Our latest Investing Matters Podcast episode with QuotedData's Edward Marten has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
. . . another sluggish year for my dividend payers!
Here we are at the end of q1 and overall year to date my portfolio has returned +7.4%. That's made up of a total return from my non-dividend paying holdings of +9.2%, whilst my dividend payers are about flat at -0.3%.
Thankfully my dividend payers only account for around 18% of my portfolio by value. The plan is to further reduce this to around 15%.
Buybacks will tend to reduce the share price. It doesn’t seem to be the case with IMB and Bats.
Since the buybacks have commenced the relevant share prices have increased.
Just a lot of assumptions at the moment, have they ever mentioned buybacks, but with a new ceo this is a bit of a journey into the unknown, that's one of the reasons I would like to reduce a bit here
Spot on with that assessment Tich...If i was thirty then yes long term growth if is great unfortunately I'm nearly sixty so would prefer the cash/dividend....
@ToS1963
I think you're missing the fact that after the buyback the company's assets are down by the amount they spent on the shares. That will tend to reduce the share price, and may cancel out the benefit of the increased EPS. I think that's why zac0_4 said that a buyback is a neutral transaction.
However, from my point of view, as a long term investor, the potential benefit of a buyback is not that it could increase the share price in the short term, but that it could increase the long term returns, as measured by long term dividend paying potential. If the shares are being bought back at a price below fair value (fair in terms of long term dividend paying potential), then the buyback is "accretive", meaning that it increases the fair value of the shares. However, even then I wouldn't expect it to increase the market price of the shares in the short term, since Mr Market thinks that the current price is the fair value, so he doesn't agree that the buyback is accretive.
Even if the buyback is accretive, there's a case for saying that the company should instead pay out the same money as an extra dividend, and let shareholders decide for themselves whether to reinvest the dividend by buying more shares in the company. (One counter-argument is that the buyback may be more tax-efficient for shareholders, though that won't be relevant to those of us with our shares in an ISA or SIPP.)
Zaco.... I think the theory is that buybacks increase the SP, as long as the shares are cancelled. If I own a company worth a million quid, with 10 shares each worth £100k, buy back and cancel 5 of the shares, the remaining 5 shares are now worth £200k each, as the market cap is unchanged. It also reduces the cost of dividend payments by 50%, and increases EPS by the same. That’s the theory, although I agree with you, it never seems to work like that in practice. I’d rather see excess cash returned via special divs.
Berkshire Hathaway have an even bigger pile of cash, and recently implemented a buyback
programme. I think your find that the U.K. is unloved. To my mind Lgen should be buying back
stock, why because most of the mergers and acquisitions are overpriced and afterwards the
company buying the other company doesn’t see the rewards in the share price, just the
increased debt to service.
Aviva seem to be supporting an increased share value since the buyback program, so why
wouldn’t it work here.
Something to think about.
"The company simply buys shares on the open market and cancels them. Your shareholding remains as-is. In theory it shouldn't affect the share price at all as it's a neutral transaction. "
==============================================================
If one cancels shares then presumably the P/E ratio increases - although they are probably just cancelling shares that they then re-issue to give to employee bonus schemes. Increased P/E can make a share appear better value and I suppose might impact the dividend paid.
But generally I agree. They are could also the sign of a leadership that don't have any idea on how to invest for growth and use it as a means to hit their milestone targets and guarantee their bonuses.
Reddukeclothing
No rationale.....just they felt they want to capture a pullback or something.
Longer term thinking like us normal folk will hold and accumulate and bag the divi.
B-w-f " . . . How does a buyback work? Is it a percentage of everybody’s holding? And how does it impact share price? . . . "
The company simply buys shares on the open market and cancels them. Your shareholding remains as-is. In theory it shouldn't affect the share price at all as it's a neutral transaction.
From my experience buy backs are a waste of time.
Excuse my ignorance, relatively new to shares. How does a buyback work? Is it a percentage of everybody’s holding? And how does it impact share price?
Think it’s odds on now that if they sell Cala there will be a buyback. Given their solvency 2 position is 224%, what else are they gonna do with the money. If Cala goes for £750 million I’d guess a £500 million buy back would be announced. Maybe that would get the share price moving.
Tambo - what’s the rationale, could you share the update
Brokers are a waste of time & space.
Exane BNP cuts Legal & General to 'neutral' ('outperform') - target 270 (280) pence
Stormer, correct exdiv 25th April, let's see how high it can go by then
Anyone think special divi if cala sold ?
25th April
It goes ex dividend on the 30th of april plenty of time for the market to turn. if not I'll stick it in rolls royce.
What a silly billy and only weeks away from exdiv of 15 p
Look at PHOENX Group. cheaper metrics. massively growing cash pile on an undemanding P/E and great dividend policy. yielding around 10%
AP
totally agree with you, funds available, too pricey for me at these levels
One thing I know.
Lgen aviva. Barc nwg Lloyds
I am not buying or reinvesting a single penny at these levels
Not sure why anyone would want to sell a month before xdiv but i guess they have their own reasons, but i agree the share price is a bit underwhelming, if it reaches 2.60-2.65 i will be selling some off and adding to my funds, if you take inflation into account we should be seeing a new high at this time of year, Aviva was my only share to finish in the blue today
Very astute post . Plenty of people I know choose not to work full time, just the minimum 16 or 20 hours a week or else they have to pay all their rent and c.tax, which is otherwise free or heavily discounted.
This lack of FULL time work from a huge section of society, then forces HMG to think immigration is the 'answer' BUT this is wrong, as it means HMG 'assume' that immigrants will work full time, but, many, after being granted permission to stay, soon take on the British way of life, as entitled to the same benefits and thus they too work the minimum, so HMGs answer is then to bring in more, rinse and repeat.
Problem being, that the newcomers will age, and then what? Bring in the rest of the world to work to pay for an even larger retired population?
Hi tech, mechanisation, AI and high end electronics is the way to go, not forever paying people to breed, but to reduce the need for a manual workforce, so the then available for work can do the jobs that machinery can't.
Otherwise the death spiral of inorganically increasing our population will destroy this country, our culture and ensure that poverty only increases for all but the few. Seems to be happening already.
Lets hope solutions to ours and the worlds problems are doable