Member Info for zac0_4

ade2a

"Was this you Zac?"

Yes. You know full well it was me! And I stand by my statement. The overall total return here over recent times is appalling. I'm not aware that I've stated that I'm happy with the way the fund is managed. I've simply pointed out that dividend income received is robust compared to dividends currently paid out.

Perhaps you could share a model showing how the current yield received is well short of dividends paid out as you indicate. I'll be happy to debate. But, please, provide factual monetary data.

ade2a
"The yield received on holdings is irrelevant".

"Here we do not agree.
You understand we do not have to agree.
if you have a model to explain your position I will be happy to debate it."

Here you go. HFEL have around 150m shares in circulation. They currently receive approx. 23.22p per share in dividend income. This equates to around £35m. You claim this is around a 5% yield to HFEL. Let's assume the holdings in their portfolio double in value. Therefore the yield would reduce to 2.5%. However, they would still receive £35m income. Therefor, as I say, the yield on holdings is irrelevant, it's the monetary value that's important.

Nice to see a director spending £120k on shares!

"How does the fund pay 8% dividend when underlying holdings yield about 5% or so?"

The yield received on holdings is irrelevant. It's the physical amount received that's important. A quick look at the annual report shows both revenues paid per share as a dividend, 23.40p, and revenues received per share, 23.22p.

So, using today's share price as a benchmark, say £2.94, the dividend yield paid out annually is 7.96%, whilst revenues received would cover a payout yield of 7.89%.

The small shortfall was covered by using funds from reserves.

On 5,000 shares the dividend per annum would be around £820 (that's at an exchange rate of around $1.33 vs £1.00)

I read with interest some of the comments made under the thread “Dog Share”. There’s no right or wrong decision, just different outcomes from decisions made.

I held TW for a number of years and finally sold out in June 2020 at around £1.60 per share. That represented a 15% loss of capital for me. Although, this loss was somewhat offset by the dividends I’d received over the years.

This, sort of, brings me to my point. Whilst we’re all looking to make a profit, whether you’re sitting on a loss or profit should not come into your future thinking. The value of your holding is what it is today. The question you really need to ask yourself is what total return do I expect this investment to make over a future period? If you’re happy with the answer then continue to hold. If not, then move on. That’s provided you have identified a better holding to move on to of course! Simply continuing to hold whilst waiting to regain your losses is not a good strategy. If markets are rising and your holding here is stagnating then, as far as I’m concerned, that’s costing you money. But that’s only my opinion.

So, my decision was clear. At £1.60 the share price had recovered by about 60% from its low point early April 2020. The dividend had been cut. I wasn’t comfortable holding a single, highly cyclical, share given the market conditions. So, I sold. I decided to spread my risk.

I invested half in a managed global equity fund, Fundsmith, and half in a dividend paying UK investment trust, Merchants Trust. The results? My holding here would have lost a further 3.8% capital value (not sure of dividend). My holding in Fundsmith has grown by about 32.0%. My holding in The Merchants Trust has delivered 30.7% capital growth plus about 9.0% in dividend payments over the period.

Selling at a loss doesn’t come into my thinking. Good luck!

meoryou - "Whatever your view on buybacks when you look at a 5 year graph of BP sp BOD have done one hell of a job to do the buybacks so far in the price range they have managed"

No they haven't! They're delivering buybacks at this share price level because they've managed to decrease the share price by 24% over a 5 year period. This is an appalling performance for shareholders! Let's not kid ourselves.

dicklaw68 - “Where else am I going to get a SAFE near 5% return? Any ideas?”

Well, here are some suggestions you may wish to look at. All currently yield 5% or more and pay quarterly. All offer a greater degree of diversification than a single share / holding.

Merchants Trust – an investment trust invested in mainly UK listed companies. Current yield is around 5% and it’s increased its dividend annually for the last 39 years!
European Asset Trust – an investment trust investing in European listed companies. Current yield is 5.6%.
Henderson Far East Income – as above but investing in dividend paying holdings in Asia Pacific region. Current yield is around 7.5% pa

Or you could do the following with Fundsmith Equity fund. Invest directly with Fundsmith into the accumulation version of the fund ie any income (which is small) is reinvested into the fund. They offer an automatic withdrawal facility. So, each January work out what income you want to receive over the next 12 months ie 5% of your fund value. Tell them you want to receive a quarter of this amount every 3 months – just like a dividend! This is how I receive income from my Fundsmith holding. The fund has delivered an average annual return of 18%+ for over a decade. So taking out 5% (ish) each year should see your capital grow as well.

None of the above is intended as advice, just some information which may be useful, and provide alternatives to your holding here for you to investigate. Good luck.

