The Lemon Fool

BT63 wrote:

scotview wrote:My question is, is income from an inflation capped DB pension "better" than an income from divis/investments.

Over the very long term, I would expect dividends to grow by roughly the same amount as GDP, so around RPI+2%, therefore slightly better than the capped DB or even gold-plated DB pension.
However, dividend growth will be well above that in the good times and well below that (probably negative) in not so good times, therefore more erratic and benefitting from putting a little aside each year in the good times to build up a cash buffer equal to a couple of years dividends to cover shortfalls when the bad times come.

As someone with a fully RPI linked DB pension I had never considered it like that. What you describe is exactly what Investment Trusts are doing? - that is one of their big draws for me in my income focused ISA based portfolio. So it seems I have inadvertently done the right thing for a change

Femi wrote:Over the very long term, I would expect dividends to grow by roughly the same amount as GDP, so around RPI+2%, therefore slightly better than the capped DB or even gold-plated DB pension.

I always like to refer to factual history, using the dividend per income unit of my portfolio.

[pre]
         .   Income Units                                                                
         .   Ordinary       Rebased     RPI       Change      Change                     
Year to      Divs/unit      Divs/unit   Rebased   Divs/unit   RPI      FTSE100   Divs/RPI
05-Apr-88            2.86      100.00    100.00                                    100.0%
05-Apr-89            2.72       94.81    112.28      -5.19%   12.28%    -4.82%      84.4%
05-Apr-90            4.24      147.94    122.89      56.05%    9.45%    11.73%     120.4%
05-Apr-91            5.42      189.25    130.75      27.92%    6.39%     7.78%     144.7%
05-Apr-92            7.52      262.34    136.35      38.62%    4.28%    10.31%     192.4%
05-Apr-93            6.91      241.32    138.11      -8.01%    1.30%    -0.68%     174.7%
05-Apr-94            6.27      218.85    141.65      -9.31%    2.56%    16.51%     154.5%
05-Apr-95            7.48      261.07    146.37      19.29%    3.33%    12.84%     178.4%
05-Apr-96            7.38      257.48    149.90      -1.38%    2.42%    -2.01%     171.8%
05-Apr-97            8.40      293.36    153.54      13.93%    2.42%    17.32%     191.1%
05-Apr-98            8.88      310.04    159.72       5.69%    4.03%    16.57%     194.1%
05-Apr-99            8.46      295.34    162.28      -4.74%    1.60%    37.71%     182.0%
05-Apr-00           11.33      395.51    167.09      33.92%    2.97%     5.47%     236.7%
05-Apr-01           11.73      409.64    170.04       3.57%    1.76%     4.41%     240.9%
05-Apr-02           13.02      454.50    172.59      10.95%    1.50%   -13.86%     263.3%
05-Apr-03           12.10      422.26    178.00      -7.09%    3.13%    -6.79%     237.2%
05-Apr-04           11.62      405.63    182.42      -3.94%    2.48%   -31.17%     222.4%
05-Apr-05           12.07      421.42    188.21       3.89%    3.18%    21.34%     223.9%
05-Apr-06           13.12      458.13    193.03       8.71%    2.56%    11.60%     237.3%
05-Apr-07           14.04      490.19    201.77       7.00%    4.53%    21.87%     242.9%
05-Apr-08           24.32      849.07    210.22      73.21%    4.19%     5.76%     403.9%
05-Apr-09           21.17      739.15    207.76     -12.95%   -1.17%    -9.61%     355.8%
05-Apr-10           11.06      386.20    218.86     -47.75%    5.34%   -31.15%     176.5%
05-Apr-11           16.71      583.44    230.26      51.07%    5.21%    44.66%     253.4%
05-Apr-12           17.46      609.34    238.21       4.44%    3.46%     4.03%     255.8%
05-Apr-13           19.91      694.93    245.09      14.05%    2.89%    -3.13%     283.5%
05-Apr-14           20.47      714.45    250.29       2.81%    2.12%     9.19%     285.4%
05-Apr-15           21.33      744.60    253.44       4.22%    1.26%     5.58%     293.8%
05-Apr-16           21.67      756.58    256.78       1.61%    1.32%     2.65%     294.6%
05-Apr-17           24.99      872.20    265.82      15.28%    3.52%    -8.83%     328.1%
05-Apr-18           29.23    1,020.51    274.75      17.00%    3.36%    18.59%     371.4%
05-Apr-19           29.25    1,020.97    283.10       0.04%    3.04%    -3.64%     360.6%
05-Apr-20           29.31    1,023.17    284.38       0.22%    0.45%     5.53%     359.8%
05-Apr-21           18.93      660.92    295.78     -35.40%    4.01%   -23.83%     223.5%
05-Apr-22           23.71      827.82    328.68      25.25%   11.13%    18.78%     251.9%

The final column shows the dividends compare with the RPI over that period. Quite a bit of fluctuation, of course, and you could argue that dividends have gone backwards sine 2007-8, but that was an unusual year.

