Member Info for tophat

First of all the 2019 final dividend wasn’t taken from anyone as it was never formally declared!
The board announced their recommendation to pay a final div for 2019 of 2.25p but that was always subject to shareholder approval at the AGM on 21st May 2020. Following the PRA’s request and Lloyds announcement of the cancellation of the dividend, the company removed resolution 17 dealing with the declaration of the dividend, from the AGM. It was just a recommendation.
The company had announced that the XD date would be 16th April 2020 with the payment date 27/05/2020, again subject to shareholder approval, but they never took effect. Had they done so then to receive the dividend a shareholder would have had to hold until 16th April 2020 at which time the SP should have dropped by the 2.25p to take into account the fact that the company was worth less than it was the day before. However the 2.25p dividend should have made up for that.
As there was no XD date the SP didn’t fall by 2.25p on the 16th. The closing SP on the 15th April 2020 was 29.75p and 29.44 on the 16th. Shareholders who sold on or after 16th didn’t take a hit to the SP so certainly shouldn’t be entitled to any payment in relation to the cancelled dividend.

Hi Bamps21

I’m sorry to learn of your problem with Barclays

I would write to Barclays giving details of the facts, the timeline and your repeated attempts to obtain answers. Point out that their mismanagement caused you both financial loss and additional expenses. Ask them When and How they propose to resolve the problem? Also point out that if they can’t propose a reasonable solution within a reasonable timeframe you will refer the matter to the Financial Ombudsman Service. They have to respond within 8 weeks and if you don’t like their reply, refer it to FOS.

An interesting comparison

HBOS caused Lloyds over £52bn in losses, to which the costs and revenue lost from the State aid disposals have to be added. On top of that they have taken almost £22bn in PPI.

At the close of business on 17th September 2008 (the day prior to the HBOS takeover announcement) Lloyds SP was 279.75p. A Lloyds shareholder who took up their full allocations in the various capital issues since would now have approx 5.58 times the number of shares but would have paid an additional 228..46p per each original share so the pre takeover breakeven SP is 91.14p

On Friday Lloyds closed at 58.09p so anyone who bought at that 279.75 price would be down approx 36%

In contrast Barclays bought profitable parts of Lehman Bros at a knock down price and have taken a PPI provision of almost exactly half of Lloyds at £11bn

Barclays closed at 317.75 on 17/09/2008. A Barclays shareholder who bought at the closing price on that date and who took part in their capital raising would have 1.25 times the number of shares at a cost of 185p. So their breakeven point is 291.2p and they would be down approx 40% at Fridays closing SP of 173.44p

I think the main reason for the difference is the level of debt and leverage ratios of the two companies (£9.4bn and 56% for Aviva, £1.2bn and 20% for L&G). In uncertain times (Brexit, trade wars, slowing global economic growth) many investors see lower leveraged companies as safer and at over 5% L&G offers a good return as well.

Aviva announced that they intend to reduce the debt by another £1.5bn by the end of 2022, I would prefer that they speed up the debt reductions rather than any new share buy back.

I have been an Aviva shareholder for almost 10 years now and with an average of under 300p I've got a reasonable capital gain and a return of 11% (with a full year div of 30p) so I can't really complain.

Hi Nige_W

Does it matter how the massive future Divis will be distributed?

The preception of how the dividends can grow does matter!!!

TW had announced that their ordinary dividend policy for the next five years would be an increase from 5% to 7.5% of net assets. The ordinary dividend represents onbly a small proportion of the overall dividends so tying the special to current levels would mean that for the next five years dividend growth would be dependant on net asset growth. Since this contributes to only a small part of the current dividend then growth over the next five years would be severely limited.

Mr Redfern and the analysts present knew this which is why he made the point (Were it trivial then why mention it at all?)

Without that clarification then i’m sure that the SP today would be lower than it is!

Hi Bamps21

The following is a quotation from the Capital Markets day transcript and a link to the document. The quote is from the bottom of page 14.

“One word I think we may have got slightly wrong that I've just seen in a couple of notes is that people have taken the flag that we expect dividends – special dividends to remain comparable to the levels in 2018. We probably should have put ‘at least comparable’. That doesn’t mean that it’s definitely going to grow but we are not trying to signal to you that that’s a cap if you see what I mean.”

https://www.taylorwimpey.co.uk/-/media/Head%20Office/IR%20Comms%20images/2018/Taylor%20Wimpey%20Plc%20-%20Capital%20Markets%20Day%20-%20Combined-Final.pdf?la=en

PCIa

At the Capital Markets day Peter Redfern pointed out that the statements you quote had a mistake and that they meant to say that "... we expect special dividend payments to remain AT LEAST comparable to the 2018 and 2019 payments" i.e. they are not ruling out increases to the special dividend.

moviebuff It depends on who you have your account with. Some do allow scrip dividends but others, like iii, don't but offer a dividend reinvestment option instead. However this defeats the object of obtaining new shares without having to pay the fees. Ask your broker.

Pete Redfern gave an update on the leaseholder issue in the Q&A session following the April 2018 trading update. TW have signed agreements with Freeholders representing about 94% of the affected customers and are confident of either signing up the remainder or providing another solution within the £130m provision already made. During the capital markets day presentation he made the point that taking responsibility for the situation has been a positive for the company in that councils and government bodies now have greater trust in the company, making it easier to deal with them.

Of course a crash is on the way, even Peter Redfern predicted one during his capital markets day presentation and that is just one of the challenges which TW will face. However the presentations given were about how TW are positioning themselves to cope with these challenges. Including - The entire land bank is paid for entirely out of equity (no forced sell offs at rock bottom prices). Debt is only used for working capital (in a slump you need less working capital hence less debt) Diversifying revenue streams Creating partnerships to mitigate risk and leverage the partners capital Testing alternative products so they understand the market dynamics and financial implications to see what works in case they are necessary... I would recommend that any investor watch or read the transcripts of those presentations.

