RE: Still around 25% Above19 Jun 2022 13:32
Last one from me on this subject because its like talking to a brick wall time and time again and i have better things to be doing.
I will use a simple enough and rather pertinent example quite close to home on this board,and im sure the 'example' will agree completely.
Mr Johnbri, has, we are told, substantial investments in the airline sector. RYA, EZJ and IAG. One of which, RYA, doesnt pay dividends other than the odd rare special, using spare cash to either buyback shares or invest for the future whilst holding prices down to grow. He holds this share as he expects it to grow (covid/wars getting in the way) as do i.
The other two paid quite reliable and decent dividends for years and years, so ideal for divi 'divi' hunters. Similar to lloy/BT/Vod. I expect he holds these two shares for a bit of capital growth as well as divi income to use for whatever.
Now putting aside the sectors current woes, two of those shares USED to pay quite reasonable dividends (had some myself in the past). It is quite clear that such dividends in the sector are now a thing of the past for a good number of years while all the companies repair their balance sheets and payback debts.
In other words you CANNOT always rely on dividend IOU's, it is a fools folly to think they will be paid forever - ask a Shell shareholder!
So, Mr Bri, (by his own words) is now suffering on two fronts with his investments.
Namely a rather substantial capital depreciation (like your lloys, and BT and presumably Vod of £50k), AS WELL AS a lack of any dividend payments for the foreseeable future, so zero income either.
I would remind you that the same cancellation and share price falls happened with Lloy, which simlarly canceled some divi payments recently, as per the two income examples given.
Now, im sure that whilst in such a position, Mr Bri has indeed thought of moving his reduced capital elsewhere to receive a better than current zero return and capital errosion. Yet 7nfortunately having suffered a LOSS IN CAPITAL there is a crystalising cost penalty to do so, which makes this move unattractive and risky, as to move elsewhere may incur just similar troubles and not recover the loss crystalised. Unless choosing to do this he is stuck where he is, losing income on one hand and capital on the other.
It is quite the dilema, but quite clearly demonstrates that allowing capital to depreciate on the basis of 'ever coming' dividends is a highly risky venture in volatile times. Dividends are not set in stone.
Lloy have done this too you already, capital loss and zero dividend. whats the risk of BT or Vodaphone doing the same?. Low you might say, but lloy have already, as have a host of other stocks to other people - even Shell did after 70 odd years and surprised everybody.
Preservation of CAPITAL is KING, at least you can move your cash elsewhere when the divis disappear. I would wager that is EXACTLY what mr Bri would do if the option wa
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