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Thanks fleccy & sorry but you are just stating the blindingly obvious, that is, if the sp falls you can get more shares for your money, you don't need a chart. I feel that it is folly to buy high divi shares just to re invest, what is the point of receiving the divi if you are just going pay it all back in again with all the costs involved. If vod paid no divi & just kept the money , you might be better off than receiving the divi but then pay it back in. At the end of the day, a fall in the sp is only good if you can guarantee it will recover to the original price. No such guarantee excists of course & vods sp has in the past done the exact opposite. But of course that may change, so it is just a gamble. We are just chasing our losses, but I think the sp will rise, so I am not selling. But of course I could be wrong. Anyway mate, your latest buy is showing a small profit so far, so good luck with that.
Dan it's just meant to demonstrate the compounding power of dividend reinvestment and how a reduction in the share price buys more stock when dividends are reinvested, it isn't meant to be a real world example. Something else to consider is that Fleccy2 pulls in dividend income of £14,633.34 in year 18, whereas Fleccy1 only brings in dividend income of £7,599.37 in the same year.
Here's a chart showing the growth in dividend income with each passing year of reinvestment. It really demonstrates the differences between the two, with Fleccy2's dividend returns pulling further away from Fleccy1's year on year:
https://docs.google.com/spreadsheets/d/e/2PACX-1vRYwu6rv7Vk2093vnE9975iJIfiNBDGYW08VmYU2MK2tsi0o9bA3rDwV9NV0XA6QJrkQeqet_jppwWg/pubchart?oid=305726335&format=interactive
Fleccy. Having taken another look at your charts, it would take fleccy 2, 18 years just to be equal the fleccy 1 valuation, & that is assuming the fleccy 2 share price, & divi holds, & he is not dead. I know which fleccy I would rather be even if I do live for another 18 years.
They aren’t taking over 3. Reducing market share by palming debt off onto Hutchinson in a JV vehicle.
Who’s gonna run that, well?
Will VOD do an RR?
As an ex employee who’s been through mergers I’d say not with the current senior management. My experience with the CW merger was horrendous but with 3 at least they’ll understand the market.
Voda have a cultural arrogance that makes them think they’re great, they resist change internally despite looking to improve by bringing in others, they also have a very young overall age profile (38), lots of reinventing the same wheel. Their takeover of 3 will certainly create synergy savings and an opportunity to reduce headcount, though they’ll be unlikely to adopt 3’s more agile ways, been there too. That said I’m invested and ever hopeful that they can reduce the debt and move the business forward and improve the stock price for all of us. But do an RR (I’m up to my chest there) unlikely in the short term.
Gazza bombings started again few hours ago,, Not Looking Good,, Could Get Very Ugly Very Soon..
"Fleccy. It is pure fantasy, making the assumption that the sp falls by 50% in 1st year & then continues to rise for the next 29years. "
Does that mean you don't disagree with the alternate reality part of my example then Dan?
Actually you misunderstood the chart, the share price or dividend rate doesn't rise for Fleccy1, or Fleccy2; Fleccy1's share price stays at £2 for 31 years and Fleccy2's share price remains at £1 for the 31 years, both Fleccy's receive annual dividends of 7.7p per share. The reason Fleccy2's shares rise on a steeper curve is because he can buy more shares at £1 per share than Fleccy1 can at £2, and because Fleccy2 is adding shares at a much faster rate than Fleccy1 he increases his future dividends and shareholding at an exponentially faster rate, allowing him to catch up and eventually overtake Fleccy1.
The whole idea of the chart was supposed to demonstrate an easy to understand example of how dividend reinvestment gives an enhanced return as the share price drops.
Dan, I was thinking of doing a chart to illustrate how you can lose more money on your capital than you get back in dividends if the share price keeps dropping every year, but i didn't want to be a wet blanket
as long as we finish on a high tomorrow i will be happy with that for this week
That fleccy1 and fleccy2 example is a very nice illustration of why I like BP shares, their buybacks are at a much lower price than the other oil majors so over the long term they don't need to perform as well as the others for their share price to outperform.
Sorry for going off-topic, I have also invested in VOD recently (after keeping a tiny position from 120p). I am hoping that with the change in interest rate expectations, the debt load will be seen as less of an issue leading to a price rise.
I read somewhere that if you invested £10k in a ftse 100 company and re invested the dividends thru all the good and bad years after 36 years it would be about £156k where as if you did the same with savings they estimated the savings would reach £56k. So my take is even though Voda are doing bad in the grand scheme of things they will be far better.
