Member Info for zac0_4

UpDownFlat - "And they are currently having the best year they have had in many years . . . "

I wouldn't disagree with your comment. The concern I have is that despite of this the share price currently sits some 40% behind its pre-covid average. In addition there is no sign of a share price move north. Quite the opposite. I now think £3.00 is the old £5.00!!

jamesmaggs - maybe we are over thinking it. However, putting the covid situation aside, the last time this traded at these levels under normal circumstances was June 2016. So, a £3.00 share price is certainly not normal.

With a current yield of 7.7% it's difficult to move elsewhere as if the sp reaches £3.10 over the next 12 months it will have delivered a 10.0% total return during that 12 month period. It's just not good to look at my current capital reduction presently!!

NSS & UpDownFlat - so, they're going to replace the lost revenue from oil output with . . . revenue from oil?!!! I'm sure the green brigade will see through that one!

I've yet to see any tangible evidence of costs and returns from future so called renewable sources, but I stand to be corrected.

As for 8-10% returns from renewables well that's nothing to write home about and reinforces why my investments in the funds I listed earlier continue to outperform. They seem to invest in companies with a ROCE of 25-30%. The companies don't pay dividends favouring reinvesting a large part of profits generated back into the business to compound that high return.

That's another worry for me here. BP have a strategy to move to greener energy sources but also look to return a large proportion of profits to shareholders. Why not use excess cash to accelerate the transition? Maybe because it's not as simple as the strategy suggests.

Sometimes it's hard to say goodbye to an old friend. In my case this now has 6 months, tops, to demonstrate to me that it still has value to me as an investment, because currently I don't see it.

NSS - "Fundamentals always play out over the long time . . ." and for me there lies one of the main issues. BP have announced a 40% reduction in output over the next 8 years. To date there appears to be no tangible evidence as to what it will cost to replace that loss of revenue and profit with renewable energy.

Can anyone here point to some data that answers the above point? I'm not aware of any.

Tinker T - Yield is fine providing you're not having to sacrifice capital in return. I cannot see any catalyst here that will help push the BP share price significantly north from here. Oil price is up over 3 months, there's been a dividend increase announcement and buy backs have begun in earnest . . . the result . . . a total return (loss) of -8% over the last 3 month period.

I've begun to cull some of my dividend holdings. Why? Simply because the numbers don't add up. I sold my long term holding in Aberdeen recently because the dividend's been cut and the overall performance is appalling.

So, where do I put capital from the sale of dividend holdings? Well I simply top up my 3 largest funds. Here they are with the last 3 months performance: Fundsmith equity +11%, Rathbone Global Opps +12% and LF Blue Whale equity +14%.

BP is now moving higher up the list of dividend holdings to be culled!

watching my capital decline further!

"Noticed the Dow is down heavy today . . ." It's currently down less than the FTSE ended up today!!

Yes, doubling your money in 3 years is an average of 26% growth per annum. Compound. Fabulous result to date. Boringly reliable. I hardly ever look at performance and I've held since launch. Massive fan as I am of the Fundsmith equity fund. If only more of my portfolio had delivered similar returns.

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ade2a - HFEL have used other means of income in addition to dividends received for many years. The current income figures available look normal as in their % contribution to the overall income. (ie dividends received and other income)

There is nothing different to previous years yet you believe HFEL are over distributing.

I don't. From what I can see the dividends per share paid out are covered by earning per share received from all means of income.

Regards

ade2a - It was a genuine question. You believe that HFEL is over distributing to shareholders. I have gone through the latest profit and loss account and here's my analysis:

total income £38,754m
total costs £6,166m
annual profit £32,588

This figure equates to earnings per share of £0.2371
Dividends paid out per share of £0.23
So a surplus of £976,880. Not a deficit.

Just wondered how you arrived at your assumption of HFEL over distributing?

It's just a pity my pessimism has triumphed again! I wish it hadn't!! Unfortunately my view is simply that the catalysts that have been at play over the last 6months (dividend increase, commencement of share buy backs, +7% growth in ftse index, 18% increase in oil price) have had no positive effect on the BP share price (-0.3% over last 6 months) at all. Hence, I can see no positive movement on the near horizon.

However, I'll continue to hold until q2 2022 in the hope that BP is still in a recovery phase and we see some meaningful increase in the share price medium term (although my hope diminishes weekly!!)

I mentioned previously the importance of investing regularly in a global equity fund. An investment in the L&G International Index tracker fund over the last 5 years would have returned growth today of 94%. That's an average annual growth of 14.2%. Every year, compound. BP share price over 5 years -29%. Probably flat with dividends.

Outside of BP I continue to rationalise my holdings. I've sold my total position this week in Aberdeen. Yet another poor performing dividend payer whose share price continues to languish.

And I continue to diversify. I've increased my position in the L&G Global Thematic fund. This fund invests in what I consider to be future areas of growth - cyber security, pharma breakthrough, robotics & automation, artificial intelligence etc.

So, I'm holding here, but have plenty of exposure to global equity markets and continue to build positions in what I believe are going to be areas that shape the future economy.

Good luck to all!

ade2a - thanks for the speedy response. If you don't know the value of the shortfall, how do you know there is a shortfall?

ade2A - out of interest how much shortfall is there comparing dividend income received to dividend income paid out?

TinkerT - I'm just skeptical, that's all! The share backs took place in both q1 and q2. Yet the share capital at the end of q2 was only around 0.1% lower than 12 months ago and 0.2% lower than 2020 year end. Plus, BP regularly carry out share buybacks. During 2020 I think the figure was $2bn. Figures of 4% or 7% reduction in share capital over a year . . . I'm to be convinced!

"BP has no short term plans to get out of the oil industry . . ." maybe not to exit the oil business but they have stated that they intend to reduce output by 40% over the next 8 years.

"The buyback means that if as they state they expect to retire 4% of shares each year" I'll be amazed if they get to within 10% (ie 0.4%) of your quoted figure per annum. Despite much being made of share buy backs during q1 & q2 2021 they've only reduced the number of shares in circulation by 0.1% over the last 12 months!

Well, after holding for many years I've finally decided to sell. Taken a small overall loss but not prepared to sit here any longer watching my capital stagnate. Have moved funds in to European Assets Trust. Taken a slight hit on the dividend but feel more comfortable with the overall longterm prospects. Good luck all!

If a share/Investment yields 5% how much will I get for £ invested? - clearly 5p
If a share/Investment yields 8% how much will I get for £ invested? - clearly 8p

However, your yield will fluctuate as the share price fluctuates. If, in example 1 the share price rises by 10% your yield falls to 4.5%

In example 2, if the share price falls by 10% your yield increases to 8.9%. In both cases the amount you receive per share stays the same in monetary terms it's simply the yield that fluctuates as the value of your capital rises or falls.

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PeterH1 - "why didn’t you say the last 5 years?…"

Ok, if it makes you happy. 5 years ago today this was trading at £4.33 per share. So, only a loss of capital of 30% over the last 5 years. Add in dividends received over that period and it's probably delivered a total return of about -5% over your suggested 5 year period!

Happy?