The following is an extended re-write of something I posted on the iii board a few months ago. Lloyds policy on dividends/capital distributions has been clear for some time. They want to pay a �progressive and sustainable� ordinary dividend which means that they want each year�s ordinary dividend to be at least as high as the previous year, preferably with an increase which at least matches inflation. They do not want to have to cut the dividend in the event of a downturn. The company wants income investors to be reasonably confident about the cash returns they are likely to receive so they don�t want to pay a high dividend one year and then have to scale it back the following year. A buyback is a way of returning capital to shareholders without increasing the dividend which the board would have to try and match in subsequent years. It also gives Lloyds the option, if necessary, cancel the buyback while maintaining the cash dividend. Lloyds have repeatedly made the point that they will decide what to do with any surplus capital after each year end when they have all of the information. As pointed out in the 2017 results presentation they are looking to grow organically rather than by acquisition but if the right opportunity came along, in an area where they are under represented, like MBNA, then they would give it serious consideration. On the dividend v buyback issue, George Culmer said that now that the ordinary dividend is at a more normal level then a buyback seems more appropriate.

If you use the figures from Taylor Wimpy�s own web site then the closing SP on 30th May (the day before it went XD) was 201.20. Taking the 10.4p div into account the equivalent SP would be 190.8 The closing SP today was 187 which is only marginally lower than the 187.85 it closed on 9th April following the previous XD on 05/04/2018 and that dividend was only 2.44p. Attempting to read anything significant into the fall so far would be misleading. https://www.taylorwimpey.co.uk/corporate/share-price-centre/share-price-history

There seems to be much confusion about what happened so may I offer this very simple but totally unrealistic analogy which I hope will clarify matters. Suppose there is a company with 1000 issued shares which pays off all its debts and its only asset is �1000 in a bank account. A shareholder with 100 shares has a holding worth �100. Suppose now that the company returns �500 to shareholders. Now there is only �500 left in the bank but there are still 1000 shares so each share is now worth only 50p. However the shareholder with 100 shares which had a value of �100 now has 100 shares worth �50, however he also has �50 in cash so the total value is exactly the same. Now suppose the company has a 1:2 consolidation at the same time as the cash payment. The shareholder who had 100 shares now has only 50 but as there as there are now only 500 in total each one is worth �1 so he still has �50 worth of shares plus the �50 in cash. From memory National Grid paid out approx. �3bn to shareholders and cancelled the same value of shares. The overall net result should be zero. For those wondering why a company would do this when it doesn�t affect the overall value it makes it easier for shareholders to make multi-year comparisons of the SP and other financial data because they don�t have to factor in the return of the cash in their calculations.

Remember also that the company paid a special dividend of 84.375p per share on the original holding. In effect they took away 1 share in 12 but paid shareholders �10.125 for each share they took. At todays SP of 887.8 that seems like a good deal.

My average is higher but if I include the dividends I've received then I'm still in profit so not worried. RDI was one of my larger holdings so invested in Taylor Wimpy and HSBC to diversify rather than average down. However it's getting to the stage where I'm considering adding more RDI. Regards

Hi Gerry65 Yes the results are good. The interim dividend announced was actually 1.35p up from 1.30p last year. The company has also announced a share buyback to cover the shares issued in relation to the scrip dividend. The dividend dates have not yet been announced but they said would be available on the company web site shortly Regards

Grayling Cancelling the shares held in treasury would have no beneficial effect at all for shareholders. As has been pointed out they don�t receive dividends but also they have no voting rights, play no role in capital raisings such as rights issues and do not count if the company is wound up. Whether or not the shares are cancelled makes no difference to shreholders. However it does make a difference to the company if they want to issue shares as bonuses or as part of an incentive scheme. If shares are held in treasury then they can be issued without going through the formal process of creating and issuing new shares. Of course, once issued from treasury any new shares would be entitled to distributions and have voting rights so they would then affect existing shareholders but while they are in treasury they might as well not exist from a shareholder point of view.

HSBC can't do a buyback any time they want! They are about to issue additional AT1 capital as part of the build up of MREL/TLAC which most banks need over the next 5 years or so. The rules prevent a buyback programme during a capital issuance. HSBC need to get the AT1 issue out of the way before they can restart the buyback.

Hi CarpeDiem1 This is a summary of what Tom Stoddard, Aviva Chief Financial Officer said about the pref shares. �One of the things we are looking at is the possibility of a liability management exercise concerning one or more tranches of preferred securities issued either by our General accident subsidiary or Aviva PLC. The ratings agencies don�t count them as capital any more and they likely will not count as capital for Solvency II purposes from 2026. So they no longer serve their originally intended purpose. Essentially they are now just the equivalent of very expensive senior debt with coupons that are not tax deductible� So while we haven�t taken any decisions we note that these securities are subject to cancellation at par upon a capital reduction voted on by ordinary and preferred shareholders voting as a single class... One of the things we are considering is how best to balance the interests of ordinary and preferred shareholders� If they are to be cancelled I would expect Aviva to offer above par for them as Lloyds did when they started redeeming their ECN�s. The note holder court case and the misleading and bad publicity around it may well have meant that those who waited for the court ruling lost out compared to those who accepted Lloyds initial offer.

Sorry CarpeDiem1 I was mistaken. Aviva do have the right to cancell the pref shares at par (with shareholder approval) and they will cease to count as regulatory capital from 2026 which does explain the drop.