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Strictly, interesting to see your switch in sectors. I've a position here in LGEN, which I entered for the reasons you've described - a high dividend yield, likely to be inflation proofed in the foreseeable term - but the capital markets presentation next month will be key. I have a diversified portfolio, with LGEN my position in the sector. I prefer to weigh sectors rather than companies within sectors. But I understand your strategy and the success you've had within the house building sector.
Good luck weighing the relative merits of LGEN, MNG and PHNW. I look forward to your analysis.
But the reason I'm posting is the ask, why the switch now, when you stayed with the house builders through the financial crisis of 2008, what's different this time?
Personally I would NOT be distributing your dividends like so.
There is trouble ahead and if you follow BUFFETT in USA, he has a cash pile of $200bn as of May .
I would be topping up in large sums not in tiny amounts at lower levels .
Your paying to invest in these prices, sounds rather daft. But everyone is different.
Recieve your income hold it, and throw it at stocks when we get a large drop like what Buffett and I’m doing.
There are no bargains at the moment anywhere…
Gary,
In sharp contrast to my approach to investing in house builder shares in which I tend to go right into the in’s and out’s of a duck’s a.se when it comes to the vital numbers, I have taken a somewhat different approach with these big insurance/pension companies.
I have invested in them fully mindful that I don’t have more than a minimal understanding of their balance sheets ~ so I am not using book value growth or return on equity as metrics despite this pretty much being indelibly tattooed on my forehead when it comes to builder shares.
What I have considered is how big these companies are, how long they’ve been around, what their dividend track records are and what their stated dividend policies are going forwards.
As I said before, Bellway are projected to only be making a return on equity of 7% by three years’ time ~ still only marginally above the 6.5% they made in 2020, the year of covid…. since then, of course, they’ve also suffered the headwinds of cladding, Gove, Vlad, inflation & interest rates…
So, how many years beyond the next three will it take to get back up past 10% ROE, which is the sort of dividend yield alone available on two of the three insurance boys let alone that if that dividend increases it implies at the least a confidence that there is underlying profitability of above 10% ROE whatever the latest government accounting requirements may be.
I freely admit I can’t understand why Mr Market has allowed these FTSE100 boys such a big yield, but if it’s based on the fear of something I’m not aware of then that seems a long time manifesting given that these div payouts have been high for years…?
My feeling is that most posting here are also likely similarly basing their decisions to invest in these companies on the div yield & track record without necessarily having any more insight into the companies’ figures than I do ~ though an obvious & impressive exception to that is Meconopsis on this share chat who clearly seems to know what he’s talking about.
So ~ thanks Meconopsis, for your contributions here.
Gary, I probably differ from you in approach given your comment “I’d like a little drop before I buy” as I consider that to be calling the market which I do not have the ability to do, unless you’re looking for a price shift relative to a different share that you’re holding and which you’d trade out of to buy into one of these under discussion…?
However, having now moved two thirds of my portfolio away from house builder shares, I remain undecided at present as to what would be an appropriate point to go back into Bellway et al..?
That would likely depend on the relative share price movement.
I mean, on what happens to Bellway’s, etc., share price as well as to LGEN’s, MNG’s and PHNX’s…?
Strictly
At the risk of being accused of a "love in" may I wholeheartedly welcome you to the LGEN chat board Strictly. Like yourself I have LGEN in the folio but MNG & PHNX are just on my radar at this time, I'd like a little drop before I buy & it's a while until any reach ex-divi territory. Perhaps an insurance blog SB? I for one would be very interested in your take here. Good luck to all & happy bank holiday from the beautiful Quantock Hills where the sun is shining, at last!
PS
Firstly, a typo alert: the first line of my earlier comment should have said "....I haven't commented on LSE anywhere for a while..."
And a further point I omitted to make was that buying into three very similar companies potentially offers the game of switching between LGEN, MNG & PHNX based on pursuing best perceived value ~ which is a strategy that has worked well for me for many years within the house builder share sector.
In that I consider it more reasonable to try to call the value between companies of a very similar ilk than it is is to try to call the value between any of the individual companies and cash ~ which is something that I consider to be somewhat above my pay grade.
And the share price graphs of these above three companies shows that, while they may all have moved more or less sideways for years, unlike Lindisfarne, they don't all swing together, and they do cross over each other from time to time.
And within that untogether-ness lies opportunity... :-)
Without the risk of speculatively sitting out of the market ~ I mean in cash and not invested.
Strictly
Gary,
Your Captain Hindsight comment made me chuckle and, as I have commented on LSE anywhere for a while, I thought I'd check in...
From having been invested solely in house builder shares for the past two decades, I had a moment earlier this year when I went from being 100% invested in Redrow ~ i.e. the entirety of my portfolio ~ at the time of the takeover announcement of them by Barratt, to then switching back 100% to Bellway but then, out of the blue, decided on a substantial shift in strategy for the interim duration of however long the house building sector is stuck with forecast low earnings.
I mean, even for three years’ time, the scribblers only have Bellway in for an ROE of 7%.
And, surprisingly, given my previous one trick pony investing strategy, I find myself with two thirds of my investment capital spread across LGEN, M&G and Phoenix.
Having said that, I probably take a different view on this to most commenting here….?
If these companies can maintain, let alone increase, their dividends at current levels, I am absolutely okay with their share prices going sideways ~ a 10% or so total annual return seems fine to me in these straitened times, while the house builders remain under the cosh…
And that’s before Starmer and crew take over…
Well, at least it then wouldn’t be our pal Gove..!
Strictly
What a memory Baz, I dropped a proverbial with BP in selling far too soon but as the LSE stock picking god Strictly often says “We can’t all drink with Captain Hindsight all the time”. Hoping everyone here stays prosperous.
