Member Info for zac0_4

Rachel Reeves, Shadow Chancellor, on TV interview this morning was saying Labour was calling for a wt on North Sea oil producers.

No smoke without fire and all of that!

Trevor321 - "growth stocks (companies that have never made a profit only a promise of one to come somewhere in the future)"

Well that's not my understanding of a growth stock! I've always viewed 'growth stocks' as businesses which aim to increase their share capital by re-investing a large proportion of their profits back into the business rather than paying out income to investors in the form of dividends.

Gary59 - your figures are correct, of course. However, the share price is still lower than it was last October!

I've viewed Covid as the ultimate stress test of all my (20 ish) holdings. Only 3 individual shares with most being investment funds or trusts. BP is bottom of the league during the last 2 year period ie pre-pandemic. The share price is down 30% and the total return over the last 2 years is -21% (dividends re-invested)

And as for the excellent dividend . . . well that's been cut in half!!

I stand by my view that this is still a recovery share for me. My guess (and that's all it is) is that we'll (hopefully) see some further growth throughout the year then the share price will begin to stagnate. The market needs tangible evidence (cost / revenue / profit data etc) from the move to renewables. All that's known to date is a 40% reduction output in oil over the next 7 years.

I continue to hold for the time being but this will not form part of my long term portfolio.

Good luck.

Now confirmed at 8.8p per share for 2022. 4 equal payments of 2.2p.

"30% last year plus divi is not a bad return, if it does the same this year, I am happy . . . "

You'll be happy. I'll be amazed!!

2021 share price performance was on the back of a 42% shareholder loss in 2020. Couple that with a 60% increase in oil prices and a return to global demand of 100m+ bopd during 2021, and some recovery was inevitable. I'm hoping for further recovery (15 - 20% total return) this year, but that's just a guess.

I firmly believe that at some point during this year the share price will reach a level where it will begin to stagnate for years and years. What that level is is anybody's guess!

Well, I'll continue to hold. I can't see this recovering to it's pre-pandemic level until some meaningful revenue, cost and profit figures become available from the replacement renewable energy strategy. And I think that's years away.

I'll continue to hold on the basis that there's probably still some recovery to be had in the share price. My capital will deliver a 5% return via the dividend during 2022 and (hopefully!!) the share price can grow to around £3.65 to £3.80 by year end. That would deliver a total return of 20% in 2022. I'd now settle for that.

At that level I'll probably call it quits and move on as I fear years and years and years of share price stagnation ahead.

jamesmaggs - apologies but not familiar with holdings you mention so, unfortunately, I've nothing to add. I recently took a position in European Asset Trust to provide some diversification to my dividend paying holdings.

The one thing I would say is don't just look at dividend paying holdings to provide income. I hold about 30% in dividend paying holdings and 70% is invested for growth. I've no problem drawing down on capital when I need to.

As an example my largest holding by far is Fundsmith Equity Fund. I invest directly with Fundsmith. They offer an automated drawdown facility which I use to provide me with income. I built up a position over a period of time in the fund then around March 2018 decided to drawdown 5% per annum, so 1.25% per quarter, just like a dividend. The performance puts all my 'traditional' income holdings to shame. My capital is up 50% and I've taken around 12% of the value of my initial investment via drawdown. So a total return of around 62%.

Not advice just food for thought if it's an income you're after . . .

All this wishing it would go lower will come good one of these days . . . only it won't go back up!

Not BP, I actually think this is ok but will be interested to see where the share price settles, and it will, over the next 12 months. My best guess is around £3.75. That would represent a capital gain from here of around 12.25%. Couple that with a 5.00% dividend and (hopefully) we'll see around 20% return next year. That's the only reason I continue to hold.

Historically I've held many individual shares. Too risky! I'm now predominantly invested in funds and trusts. Far less risk, and far better returns compared to my holding here.

I'm now down to my last 3 individual positions, BP, RDSB and L&G. Once the time is right off they'll go and my capital will be redistributed into less risky, better returning, funds!

That's the viewpoint of a long-term investor ie I buy and don't have any intention of selling . . . ever!

A drop? It's already 35% down on its pre-pandemic level!! I'm sitting on a big enough loss, thank you!!!!

Gerry557 - I'm in agreement. I have some cash from dividends to reinvest but will sit tight until the new year. I fear a further dip in the markets - but like all my views that's only an educated guess!

I'm uncomfortable putting more into HFEL at this present time. As attractive as the 8% yield looks, where will the share price go from here over the coming 12 months? I see no point investing for yield at the further expense of capital. I'm tempted to simply top up my global equity index funds which have delivered double digit growth for 4 out of the last 5 years.

Decisions, decisions, decisions . . .

. . . towards BP, I might actually be tempted to top up if it falls below 3.00!

. . . we can discuss BP!!

licker - "It's all relative so what's better than that?"