Fleccy. It is pure fantasy, making the assumption that the sp falls by 50% in 1st year & then continues to rise for the next 29years. We can all come with fantasy predictions, but they are not very helpfull in the real, non fantasy world. Come on fleccy, give us a break.
Very cordial on here today,,,,Nice to see.....
Fleccy, i like that one, I hope i don't have to wait 30 years to catch up though, i will be too old to enjoy it ;-)
cheers mate
By year 30 Fleccy1 owns 155,298 shares worth £310,595.40 and Fleccy2 owns 462,851 shares worth £462,850.89, so Fleccy2's portfolio is worth £152,255.49 more than Fleccy1's, even though Fleccy2's stock price halved in the first year compared to Fleccy1's.
Rob, did I ever show you the chart for fleccy1 and fleccy2, and the effect of reinvesting dividends when the price drops?
Fleccy1 and Fleccy2 live in alternate universes and they both buy £100,000 in a company stock, they then annually reinvest the dividends over 30 years following the initial £100,000 investment. Fleccy2 (possibly me 🫤) see's the share price drop by half in the first year, with both Fleccy's then seeing the stock price stagnate for the whole reinvestment period.
https://docs.google.com/spreadsheets/d/e/2PACX-1vRYwu6rv7Vk2093vnE9975iJIfiNBDGYW08VmYU2MK2tsi0o9bA3rDwV9NV0XA6QJrkQeqet_jppwWg/pubchart?oid=1399088825&format=interactive
Because the price halves for Fleccy2 his dividend reinvestment buys twice the shares of Fleccy1's reinvestment, his portfolio grows more quickly and eventually overtakes Fleccy1's portfolio where the price remained the same. The idea of the chart is to demonstrate the power of compounding using dividend reinvestment when the price drops. It's an exaggerated example, but nicely demonstrates what I'm talking about.
Fleccy. I like that one. English is a very confusing language sometimes.
Rob. I was very tempted to name them, but would I ? Not looking too bad today, up on the closing pre-divi price minus the divi. but only just. Hoping for a good Friday.
Rob, “the stock market is a device to transfer money from the impatient to the patient.”
Well spotted Dan, I'm going to blame this predictive texts, come to think of it though,there do seem to be a few patients here
Rob. "Hope we will all be rewarded for our patients here". Who are these patients on here that you refer to? they can't help it! Only jokiing, I had to check the spelling myself.
Hi Fleccy, If there was an award for the most patient investor, i would give to you for sure, and i mean that as a compliment
If i compare this with 3 of my better investments lgen/aviv and mng they all pay good dividends but are also all in profit , so no loss of capital, i do of course have others that have not worked out so well, just saying though we will need to get that loss of capital back eventually to make it all worth while, so let's hope we will all eventually get rewarded for our patients here
best of luck
Dan i like to share some of my profits with the broker for all their hard work, don't be so mean, i am only joking of course, most of my investments are in my sipp and don't want all the hassle of changing, and they do have a good selection of funds available, maybe i should switch my stocks and shares isa though hl are expensive
Thanks fleccy. I am glad I don't pay fees as I have saved £360 over the last 5 years. Better than nothing! Cheers.
My wife has shares in a standard share dealing account, but she's a non earner and the dividends generated there come in below the income tax threshold of £12,570. We also have two ISA's which house the rest of our shares. The total admin charge for both sets of accounts is £72 a year (£36 each). £72 a year is insignificant considering the dividend income.
Thanks for your reply fleccy. Do you have to pay to hold your shares in your I.S.A.'s as that can be a big dent. Some do, but I don't.
"Talk about my glass is always half full, i bet you always see yours as 3/4 full fleccy mate"
I'm stuck in awaiting a delivery so I thought I'd respond to you Rob.
If I was to use a similar metaphor, I'd describe it as a glass that tops itself up year on year. I realise that dividends take time to compensate for large drops in share prices, where drops leave investors sitting on paper losses, but they do give choices. After this latest Vodafone top up the dividends across all our holdings should bring in over £27,600 tax free, assuming all the dividends are maintained going forward, if I remove the yearly Vodafone dividend income the other holdings bring in just over £19,000; The dividends give me the choice to grow the holdings through reinvestment, or use the cash for other things, which is why I decided to invest in dividend paying stocks.
UK stocks have been hammered for years and Telecom stocks doubly so, will that situation persist forever? I don't think it will, and as the saying goes all boats rise when the tide comes in.