"The dividend yield depends on what price you bought the shares at doesn't it?"

You can look at it that way. I think a more realistic way to look at it is to base your return from the dividend against the value of your capital today. So, currently about 4.7%.

Yes, and I've been tempted to press it on more than one occasion!

They need to address something. Total returns are appalling. The last 3 years individual performance are as follows: +10.4%, - 15.5% and -2.5%. An overall total return over the last 3 years of -9.0%. And we're paying for this! What an appalling return for investors.

. . . in 12 months time? Well your guess is as good as mine! However, even though my average buy price here is around £4.65 that doesn't come into my thinking. I always judge my holdings as to what I think they'll return over the next 12 months. So, for me from here, a share price of £3.65 would represent a 10% return on my capital today. I've no issue with that. Until that situation changes I'll continue to hold even though long term this has proven to be a poor long term investment.

wales - you have the one key factor on your side when investing . . . time!

You may wish to consider the following in addition to your investments in single shares. Invest in a global equity fund, either a well managed version or an all cap tracker. Invest every month, via direct debit. Every time your salary increases, increase your level of monthly investment. Do this, in a fund & share isa. Invest every month without fail. Do it year after year after year. Never panic. Never sell. Over the long term you should do very well.

Good luck.

Wales - a very nice 32% return to date. Well done.

Will you set a target at the beginning of 2022 regarding growth for the forthcoming year? I think you should because I'm beginning to think this is going to turn into one of those shares that you continually hold waiting for something to happen!!!!

grandadtom - I wouldn't disagree with your figures for year end.

Where I might raise a question is your comment around an appreciating share price to £4.00. After a positive set of results, an oil price of $80+ pb and global demand back in excess of 100m bopd the share price still needs to increase by 16% to reach that £4.00 target. As for reaching a pre-pandemic level, well a 45% uplift in the share price is required!

The longer we sit at current levels, give the positive factors in place, the more pessimistic I become of a full recovery in the share price arriving any time soon.

Good luck.

It's already started.

Gary59 - I've been saying goodbye to some of my single shares over the last 12 months or so. Taylor Wimpey went last year along with New River Reit (what an absolute shambles!!) More recently I've parted company with Aberdeen (Standard Life). To date no regrets. I'm now down to only 3 individual shares, L&G, RDSB and BP. Both the oil shares will go when I think the time is right.

For dividends I hold mainly trusts. MRCH, HHI, HFEL and more recently I've added EAT for some diversification into Europe.

The largest proportion of my portfolio is in funds. Some managed - Fundsmith, Rathbone Global Opps, Blue Whale, LT Global Equity and some trackers - L&G International Index, L&G Global Thematic, L&G Global Tech and L&G Global Infrastructure.

When I compare total return from my funds compared to my dividend holdings I've no idea why I actually invest for income!! I can only put it down to a psychological factor where as it doesn't feel quite right selling fund units when I want income compared to actually receiving a dividend payment!!! My data and experience clearly shows it's costing me money investing for dividends. Never mind!!!

As for my holding here, well I've decided to hold until q2 2022. If it's showing no signs of a major improvement by that date then I'll be saying goodbye to my BP holding as well. I've spent too many years invested in shares waiting for growth in my investment that never actually arrives. Good luck!

Compound - I think my figures might be somewhat over inflated on the funds! Not sure what I've done!! Thanks for pointing out my mistake.

However the principle of my message remains. BP is still over 20% down on its pre-pandemic levels despite a global recovery in oil demand at 100m bpd and a much higher oil price.

I fear £3.70 (ish) is the new £5,00 and if we're not careful we'll be sitting around for years stagnating whilst other potential investments continue to flourish.

Cheers.

. . . the category of a "jam tomorrow" holding.

I don't trade. I simply hold. I've held here for many years as I do with pretty much all of my holdings. For me the true measure of current performance is to compare where we are today compared to each holdings high point in q1 2020 ie just pre-covid. Everything fell but not all have recovered.

But before I look at BP's performance let's look at some of my other holdings performance on that basis.

Legal & General -7%
Merchants Trust -4%
Both the above are dividend holdings.

Now, I'm a big fan of funds. So let's look at 3 of my fund holdings.

Blue Whale Equity +100%
Rathbone Global Opps +186%
L&G Global Tech +210%

And BP . . . well its -32%!! An abysmal performance. As I've said before I'll hold until q2 2022 but unless there's a drastic improvement I'll look to move on from here.

I've invested in shares before that are full of promise but fail to deliver. Both BP and RDSB for me are currently sitting in the relegation zone!!

Strictly - just so we're both referring to the same thing, I'm referring to individual share holder total returns ie share price movement plus dividends received. Is that what you're referring to with your figures?