Well here's some of my holdings that have doubled over the last 5 years - Fundsmith equity +130%, L&G Global Tech Index +242%, Rathbone Global Opps +142%. Or, how about Blue Whale growth +82% over the last 3 years. Or, Smithson Investment Trust +91% over 3 years.

There are many more. I won't list them as I'm not invested in them. But the above I am invested in. Great returns, plenty of diversification and less risk. I fully expect the above funds / trust to outperform BP over the next 5 years as well! There's been no competition over the last 5 years!!

So, best case scenario is a doubling of the share price in 5 years! I won't be hanging around to see if that develops. Too much risk holding a single share in a highly cyclical sector for a potential 15% year on year return.

My view is that we'll probably see some positive share price movement once things settle down then share price stagnation. It's at that point I'll move on.

Theaky - I'm basing my decision to continue to hold in the hope (not the best sentiment upon which to base an investment decision!!) that this share is still in the recovery phase following the share price collapse last year. Although I'm down about 25% on my capital, dividends received to date cushion that blow and I'm about at break even point. (about 2% down at today's share price)

I look at this and think £3.75 to £4.00 is probably the new £5.00 (ish) level.

BP's core competency is oil. The exploration, refining and distribution of oil and oil based products. They are being forced to reduce their dependency on their core competency and move into new products. On that basis I can't see how the share price will deliver growth over it's pre-pandemic level for many years, if ever.

I've no problem selling at a loss if I have to. If we get to a point where I believe the share price is stagnating then if I have other investments delivering growth then simply continuing to hold here is costing me money.

Good luck!

Not a chance! If this does show signs of heading towards £4 at some point in 2022 then I'll sell. Come to think of it if it continues to languish at levels around 30% below its pre-pandemic level I'll also sell!

It's interesting to read the differing views with regards to where people see this going and what individuals intentions are.

As of today we're all in the same boat. Our capital is worth what it is, irrespective of whether we sit with a capital gain or loss. Our dividend yield going forward from today is the same irrespective of our buy price.

My view is simple. I fully intend to exit BP sooner rather than later. I won't be sitting around for the next 5-10 years waiting for value to be (hopefully!) realised from the transition strategy. I'm simply waiting for some normality to return in order to withdraw from my holding here.

I can see some recovery when an improvement occurs but my fear for this investment is that we'll simply see years of share price stagnation whilst any transition takes place. Whatever your view good luck!

I’ve enjoyed reading the recent comments and views here. I thought I’d take the opportunity to put forward my general view on investments based on my own experience. I am invested here so do have a vested interest in HFEL overall performance.

I categorise my investments into 2 main categories, (i) dividend paying holdings, and (ii) holdings that do not primarily pay a dividend.

Up until a number of years ago I held a decent number of individual dividend paying shares. I’ve now pretty much consolidated these holdings into 3 trusts. Merchants Trust, Henderson High Income and Henderson Far East Income. Dividend paying holdings represent about 30% of my portfolio.

The balance is made up of a number of investment funds. None pay me dividends. The funds are split between ‘managed’ and ‘tracker’ funds. I only invest in the accumulation version of each fund.

I now view this last 2 year period as being the ultimate ‘stress test’ of my investments and what a difference!
Over the last 2 years my dividend paying holdings have delivered total compound returns as follows: Merchants Trust +11%, Henderson High Income +3% and HFEL -3%. Compare that to (i) my managed fund holdings: Fundsmith equity +48%, Rathbone Global opps +66% and Blue Whale equity +58%, or (ii) my tracker funds: L&G International Index +43% and L&G Global Technology +102%.

I think this period has confirmed to me that paying dividends is not necessarily the right way for companies to generate value for its shareholders. Surely if a company produces healthy profits and is growing it would be a better use of capital to simply reinvest profits back into the business rather than pay out large proportions to shareholders and potentially starve the business of capital investment.

I’ll continue to hold here but my long term strategy is likely to be a further reduction of my dividend paying holdings. Good Luck all!

ade2a - oh, I'm fully aware that today's 7.7% yield is at the expense of capital reduction for long-term holders! I certainly don't need reminding of that!!

It's what do I do from here? My capital, irrespective of whether I'm sitting on a profit or loss, will deliver just short of 8% in dividends over the next 12 months. The big question is what will the share price do over the same period? Well, I'm not expecting much but do hope(!!!) there'll be some recovery. Even a slow climb over the next 12months to £3.10 would provide a total return of 11%. On that basis I'll sit it out. Of course the share price could fall further . . . . !!!!!

ade2a - thanks for replies. As you can see I'm comfortable simply tracking income per share received and comparing that with dividends paid out per share. Up to now things look ok with just a small shortfall.

I'm more concerned with the share price decline over recent times. Over the last 2 years we've received approx. 13% in dividend payments but the share price has declined by 17%. On that basis this has not proved to be a good investment.