Member Info for tichtich

Same here. I bought last week at 37p. Only 2% of my portfolio, which is relatively small for me, as I usually start at 3%, so I might add at a lower price. I probably won't wait for 30p though. Unfortunately I'm not that patient!

Yes, it probably suffers from being a new trust (and a small one). It still has properties being developed, and others unlet I think. It's hard to know what it will be like when it's reached a more mature state. I generally prefer to invest in things with a track record. I also usually go for companies with longer maturities on their debt, and preferably interest rates that were fixed when they were low. But I thought I'd make an exception as LABS is selling at such a big discount to NAV.

Since we're comparing 😉, I currently have 122k divided between ISA and SIPP, the following 20 different shares, each category listed largest to smallest...

Renewable energy: UKW, BSIF, GSEO, AERS, GSL

REITs: RESI, AHH

Financials: LGEN, CSN

Shipping: GSL, DAC, STNG, INSW, SFL, SHIP

Commodities: JLP, CAML, MOS

Midstream (ETF): MLPD

Digital infrastructure: CORD

Hi. 58K sounds like a lot to me, but of course I don't know how much you have invested in total. I have about 6% each in CSN and LGEN. (Those are my only investments in the financial sector.) If you have £1m invested, then I suppose your CSN position will be about the same % as mine. 😉

Good luck.

I use this site for copper and other commodity prices:

https://tradingeconomics.com/commodity/copper

Copper price is in $/lb, which suits me. It just got back above $5/lb.

I'm just sitting and waiting. My break even was only around 7p, as I luckily sold on the way down and bought back cheaper. So now I feel like I can just relax and enjoy the ride. 😎

Well, at least we now know that GSF can make money from solar eclipses. When's the next one?

Increase is a little above inflation, but the dividend hasn't kept up with inflation over the last 3 years. I can't complain, as I only bought a few months ago, but I hope it keeps up with inflation in future. I suppose we should measure it against European inflation, and then hope that the exchange rate adjusts for any purchasing power differential.

You can't rely on the yield figure from DividendMax. I suspect they base it on their own automated estimate of the next year's dividends, and their robot probably doesn't realise that this year's total dividend is already fixed at 10p.

I usually do my own yield calculation.

@zac_04

' - the US stockmarket, which you keep refering to, has gone up 18.5x over the same period'

But that's irrelevant to the point I was making. You claimed or implied that the price of LGEN was falling over the long term, and I was responding to that.

'" . . . US stocks on the whole are significantly overpriced . . . " - maybe, maybe not. Some of the so called tech stocks are producing mind boggling returns'

Is that earnings or total returns? I assume the latter, since they have high P/E ratios (so relatively low earnings). But high total returns to date don't count against the claim that they are overpriced. They may have high total returns BECAUSE they're overpriced.

We need to consider how much of the price increase to date reflects fundamentals (actual improvements in the companies) and how much is just market sentiment leading people to overpay for shares. The former constitutes genuine returns; the latter is just temporary paper profits which will not be sustained over the longer term (unless you successfully time the market by selling when shares are overpriced and buying back when they normalize).

We're back to the point that your approach ignores the fundamental value of companies, and bases investment decisions on how much their share prices have risen in recent years. That's a recipe for buying overpriced shares. It means that shares look most attractive at the peak of the market cycle, just before prices start falling!

' - probably do what I've always done. Sit tight. One of the reasons I maintain a (at present) 17% exposure to dividend payers is to have some income coming in in the event of a market correction.'

I'm glad to hear it, though I think you've said you're planning to sell your dividend payers.

@zac_04

Yes, good to have debate. And no one knows what the future will bring. I'm trying to go for a strategy that will produce less volatile returns.

"However, if a stock price shows a continuous decline over the long term it would be foolish to ignore"

Your idea of long term seems to be the last 10 years. Over the last 30 years LGEN has gone up 6x.

Anyway, I don't judge by past share price movements. As a long term investor I try to value companies by what they're really worth (fair value), not what a possibly irrational market has been willing to pay for them in recent years.

Suppose LGEN's share price didn't change for the next 30 years while its dividend went up in line with inflation of 2.5%. It would then be on a yield of 18%. Why should I assume that the market would price it so ridiculously cheaply? And if it did, I just wouldn't sell. I would continue holding for the dividends for the rest of my life, and hopefully my inheritors would do so to. If I need more cash, I would sell something else that was sensibly priced.

On the other hand, US stocks on the whole are significantly overpriced. It would be rational for those prices to fall somewhat. I'm curious to know what your reaction would be if there's a crash, with your portfolio value halving and then taking years to recover. I'm not saying that will happen, but it's a real possibility.

