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Tichtich - " . . . Current yield is about 8.6%. In principle, if you hold forever and the dividend rises with inflation forever, that's an 8.6% p.a. real (inflation adjusted) return. That's better than the long term average from UK or US stock markets (and probably any other stock market) . . . "
No it's not. The US stock market has an annualised average return of 15.45% over the last 10 years (probably longer!)
In February, 2014, the share price was more or less where it is now. So, while you may get an 8.6% dividend, it is 8.6% of a non appreciating asset.
Tomglan - how do you get to an averaged annualised return of "just under 10% per year" when (i) you state the average yield has been 6.5% pa, and (ii) the share price is only up 17% over the 10 year period, so an average annualised growth rate of 1.6%?
Current yield is about 8.6%. In principle, if you hold forever and the dividend rises with inflation forever, that's an 8.6% p.a. real (inflation adjusted) return. That's better than the long term average from UK or US stock markets (and probably any other stock market).
Of course, no one is going to hold forever (though I suppose you could pass the shares down to future generations). However, other things being equal, long term you would expect the share price to rise with inflation if the dividend does (and if it looks like the dividend will continue doing so).
It may be that the reason the yield is so high (share price so low) is that the market doesn't expect the dividend to be maintained indefinitely in real terms. Or it may be less rational considerations. I think many investors are overly fond of growth stocks over dividend stocks. That may explain why the share prices of dividend stocks have suffered since interest rates went up, when higher interest rates are actually worse for growth stocks (other things being equal) because their earnings tend to be further in the future, and therefore must be discounted more.
....that we have a new broom as new Chief Executive. He sensibly stated when appointed (March as I recall) that he needed until June before he would have become fully appraised of the innards of this big and complex organization.
I am awaiting this review before adjusting my largish holding. His record is excellent.
“Considering LGEN sp is the same as it was 10 years ago you have to ask whether it's a good investment.”
A £10,000 investment in 2013 would have bought around 5,000 shares, with dividends re-invested at around the average price for each year you’d now have 10,000 shares. Including the recent dividend, this now totals about £25,000, which equates to an average return of just under 10% per year. This is despite the shares having de-rated to an 8% dividend yield compared to an average of 6.5% for the 10 years.
I think most people agree this is a good investment, but it;s not a great one unless the sp increases a little each year with inflation, for a lot of years i have just held on here and taken the dividends, but then kept watching the sp drop a lot more than the dividend, so this year i sold a third off before xdiv, it all depends now how low this will drop in the coming weeks whether it was all worthwhile or not, the whole point of it is to try and lower my average, i may end up regretting it, time will tell
whatever happens i hope we have a better year with a higher sp by next APRIL
Ah, but if the price recovers each year then you are getting 8% return on your money.
I held this for years but now think it is overplayed. It pays a good dividend but, more often than not, the share price will drop by more than the dividend after the ex date so you lose your capital. Still, everyone has their own strategy.
"Considering LGEN sp is the same as it was 10 years ago you have to ask whether it's a good investment."
If you are not desperate for the capital value - the 8% or so dividend suggests it is a good investment - in that 10 years you refer to the shares have exceeded (briefly) 300p, exceeded 280p on many occasions - so decent on all fronts - if you need to be able to call on the capital at any time - buy premium bonds.
Not the post xd bounce I hoped for but still reckon this isn’t a bad start point to build here
Considering LGEN sp is the same as it was 10 years ago you have to ask whether it's a good investment.
It’s appears that the ftse has had a bit of a leg up this week. There is even talk of interest rate reductions before the Americans. I’ve been a holder of ds smith and AAL all undervalued businesses, why anyone would be out of say Lgen and Aviva, and trying to make a few extra quid around the dividend payment is beyond me. A bid or interest from a 3rd party could come at any time.
Something to think about.
I remember someone telling me to be carefull of Rolls Royce and Bp when they were at record lows, just glad I wasnt, so you have to work out your own risks and stratagies and take everyone elses with a pinch of the proverbials, win or lose, and the more you take any notice of anyones advise on these forums your going to lose big styley, the only advise I would care to give as i and so many have learnt the hard way is FOMO is your enemy, if you miss the bus just wait for another one, if you jump into something at the top you have higher to fall, with me now its just becoming a waiting game pure and simple
Of course Thriller, what i meant by neutral was i traded the difference at approx 16.5 between my sell/buys so, taking the fees into account ete, came out about level cashwise, but of course i now have more shares at the lower price for the future.
Depends what price you sold them at they have drop by over 18p a share more than the 14.93 dividend
Well tried out a little trade ahead of the exdivi, sold approx half my holding incase of huge post divi fall, which seems common just about everywhere of late. Ended up pretty neutral as it happened so a bit of a waste of effort, didnt win anything nor lose anything in the big scheme of things so not so bad.
Nicknaim, as long as you made a profit that's all matters, will just see what happens here, if i can lower my average as intended i will buy my third back
be careful though with so called recovery shares, as they don't always come back as well as you hope, which i found out the hard way with VODAFONE
I got into phnx 2022 circa 520s, as saw them getting into bargain territory and have been trading them as well as collecting dividends that have far outdone Lng but collecting those also, Just sold them and LnG before EX this time round 550s for Phnx and 247 on the LnG, bought back phnx 480s and picked some more 470s so no dramas and got a healthy Div coming to my isa account and up on the deal considerably, considering there steller recent results and future dividend that are sofar covered I have faith moving forward, will obviously re-enter LnG and do the same thing, you obviously bought and sold at a higher price than I did, horses for courses and all that
Nicknaim, i sold my phnx shares for around £7.50 and it's been in decline ever since, what makes you think it can recover ? to be honest i would rather trust lgen with my hard earned cash, providing you wait for the right price to get back in, just my opinion of course
best of luck
An update from the new team on going forward plans will help to move this on hopefully...in June I think
AbjectPerformer
" . . . this wasn’t a great investment for 5 years . . . " is a statement of fact
" . . . At this price, going forward for top ups or new investors, it is a good investment . . . " is an opinion and we'll have to wait and see! Good luck.
Tempted, my smelling is orfal
14% drop from pre ex high could be a start to enter so definately not ready to jump in, have already bought MnG at minus 16% from pre EX and they could still fall further, fully loaded with PHNX as they are my favorit for turnaround and juicy div but could be temted to buy even more for the next Div
I agree that this is a good investment, but I stick with my previous thought, I still think we will see 2.20 here in a few weeks time , before it will start to rise again, just going on what's happening to mng and aviva since going exdiv