Member Info for Meconopsis

That’s not how it works mararab.

You can’t just offset like that I’m afraid.

Dividends are income. Any dividends that land into a non-ISA share dealing account are taxable as income IN THE SAME TAX YEAR. So, if you get £100 in dividends and are a basic rate tax payer then you owe £20 in tax - even if you reinvest the dividends and don’t sell those shares. And even if the total value of the shares has dropped.

Saying that, the first £500 of dividends are tax free at the moment.

Profits (or losses) made from selling shares are capital gains (or losses). These are subject to the capital gains allowance (currently £3k) and then taxed at the appropriate capital gains rate.

(You can carry forward capital losses to offset against future capital gains - but only if you have declared the loss on a tax return.)

In the “old days” (prior to 2024!) it was easy to get away with obfuscating all of this if it was relatively small amounts of money.

Since 2024 your online trading account provider will be providing HMRC will data about your account - so ignore the tax stuff at you peril as they will catch up with you eventually.

*bump* to make the thread easier to find.

The “Comparison to Gilts” thread from 21 May is worth a look in the context next of BofA’s comparison to Gilt yields.

joedjoed makes a good point about which Gilt yield the dividend yield should be compared to. Worth a reread.

This says it all…

"Shareholders' equity is still set to decline until 2027E," it said. "The stock trades on 8.6x 2026E shareholders' equity, and even 1.8x 2026E total comprehensive equity. These multiples may raise concerns for some investors, even if the concerns are driven by accounting rather than economics."

The job of analysts is to explain why investors should look at economics and not accounting to understand the health of a business. Not say the economics is good, but be wary of the accounting.

IJShares - I was just about to post that link.

Have you read down to the SCRIP / DRIP bit as it’s material?

If you want ACCURATE dates or financial data then really the only place to go is the company web site.

In this case - https://group.legalandgeneral.com/en/investors/financial-calendar

If often find that financial sites don’t update their estimated dates following declaration.

Squadraazzura

I agree that the licensing uncertainty doesn’t help, but suspect that most of today’s share price action is simple profit taking - given the recent record highs.

I must admit that I’m intrigued by PHNX’s current ability to defy the overall market “gravity”.

Two days in the bounce this is up nearly 1% against L&G/MNG being down 0.5%.

As a long term holder here (my average is 570), I’m not used to this level of price support - even around dividend reinvestment time.

I’m not complaining. Just bemused 🤣🤣🤣

Trek - always enjoy your posts…

“Gonna be a volatile period again now for equities esp insurers who are sensitive to inflation and bonds…

…let’s hope US money is buying UK equities…”

Bond volatility actually presents more of an opportunity than a threat to life insurers.

Bond purchases are made on the basis of being matched to liabilities. The investment case for the bond purchase assumes holding the bond to maturity with a locked-in margin over the cash flows.

A life insurer will only sell a bond and buy another if it improves margin. There is no downside if bond prices drop as life insurers are holders to maturity by default.

There’s some good stuff on this if you listen to the Q&A from the Institutional Retirement deep dive on the L&G web site.

Similarly, inflation provides more upsides than downsides. Far fewer people buy inflation-adjusted annuities than you’d imagine. And most defined benefit schemes, whose liabilities life insurers assume through a PRT deal, cap inflation.

At the end of the day it’s all “the casino wins” stats. Which is not to say that the market understands this or prices it accordingly.

Re the 30 year Treasury yields, I was reading a couple of interesting articleslast week on the “uncertainty premium” (also called the “moron premium”) that the US is now having to pay on bonds because no one now trusts the stability of US economic policy - and another on the impact of the trade was on the USD exchange rate.

I can’t find the former, but the latter is here and well worth the 60 second read - https://www.apolloacademy.com/a-10-trade-war-premium-for-the-dollar/

The Apollo newsletter is well worth signing up to - one emailed “chart” per day supporting an interesting factoid. Absolutely free and without bringing a plague of marketing.

I read the Washington Post and New York Times most days. Most weeks there is an article on the “value” provided by UK stocks. My view is that some of that is having an effect.

Numb - in principle HMRC will catch up on dividend payments as financial institutions now pass on interest and dividend information to HMRC. This is part of the Making Tax Digital initiative.

https://www.gov.uk/guidance/automatic-exchange-of-information-account-holders#what-information-is-shared

“you should get £238 less tax unless it’s in an ISA”

Just to be pedantic - you always get the full amount of the dividend. If it’s not in an ISA or SIPP then you’ll owe the government tax on the payment at the appropriate rate for your overall dividend and taxable income.

