Member Info for TheTrotsky

Crystal, You can't look at the recent performance of AV's share price in isolation to the rest of the market. Most, if not all, main market shares are down because of the current economic travails (not helped by Boris's mob now wanting to get into a trade war with the EU). If you look at LGEN it's currently trading at c237p and a dividend yield of c7.8%, whereas AV is currently trading at c395p and a dividend yield of c7.3%. Today is the first day that the yield gap between LGEN and AV has fallen below 0.5% and it may well be the case that some PIs are selling today in the mistaken belief that they will receive the capital return next week as well (they won't). How about 6) The MMs are dropping the price to spook PIs into selling so that they can pick up the shares, and the capital return, on the cheap? Do you remember the sharp price drop after the initial announcement and subsequent rebound? It was very odd and never seemed to be justified beyond the MMs shaking the tree. I've decided to hold and, as you say, see what happens when the dust settles. I'm in for the dividend and while the dividend remains at, or above, current levels I'm happy.

Last one out switch the lights out. It would be easier to just burn your money than invest in the UK; lot less painless.

Warthog, as if we didn't need more bad news, the masters of the universe, the friends of industry, the people who want to grow us out of this looming recession, our most benevolent Conservative government have decided that now is the ideal time to start a trade war with the EU! You couldn't make it up. Is theer any grey matter in this Conservative mob? They've probably got all their money tucked away offshore and are shorting the UK because they ain't doing it any good.

Personally, I don't sit around on the off chance that I might get an RNS after hours to say that there is going to be a fund raising and that I've got literally a couple of hours to make a decision before bidding closes, whilst Johnson & his cronies have probably know about this for weeks and are sitting comfortable. Totally unacceptable.

I for one will be voting to sack Neil Johnson and/or vote down his remuneration package the first opportunity I get. I am so ****ed off about this; words fail me. Should have done this fundraising immediately after the Q4 update not in the teeth of the current market turmoil. Fcuk you Neil Johnson.

... and, as always, the market ignores because of the ongoing concern about cash, recoverable debts and transparency ;-)

I am holder but am often left to wonder why ;-)

Olderandwiser, if you are looking for high yielding dividend shares, this is a good site to start:

https://www.dividenddata.co.uk/dividendyield.py?market=ftse100

You can look at FTSE 100, FTSE 250 and Investment Trusts, and sort from highest to lowest etc. Be aware that some of the data may be out of date and that special dividends can sometimes skew the yields. I'd always doublde check the stated dividends on (say) the Hargreaves Lansdown site:

https://www.hl.co.uk/shares/shares-search-results/d/duke-royalty-ltd-ordinary-shares-npv

Having bought in February 2021 and sold in April 2022, making a capital/dividend retrun of about 33%, I can't complain but I can't help but think that TEP is way overvalued (again).

I've been here before. I originally bought TEP at c357p back in early 2005 and sold at c1,260p in mid-2013 (missing out on the subsequent rise to c1,900p later that year). So, from a timing perspective (at least), I don't have pedigree ;-)

I'd like to think that TEP has legs and that there may be an opportunity to get back in but I'm concerned about the dividend cover and the PE ratio.

Even on an adjusted basis, by my estimates, the dividend cover hasn't exceeded 1.11x for the last six years (including 2022 which I'd estimate at about 1.07x based on the most recent RNS). There really doesn't seem to be any headroom to increase dividends further and they probably ought to be considering reducing them to c40p (1.5x dividend cover) if they were being prudent. I'm not saying that TEP will reduce its dividends (it seems likely that TEP will be looking to increase them again for 2023) but such a high payout doesn't give TEP any financial cushion (particularly if they see a significant increase in bad or slow paying debts as a result of the energy price rises).

My concern with the PE ratio is that TEP is an eclectic mix of businesses that don't make it a prime acquisition target. Sure competitors might (in more normal times) want to cherry-pick its customers but I can't see a utility company or (say) a telecoms company ever wanting to acquire the whole company. TEP makes sense as a standalone business but not as an acquisition target and, as such, does not warrant any buy-out premium. It's currently trading on a PE ration of c38x (on an unadjusted basis) and c27x (on an adjusted basis). The adjusted PE ratio is likely to drop to c26x when the 2022 results are published and, if we were to assume that EPS was to increase by (say) 20% (in line with the expected customer growth rate) in 2023, it would appear to be trading on a PEG of c1.3.

Anybody care to discuss? I'll be honest. If I'd done this analysis back in February last year, I'd probably not have bought and would have therefore missed out on a c33% return but this share does have a history of getting ahead of itself (2013) before reality sinks in and the share price hits the doldrums.

As to where you kind find other shares offering a 7+% dividend yield, I suggest you actually do some research. There are actually quite a few (good quality) shares offering that sort of yield and more at present and they are not difficult to find.

Olderandwiser, my issue is that you shouldn't have been able to pick up DUKE on the cheap in a discounted fundraising in the middle of a market crash. Less than a month ago this was trading at 42p+. Why didn't they do the fundraising then? Why such a steep discount to the mid-markt price on 9 May? This is not a sellers market. So, forgive me if I'm not amused.

Given where the share price was only a month or two ago, doing a cash raise now at 35p in the midst of a market crash to (supposedly) fund further expansion is unacceptable. You have to question what the directors are thinking and whether they are competent to remain in role.

Note to self to remember to vote down the directors' remuneration at the next AGM. This is not acceptable. To say that I am irritated is an understatement!