@zac_04

Please read my original comment again. My hypothetical was that you hold the stock forever, so the market price doesn't matter. I then went on to talk about selling in the long term. Short term stock prices don't matter if you're holding for the long term. The stock price only matters when you sell.

I assure you, I don't see LGEN through rose tinted spectacles. I'm not recommending it to anyone. It would be a great investment if the dividend actually keeps up with inflation forever, or at least for the very long term, but I'm by no means confident that it will do so, or even come close.

My point was really the general one that you don't need real growth to get good returns, as long as you have a good enough dividend.

Are you sure it's not you who sees the US stock market through rose tinted spectacles? 😉

See the table 'Average Stock Market Returns Per Year' here:

https://tradethatswing.com/average-historical-stock-market-returns-for-sp-500-5-year-up-to-150-year-averages/

For the last 20 years and longer periods, inflation adjusted returns were under 8.6%.

@zac_04

I'm taking about much longer term than 10 years. The last 10 years have been exceptional.

Current yield is about 8.6%. In principle, if you hold forever and the dividend rises with inflation forever, that's an 8.6% p.a. real (inflation adjusted) return. That's better than the long term average from UK or US stock markets (and probably any other stock market).

Of course, no one is going to hold forever (though I suppose you could pass the shares down to future generations). However, other things being equal, long term you would expect the share price to rise with inflation if the dividend does (and if it looks like the dividend will continue doing so).

It may be that the reason the yield is so high (share price so low) is that the market doesn't expect the dividend to be maintained indefinitely in real terms. Or it may be less rational considerations. I think many investors are overly fond of growth stocks over dividend stocks. That may explain why the share prices of dividend stocks have suffered since interest rates went up, when higher interest rates are actually worse for growth stocks (other things being equal) because their earnings tend to be further in the future, and therefore must be discounted more.

"it seems most shares fall further then the divi"

I dunno. My CAML shares have only dropped half the amount of the div today. (Maybe that's because the price of copper is up today.)

Eccles, I think your mate Warren is having you on. Berkshire Hathaway has been sitting on a big cash (or equivalents) pile for a while now, with US stocks being expensive and cash earning 5%.

The one drawback I see is that the dividend has continued rising by just 3% a year, despite inflation being much higher over the last 3 years. I suspect that will continue if we have more high inflation in future. That's why I recently reduced my holding by 1/3, though I must admit I'm thinking of buying it back again (at a slightly lower price), as I'm having difficulty finding anything else I want to buy at the moment, especially with most other shares prices having gone up.

I would assume that the 0.69 dividend cover (if it's correct) is based on statutory earnings. But those are based on accounting rules that don't necessarily do a good job of estimating profitability, especially for some sorts of companies. I believe LGEN's statutory earnings were significantly reduced last year because of a fall in asset values. But that can just be the result of market ups and downs that don't affect the company's ability to pay dividends.

To clarify, the columns are:

Year

Dividend (amount in pence)

Annual % (% increase from the previous year)

Total % (total % increase from that year up to 2024)

Annualized (annualized % increase from that year up to 2024)

I note that dividends have grown about 5% per year in recent years, but the rate of growth has been much higher in the past. It would be interesting to compare with the CPI (or RPI) increase over this period, but I haven't got those figures to hand. I'll have a look for them if I have time. I think we can safely say that the dividend has fallen behind inflation in the last 3 years (with inflation being very high). My main concern is whether it can keep up with inflation if we are going to into a period of significantly higher inflation than pre-Covid.

One thing that's encouraging is that the dividend did very well in the aftermath of the Great Financial Crisis of 2009. Will it do well if we have another big crisis?

I thought it would be interesting to look at LGEN's dividend history, so I did a bit of analysis in Excel. The basic dividend figures are from dividendmax.com, and they go back to 2006. I'm not sure what the table data will look like when it's pasted here as text, so I'll comment on it in a separate post.

Year Dividend Annual % Total % Annualized

2024 20.34 5.01% 0.00% N/A

2023 19.37 4.99% 5.01% 5.01%

2022 18.45 5.01% 10.24% 5.00%

2021 17.57 0.00% 15.77% 5.00%

2020 17.57 7.00% 15.77% 3.73%

2019 16.42 6.97% 23.87% 4.37%

2018 15.35 6.97% 32.51% 4.80%

2017 14.35 7.09% 41.74% 5.11%

2016 13.4 19.11% 51.79% 5.36%

2015 11.25 20.97% 80.80% 6.80%

2014 9.3 21.57% 118.71% 8.14%

2013 7.65 61.05% 165.88% 9.30%

2011 4.75 23.70% 328.21% 11.84%

2009 3.84 -5.42% 429.69% 11.76%

2008 4.06 -31.99% 400.99% 10.60%

2007 5.97 7.57% 240.70% 7.48%

2006 5.55 N/A 266.49% 7.48%