Member Info for zac0_4

If your holding is held outside of an ISA or SIPP you are still liable to tax on dividends (over annual div allowance) even if your have auto-reinvest (scrip) in place. The only benefits are a saving in dealing and stamp duty costs

Lending

The 2 points your raise are totally separate issues!

Hi Crossley. Still here! This is my last individual share dividend paying holding. I hold another 5 dividend payers but they're investment trusts.

Here's a rough breakdown, by type, of my portfolio split:

Global equity managed funds 38%

Individual non-dividend paying shares 4%

Global equity tracker funds (inc factor funds) 40%

Dividend payer 17%

Cash 1%

Ytd return

Dividend payers +3.4% (of which L&G is -4.6%!!)

Rest of portfolio +16.5%

Total portfolio return ytd +14.3%

Hope you're investments are doing ok. Good luck!

Well, I'm firmly in the camp that buybacks don't offer me, the shareholder, any additional value.

Cpt H - Not sure what timescale you're looking at to achieve your dividend goal. If medium to long term I feel you'd probably be better building up capital value elsewhere then buying your chosen dividend payer nearer the time.

For example an investment made here 5 years ago has returned +15% with dividends reinvested. A simple global equity tracker fund, L&G International Index Trust Acc, has returned +81% over the same time frame.

I'd concentrate on capital appreciation in the short term.

WeirdPal "All part of a balanced portfolio . . ."

Then all you need is one global all cap index fund. That will provide you with a very balanced portfolio!

WeirdPal "Recommend people stick to index/ETFs if they can't handle volatility . . . "

That would have produced a 36% outperformance vs BP over a 12 month period had you kept your money in a simple global equity tracker fund.

That's where my money is!

WeirdPal "Recommend people stick to index/ETFs if they can't handle volatility . . . "

That'

" . . . govt to make changes for example force pension firms to hold 20% more UK stocks easy . . . "

No, thank you. The less interference from the government the better!

Nightpusher - " . . . . Large capital gains tax bill does not dampen my joy, though tax rate will probably be 20% next year . . . "

I'm anticipating a doubling of cgt rates on shares from the end of October and have been selling down profitable holdings, held outside of my isa / sipp, since early June. I've also found that if you have largish gains then irrespective of you being a basic rate tax payer you'll end up paying the higher rate (I anticipate 40%) on some of your gains.

As tempted as I have been to top up here, or any other of my dividend holdings, I've managed to resist the temptation. Dividend payers currently account for around 17%, by value, of my portfolio having been brought down from around 30% a couple of years ago.

Although I only have a small amount of free cash in my isa currently, as I prefer to be pretty much fully invested, what cash I do have available has been deployed in, what I hope (not a good strategy, hope!) will be a good recovery play!

I don't view L&G as an insurance company.

" . . . people are easily spooked as they think shares just go up in a straight line . . . "

They don't go down in a straight line either. Just look at the 28% drop in LGEN's share price since early 2022!

Well the last ex-div date was 25th April. At close on 24th it was trading at £2.48. Today it's £2.26 almost 9% lower! I wouldn't call that much of a recovery. Would you?

" . . . At least only 3 weeks to x-div . . . " - and, no doubt, another drop in the share price!

It's the chance you take with individual shares. I've just taken a look at year to date performance and, including the dividend, total return to date from LGEN is -1.8%.

My 2 UK dividend paying investment trusts have performed so much better. Merchants Trust has delivered a total return of +10.3%, and Henderson High Income +11.7%

Don't forget the primary reason the LGEN dividend yield is so attractive is because of a falling share price!

Retirment - "Zac0_4 ffs £40k is nothing you cannot retire on that !! do a 1 million pot and a take out of £50k PA net on each product . . . "

Here you go. It's not just about the drawdown element it's about the wealth building element as well. So, I'll use your 15% cagr and a maximum annual savings rate of £20k pa as that's the ISA limit to build up the £1.0m pot you require.

You would hit the £1.0m mark in year 15 in your ISA. At the end of year 15 you'd have £1.094m.

In your sipp, saving the same £20k pa, you'd hit the £1.0m mark in year 14. At the end of year 15, as per the ISA, you'd have a pot worth £1.368m. So, almost £275k more.

Now the drawdown. To achieve your £50kpa nett drawdown figure would mean an annual drawdown from your ISA of £50k. Fot the same nett figure to be achieved from your SIPP you'd have to drawdown £55,866.

At these withdrawal rates and assuming your 15% cagr continues the SIPP will always stay ahead value wise.

If you question the figures, please provide some data yourself to back up your claims.

Retirment - let's use your 15% annual growth rate as an example.

You put £20,000 into your isa and enjoy a 15% cagr. At the end of 5 years you'll have £40,200 tax free

You put £20,000 into your sipp. You enjoy the same cagr as you're invested in the same holding as your isa. At the end of 5 years your investment has grown to £50,250. Assuming you are a basic rate tax payer, but have already used up your annual tax free allowance, after having paid all tax due your nett return is £42,712 - so, you're £2,512 better off.

You do the maths.

'If you’re a basic rate tax payer the ISA wins . . . '

Not by my calculations. Perhaps you'd like to explain where i've gone wrong in the example given in my previous post.

Retirment - here's my calcs. Over the last 5 years LGEN's sp has declined by over 15%. So, over the last 5 years the total return, with divs reinvested, is +24.35%

You put £20,000 in your isa 5 years ago. Today it is worth £24,870

You put £20,000 in your sipp 5 years ago. HMRC top it up to £25,000. Today it is worth £31,087.50. You take 25% tax free. The balance you pay 20% tax on. You take out, after tax, £26,424. So, you're 6.25% better off than the isa investment.

Let's leave it there because I can't see us agreeing. I might add that I hold both an isa and sipp.