The butterfly effect (or chaos theory) basically says that even "miniscule" changes to opening parameters can have major effects e.g. just the flap of a butterfly's wings could in theory, however improbable, cause a hurricane. The assassination of Archduke Franz Ferdinand, which triggered the start of WW I, might never happened if his motorcade hadn't take a wrong turn (the initial assassination attempt failed and one of the assassins, Gavrilo Princep, had retreated to a cafe to consider his next moves when we just happened to notice the motorcade reversing back down the street); a seemingly small error with major ramifications.

Also, ever heard of the laws of conservation? In science you have the conservation of energy and the conservation of matter; basically energy and matter can't be destroyed, just transformed. Likewise, in financial markets, you have the conservation of money. Money can't be destroyed; just transferred from one person's pockets to another's ;-)

When markets crash, it's not the money that disappears but, instead, the intangible value of financial assets, quantified in monetary terms, that disappears. Financial assets can rise and fall in value without money even necessarily passing hands; the opening and closing auctions being classic examples (asset prices are bid up or down without money actually passing hands until the opening/closing deal is struck)

Ever heard of the Butterfly Effect? Mankind can't even predict the weather with absolute certainty, despite using some of the largest supercomputers in the world! Each quarter the BofE produces a multiplicity of financial forecasts, all based on different variables, and the "average" is selected to be the BofE "forecast" (not because economists consider it to be the most likely outcome but simply because it is the "average"). With the benefit of hindsight, the models are highly accurate but predicting, with any accuracy, what variables will change in the future and by how much is nigh on impossible because even the smallest, seemingly insignificant event (the "butterfly") can have an effect out of all proportion to its size.

"You'd think so".

A buyer always has an effect, whether that be large or small. Without a buyer, sellers are just pushing against an open door. Just because the share price has been dropping, like the rest of the market, you can't assume that it's having no effect at all (it would be running to contrary to all market norms; when buyers exceed sellers, the price rises until buyers and sellers are in equilibrium, and, likewise, when sellers exceed buyers, the market falls until buyers and sellers are in equilibrium). It may not always feel like that but that's the general principle of supply and demand in action.

No this isn't the US but, nevertheless, a large percentage of LLOY stock is held by overseas investors and management has to pay some heedance to their wishes.

As to whether UK stock prices benefit more from dividend hikes, I wouldn't personally disagree with you but we might now find ourselves in the minority; only a few months ago a slew of financial journalists, and their adherents, were berating UK companies for being so wedded to paying (progressive) dividends!

Bottom line, I think if we had been in a bull market for the last 6 months LLOY's share price would have reacted positively to the recent share buy backs but the market has been sliding and is now positively bearish, and the fact that the share price hasn't bucked the downward trend does not evidence that the buy back isn't working. Plenty of my high paying dividend shares are being just as equally, if not more so, punished in this market. Yesterday, there didn't seem to be any hiding place; even Shell, a company that I don't own, who had just announced record quarterly propfits still slid c3%!

There are various reasons why companies do buy backs in preference to paying additional dividends; some reasons are perhaps more ethical than others. However, we should't lose sight of the fact that LLOY, like a lot of FTSE companies, now has a large number of international shareholders and US investors in particular favour buy backs over dividends (the tax treatment of capital gains in the US is a lot more favourable than income receipts). Therefore, whether the management wants to or not, LLOY are forced to strike a balance between buy backs and dividends to try and placate all shareholders, not just UK-based shareholders. Whether the balance is right is open to debate but, given that a fair valuation of LLOY in the event of (say) a takeover would currently probably be in excess of (say) 60p, buying back at c45p would seem to be "good business" (if not now, for the future).

When the share price is falling it's (too) easy to argue that the buy backs are having no effect but, given the current general market demise, surely the real question should be what would the share price be absent the buy backs? Without a willing buyer (LLOY) one can only assume that the share price would be even lower than it is presently.

"... particularly in a rising interest rate environment that favours financial stocks ..."

You could fool me after the last few weeks ;-) The market has been hammering all stocks alike. The Bears have come out to play!

I think if it goes for a second listing in the US I may consider selling. I have another share that has a dual listing and it's been a real disaster. Not only has the US market decided to re-rate the whole sector since the secondary listing but my broker, AJ Bell, now only (normally) allows me to trade the share on the US market and all trades have to be done by phone (no doubt incurring an additional telephone trading charge). AJ Bell argued that this was all in my best interest!

For the last time (we've done this numerous times before), the capital return is not taxable inside an ISA/SIPP.

Outside an ISA/SIPP wrapper, the capital return is potentially liable to capital gains tax (the dividend allowance does not apply to returns of capital) but, for most, no capital gains tax will be payable because (a) it's treated as a part disposal of your existing shareholding and a proportion of your original purchase cost can be offset against the receipt for capital gains tax purposes (and the purchase cost of your of your remaining shares is reduced by a corresponding amount for any future disposals), and (b) the availability of an annual capital gains tax exemption of £12,300 i.e. your receipt less the deemed cost of acquisition would have to exceed £12,300 (assuming that you have no other gains/losses for 2022/23) before any capital gains tax would be payable.

Meanwhile LGEN's current dividend yield has increased to c7.8% and AV's dividend yield has increased to c7.2%; AV is still trading at a c0.5% yield premium to LGEN.

In this current market, AV may drop to £3.50 post consolidation but, if it does so, it will only be dropping in line with the rest of the market because there would be absolutely no logic to AV trading at a dividend yield of c8.3% whilst LGEN continues to trade at dividend yield of c7.8%!

Personally, I'm hoping that AV does not drop to £3.50 because if it does it's likely that the general market will have dropped by another 10-20% from today's lows. Enjoy the pain!