So, how many remember that a while back a rascally outfit called citi something or other had a go at deramping L & G and it worked, not for long but probably long enough for their mates to make a quick buck as it is said. Lesson learned:- Much of what "brokers" dish up is pure hot air for their own amusement or worse.
Baz to Gaz, I would be pleased if my average was under £2😁. I remember having this conversation with you about BP. three years ago.Hope you are still prosperous.
Baz - To me LGEN is a quality share as my average is under £2.00 & as for the dividend being safe the company kept on paying it throughout the recent pandemic despite pressure from government. Sentiment towards this sector is weak I respectfully suggest but investing is a long game, 5 year minimum & all that. I understand that no dividend is ever safe & that the new boss may have other thoughts about this but as for a quality FTSE company currently increasing its payout 5% yearly it'll do for me. At the last count LGEN was on track to meet its target for the period up to 2024 with capital generation of £8 to £9bn so my guess is the divi is safe. The solvency II ratio which is above 200% should also offer investors a great deal of confidence as well. That's why I think this is a quality company & I hope that's answered your question.
'Only my opinion of course but I wouldn't want to be out of quality shares such as this over the summer. Good luck all.''.Gary,how is this a quality share?I bought these at 2.90 about 27 months ago and never made it back to that.The divi is good but not guaranteed but that is all.Quality like every thing else in life is very subjective.
Phyl, I only sold one third off as i was a bit heavy here, so quite happy whichever way it goes, will be reinvesting the dividend like yourself, if it should drop down low i will buy back the shares i sold which would give me a lower average, but have no fear i still think this is a good income share
best of luck
Phil - Why automatically set to re-invest when that won't happen for weeks? FWIW I just keep an eye on the price just as the dividend gets paid & then take the re-invest decision one way or the other at that time. HL who I used to be with didn't re-invest dividends until the 11th of the month following payment but AJBell do it the next day (I think).
As for will this reach £2.20 anytime soon, I think not unless the results of the strategic review is pants. For those that aren't aware L&G will announce this at the upcoming capital markets event on 12 June. If this is good & if interest rates are cut, which may also happen in June, then the SP here & elsewhere will rise. Only my opinion of course but I wouldn't want to be out of quality shares such as this over the summer. Good luck all.
Morning Rob, yeah, almost anything can happen in the next half hour as the commander of Stingray used to say. It could drop of course depending on the markets in general or geopolitical events etc., however, in the past, post XD day, we have generally suffered a remarked downturn in SP, but thus time around, we haven't. It's been much more resilient. That's a tad unusual wouldn't you say? I for one, hope the momentum continues, but I do understand your wish maybe for it to fall. As I recall, you edged your bets by selling circa 50% of your holding just in case the SP suffered a significant downturn? Under normal circumstances, this is not a bad strategy. I do wonder now whether it is the right strategy over the coming weeks. Time, as always, will tell.
Phyl, there maybe plenty of opportunity's for anyone to buyback here at 220 in the coming months, the old saying sell in may and walk away, plus the ftse is at an all time high, but of course you maybe right
best of luck to all holding and or wanting to rebuy
Zac0_4
Correct - for those opting to reinvest the dividend the event will take place on (or around) 6th June and the price at that time is anybodies guess.
In response to zac: By automatically setting my ISA account to dividend accumulation as opposed to Income. My dividends will, therefore be re-invested in aquiring more more shares in June in line with my strategy to build my holding and take advantage of compounding. This strategy also benefits pound cost averaging by lowering the cost pet share. The point I was trying to make is that the SP has held up (unusually) particularly well post Ex-D. This has benefited some but perhaps not all, hence the use of the proverb.
How can you have reinvested your dividend when it hasn't been paid yet?!!
The old Chinese proverb, "one man's meat is another man's poison" springs to mind following the recent dividend that is £9.1463 per pop. A number of folk on this board forecast a significant drop in SP following XD day, (as is normally the case I hasten to add) and continue to drop toward the £2.20 per pop where many would then buy in. Financial actors always extol the virtue of never aim to try time the market. Its time in the market that counts. Well, for once, it appears they are right. The sP, if anything, has risen. This means, anyone buying in just after XD day will be in profit and congratulations to them, but also those that re-invested their dividends as I did... feeling almost smug. Of course, it might all change over the coming weeks, but I'm not so sure it will. lGEN appears to have positive SP momentum, which is something we cannot with any regularity, profess. The SP closed over £2.40 a pop on last night's bell. I for one, hope this unexpected momentum continues and all investors here reap their reward. Goodness knows, we deserve it!
Eccles: Iv been in NESF for a while also PHNX MNG &BATS, currently taking in 12k pa divi, I have the same amount invested in each. There were a couple of other solars that I fancied but plumped with that one.
Tambo - sorry that should have been for MPO818
Tambo - been a while since it was £3 and we’ve just gone xd with a bad over reaction so I think patience required here but a good for sure
Tambo210
So with the FTSE100 Index closing the week at a record closing high of 8213.49 LGEN reach 240. This is a rather disappointing price in relation to the index, with LGEN having (historically) exceeded 300p with the index significantly below tonights level.
Totally agree Broomtree.
Different companies. Despite the 7%div, Nextstar is vulnerable to the vague IRA shennanigans in the US. Solar companies are struggling owing to over capacity in China and poor efficiency...
Its worth a punt, but I certainly wouldn't put a similar portion of my savings in NESF as I do with MNG, PHNX, and hopefully soon LGEN again.
Eccles - doesn’t matter how many times it pays…. Still less than LGEN and a totally different share in terms of stability and prospects!