd maybe add Dixons to the sell column and I've never seen the attraction of M&S but that's maybe just me.) Otherwise it looks a pretty solid selection - though obviously that depends to some extent on exactly when you bought them and thus how the capital performance is doing. As a HYP it looks fine with just those minor adjustments.

As for the proceeds, the one sector that stands out for me by its absence is house building. It's maybe not the time to buy Taylor Wimpey as they've risen strongly in the last couple of months, as have some of the others, but maybe Vistry (formerly Bovis) would be worth looking at.

A few months ago I'd definitely have suggested Regional REIT as another area to look at but since them its valuation has caught up to where it probably should have been. Still a good dividend at around 6.8% but not as good value as last year.

Alternatively (and assuming that you don't already have some in another portfolio), maybe consider some ITs for a bit more exposure to the far east while Coronavirus is depressing them a little. HFEL being perhaps the most obvious one and offering 6.1% the last time I looked.

Good luck with it

cheers
Spiderbill

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Re: Somewhat Dorisian HYP Review

#283583

Postby Alaric » February 11th, 2020, 11:24 am

Gilgongo wrote:I have a HYP, the eventual fate of which is intended to provide some dividend income in my retirement (some 5 years away perhaps).


You could ignore market value and perhaps yield as well and just look at the distribution of the dividend income. If you have more than say 10% in one share or even one sector, that could be a significant loss on a cut or suspension. Equally you could decide to either prune or top up the small contributors.

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Re: Somewhat Dorisian HYP Review

#283675

Postby Gilgongo » February 11th, 2020, 6:51 pm

spiderbill wrote:As for the proceeds, the one sector that stands out for me by its absence is house building.


Ah, interesting. Not considered a new sector (assuming it doesn't overlap with my existing REITs).

Alaric wrote:You could ignore market value and perhaps yield as well and just look at the distribution of the dividend income.


I had thought about that a while ago, but wasn't sure if there was some hidden risk with that around diversification. For example, the miners (BHP and RIO) contributed the most (7.16% and 9.52% respectively last year) so slimming them down would mean a hit on the mining sector. Most of the holdings are in the 2-4% zone though. Low contribution might be a contributing factor to selling perhaps. TCAP is at 0.84% for example. Feels like an income-based re-balance might be too much of a large tinkering session for comfort though.

Getting rid of First Group does seem needed though. No income and no prospect of any AFAIKT. 60% capital loss.


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