TJH

tjh290633 wrote:

Femi wrote:Over the very long term, I would expect dividends to grow by roughly the same amount as GDP, so around RPI+2%, therefore slightly better than the capped DB or even gold-plated DB pension.

I always like to refer to factual history, using the dividend per income unit of my portfolio.

TJH

So TJH's dividends have increased by about RPI+3% over the last 30-odd years.

I suggested RPI+2% and by the time the current recession/stagflation runs its course TJH's dividend growth could easily decline to an average of RPI+2%.

I certainly don't expect the dividend payers in my portfolio to manage TJH's average of RPI+3% over the next few years.

Almost any company which tries to raise its dividend at anything even close to the inflation rate will probably come under criticism for rewarding shareholders while its customers struggle with their bills and will be at risk of a windfall tax.

pje16 wrote:

Arborbridge wrote:

pje16 wrote:

vand wrote:

pje16 wrote:They keep overdoing it on the news
Amongst the highest price increases in food items is bread
up by 10%
in most cases that is a whopping 10 pence

Yes... if you only eat 1 loaf of bread per year.

It was an example
surely I didn't need to explain that
or maybe in some cases I did

Maybe the problem was in your original wording "They keep overdoing it on the news".
That made it seem like you don't believe it, or are in denial. To come back with your comment about bread "whopping" 10 pence with an eye roll, suggests you are underdoing it and downplaying the effect on people. Is this your "let them eat cake" moment?

Arb.

My thought was that a 10p increase is hardly newsworthy
a shame when you have to explain it

It rather depends what the previous price was, and how many of them you consume.

An additional 10p on every kWh of electricity tends to adds up. But hey, it's "only" 10p.

RPI 12.6%

CPI 10.1%

https://www.ons.gov.uk/economy/inflationandpriceindices

Steve

stevensfo wrote:RPI 12.6%

CPI 10.1%

https://www.ons.gov.uk/economy/inflationandpriceindices

Steve

And yet the lady in the building society was bragging about their 3% interest rate. Roughly minus 9%.

Best wishes


Mark.

Reproduced from the comments section of the FT on the article about Rishi being crowned PM

Time for Rishi to get his printer out again!

Print, print faster my machine of wealth,
For it on you that rests my political health,
Print, print for all you are worth,
For it is for those people I promise the earth.

Contribution from "Northern Socrates"

I note that food inflation is over 16 percent. Inflation for poorer households likely to be higher if a larger proportion of their income is eaten up by staples.

Best wishes


Mark.

ADrunkenMarcus wrote:I note that food inflation is over 16 percent. Inflation for poorer households likely to be higher if a larger proportion of their income is eaten up by staples.

Best wishes


Mark.

Figures just released for Oct 2022.

RPI 14.2%

CPI 11.1%

https://www.ons.gov.uk/economy/inflationandpriceindices

Meanwhile the places I use, Monzo and AJBell have actually 'decreased' the rates on their savings accounts!!

Steve

stevensfo wrote:Meanwhile the places I use, Monzo and AJBell have actually 'decreased' the rates on their savings accounts!!
Steve

Time for the masses to move from them and go elsewhere
That's the ONLY way they learn.

ADrunkenMarcus wrote:I note that food inflation is over 16 percent. Inflation for poorer households likely to be higher if a larger proportion of their income is eaten up by staples.

Best wishes


Mark.

Are staples like caterpillars?

Dod

pje16 wrote:

stevensfo wrote:Meanwhile the places I use, Monzo and AJBell have actually 'decreased' the rates on their savings accounts!!
Steve

Time for the masses to move from them and go elsewhere
That's the ONLY way they learn.

That may have been true many years ago, but I have the impression these days that they don't give a %$!! about clients and most offers and special rates have a twist, e.g. only up to a small sum or only for 12 months etc. I reckon most people would agree the quaint old idea of customer loyalty and service died a death many years ago. Maybe for those wanting to squirrel away millions, a small % difference means a lot, but for me, it's not worth the hassle.

To be honest, although the savings rates with Monzo became pretty dire over a year ago, AJBell has always been among the best.

Steve PS Maybe under the mattress really 'is' the best solution? Either that or spend everything now?

Dod101 wrote:

ADrunkenMarcus wrote:I note that food inflation is over 16 percent. Inflation for poorer households likely to be higher if a larger proportion of their income is eaten up by staples.

Best wishes


Mark.

Are staples like caterpillars?

Dod

They're certainly not butterflies.

Best wishes


Mark

ADrunkenMarcus wrote:

Dod101 wrote:

ADrunkenMarcus wrote:I note that food inflation is over 16 percent. Inflation for poorer households likely to be higher if a larger proportion of their income is eaten up by staples.

Best wishes

Mark.

Are staples like caterpillars?
Dod

They're certainly not butterflies.

Best wishes

Mark

Staples are a essential consumer product. Would have thought that in a paperless world however there was less need for staples. Or if need be then use a reusable paper-clip instead.