Good point Horult. I’d forgotten about the dividend payment - even though I checked that it had been paid this morning!

Saying that, up 3% against a sector that’s down 0.5% on the day seems like more “action” than just dividend reinvestment.

I take your point Couerdelion.

I take it as interesting that PHNX is moving against the flow of the market today.

Given how the share price keeps hitting new all time highs, I get the feeling that someone, somewhere knows more than we do…

Finley1 - I agree with your points on the modular homes. It was the thesis for the investment in the first place and everything you say is true.

There is, however, deep structural resistance within the UK property market against timber frame / modular - from the perception of buyers that "brick is best" to insurers and mortgage companies punishing owners of timber frame and modular homes for "non-standard construction".

Even social housing providers weren't keen, despite the lower costs, and you'd have thought would be more focused on utility than long term investment.

At the end of the day, it's a question of who in the market is the best placed (and has the patience / energy) to fight the fight.

MadMat - the Redrow acquisition premium and restructuring costs are going to cost us dividend this year.

The restructuring will, however, strip significant cost out of the combined organisation and it's reasonable to expect the increased materials buying power to also feed through to the bottom line.

Overall, it's a good acquisition and they are executing the restructuring at pace. But I'm afraid that it's a case of "jam tomorrow".

I agree with sheltie that the trading update is pretty *meh* - not just in terms of substance, but also in terms of presentation - there's not an once of "excitement" in the language (although I take Patiencemyfriend's point that they could be playing the grey man here).

In a normal market that RNS would probably have gotten the kicking it's getting - regardless of the shorters. As I type, the price is holding up pretty well at -5%.

Saying that, we need to recognise that with a change of CEO and all the distractions of the FCA stuff, it's hard to see how senior management could have been anything other than "distracted" from the day job.

Good points by both Couerdelion and joedjoed.

The markets have punished the valuations of the life insurance sector since the Kamakwasi budget and, just as valuations were recovering, gave them another kicking after the collapse of Silicon Valley Bank.

The markets have been treating the life insurers as if they are exposed to bond prices when, in reality, they are only exposed to bond default.

Life insurers buy bonds to match underlying liabilities. The investment case for those bond investments is that they provide a known margin against know liabilities and are held to maturity. The investments are only sold if it provides an upside to the life insurer - i.e. they can make a larger margin by trading the underlying investment. There's a good segment on this stuff in the Q&A that L&G did in their 4 Dec capital markets event (https://group.legalandgeneral.com/en/reporting-hub/Capital%20Markets%20Events).

The IFRS17 accounting changes also haven't helped as - when combined with the requirement to mark to market - it makes the companies look like they're losing money.

The net result is that the life insurers have been trading on a 4-5% risk premium against 2%(ish) historically.

I do sense a bit of a rerate going on - partly because of investment rotation from the US and partly because the CEOs/CFOs have been better at communicating the underlying investment cases.

I agree with Couerdelion that a comparison to bond yields constrains the upper share price bound, but even a rerate from a 9% yield to a 7% yield would get the price to around £8. joedjoed's insight on what to rate against is insightful and, if we assume a comparison against 4% bond yield, then 7% still provides a 3% risk premium.

So, personally, I wouldn't be surprised if we could get to £8. But that's probably the upper bound of what can be expected on current performance.

Other viewpoints appreciated :)

Hey zac0_4 - lovely to see you back posting again.

Interesting what you say about performance YTD.

I know we talk about the life insurers being bond proxies, but that very much seems to be holding at the moment. The life insurers have been undergoing a (long overdue and quiet) rerate - with PHNX and AV. doing particularly well. As a result, I’m up 6% YTD on a portfolio of 30% tech funds; 5% growth shares; 60% dividend payers and 5% (near) cash.

Personally, I think that Simoes is (very quietly) doing a better job than is immediately apparent. I think he’s where Amanda Blanche was at Aviva at this point in her tenure.

He has a plan and he’s executing it.

But it’s an oil tanker of a company and change takes time. If you take the Proprium deal, it probably took three months to take a view that such a deal was needed; three months to find a target and six months to acquire it.

He was probably set on getting rid of the house building when he arrived.

I that people aren’t fans of buybacks, but done at scale they’ll inevitably feed through to the share price. And he’s doing it at sufficient scale to have an impact.

The FT article - https://www.ft.com/content/5b056d05-e057-4845-be04-1d650490ad79

(I don’t subscribe and can access.)