Member Info for zac0_4

Here's my off topic opinion on Rolls Royce.

They've just announced a record £5bn+ half year loss. They have a massive debt pile of £4bn. The aerospace industry will take years to recover. It doesn't look a very good investment to me! In fact, I can see the government stepping in to avoid collapse at some point.

That's my opinion!

Hopefully over the next couple of years we'll see some reasonable recovery in UK listed shares. Once my holdings (SLA, LGEN, BP & RDSB) get back to levels where I feel comfortable selling, they're gone!

It's taken a crises such as this to finally convince me that investing for dividends in UK listed shares is a waste of time!

Luckily the largest proportion of my portfolio is held in global equity funds. Had it all been in the above I'd be suicidal!!!!

What a shambles the UK stock market, certainly FTSE100, is!

Thronegames - to top up or not? For me, no! I'll simply sit it out here and, hopefully, my current 42% capital loss will improve over time!

Once it gets to a level I'm more comfortable with I'll sell. As I will my RDSB. And my SLA. The jury's still out on my LGEN holding. The dividend yield for me here is now 3.7%. So, massive capital erosion and a poor dividend yield.

Luckily the above represent about 15% of my entire portfolio. The majority I hold in global investment funds, which thankfully have performed very well. That's where I intend to migrate all my capital to when the time is right.

For me it's far more profitable simply taking capital when required than picking up dividends at the expense of a higher level of capital reduction. Good Luck!

JG - I agree in that an interest rate increase will have a slow down effect on so called growth stocks.

I also think that oil is far from finished but can't help thinking that it's past its best days. There is a real focus around reducing consumption and reliance on fossil fuels. Whilst it will possibly take decades to make a significant reduction I think the sentiment is already having a negative effect around the investment case. Good Luck.

Things may change. However, nothing on the horizon fills me with confidence with regards to my UK listed dividend paying stocks. No resilience, poor recovery and unsustainable dividends.

As for your comparison with the dotcom bubble in 2000, I don't think there's a comparison to be made. Back then company valuations soared on the back of projected, not actual, revenue and profit. Look at the revenue, growth and profit Microsoft, Apple, Amazon, Netflix, Mastercard, Visa, Paypal etc, etc, etc produce.

I agree in so much that they may well be overvalued and there maybe some correction ahead. But spectacular crash? I don't think so.

So, my holding here has delivered me a +2.1% total return (inc dividends) over the last 5 years. My investment in the L&G Global Tech Index has delivered +261.0% total return over the same period.

As you say, things may change but I'm tired of poor returns and depreciating capital whilst I wait! Good Luck.

This whole saga has clearly demonstrated that investing for dividend income is not worth the effort. For long-term investors simply investing in quality global growth funds, and taking income from your capital, is a far better startegy!

Barnyards - do I have a cast iron guarantee as to where to put your money during this period? No. But what I can tell you, as a long-term investor, is what's worked and hasn't worked for me not only over the last 12 months but over a 3 or even 5 year time horizon.

My UK dividend paying investments have proved to have no resilience, poor dividend sustainability and no recovery attributes to date.

Compare that to 3 of the investment funds I hold and their 12 month returns - L&G Global Tech +48%, Blue Whale Growth +25% and Rathbone Global Opps +27%. My BP holding has returned -41%!

I shall continue to migrate from poor returning UK dividend shares into Global diversified funds with a long-term hold strategy in mind.

What an absolute shambles this has turned out to be. Average buy price of £4.53. Break-even price, factoring in dividends I've received, of £3.64. Once I can get out of this feeling comfortable I'll be off. This situation has simply confirmed to me that investing in individual UK dividend paying shares is a very poor way to invest!

Not sure I totally agree. I think the tech companies have clearly demonstrated their resilience during this market crisis. I think we might see a correction at some point but I'm not sure the bubble will burst and they will fall sharply as you say. I don't think I've seen it happen before. If growth/tech and momentum stocks are doing well at this time when can I expect so called value stocks to rally? I've been waiting for years with some of my holdings!

The DOW is made up of about 30% of technology shares. That's where the growth has come from. Exxon Mobil has now fallen out of the DOW30 and been replaced by tech stocks. A sign of the times! The FTSE now looks imbalanced in comparison.

Milliethedog - the answer to your first question posed to Thronegames is clearly yes. However, you can't simply factor the drop caused by Covid out of the equation. It's very relevant. L&G dropped 57% from its high this year to its March low point. It has now partly recovered but still needs to deliver 41% growth from here to get back to its Feb high. UK dividend paying shares seem to lack both resilience and recovery attributes.

Thronegames - I'm not clever enough to determine how much of a disconnect there is, or isn't, between markets and reality. On that basis I'll continue with a buy and hold strategy. What I am betting on is that with a growing and ageing global population growth will continue long-term in demand for healthcare, infrastructure and technology will continue to disrupt. Hence my position in the 3 tracker type funds I've mentioned in a previous post. My other funds are invested in businesses that produce a high return on capital, a large proportion of which is re-invested into the businesses rather than being paid out to shareholders in the form of dividends. To date these funds have produced better overall returns than my individual dividend paying holdings. Hence my medium term strategy to move away from individual, dividend paying, shares. Whether this proves to be the correct decision only time will tell.

Hi Thronegames. Let me try to answer your questions then explain my thinking / strategy. I'm deciding to hold LGEN and sell, albeit when the time it's right for me, SLA simply because I'm in profit on LGEN. If LGEN cut the dividend I'm off! After many years of investing I've finally come to the conclusion that investing for income, ie dividends, is false economy. Simply investing for capital growth via proven investment funds (OEICs) and taking capital when required is far more beneficial. Here's an example. If you'd have invested £10,000 in LGEN 5 years ago you'd have received dividends over the last 5 years to the value of £2,887. However, your capital is now worth £8,426. So a nett gain of £1,313 (13%) over 5 years. Now take my largest holding by far, Fundsmith Equity fund. Had you invested £10,000 in that 5 years ago and at the end of each year drawndown capital to the equivalent value of the LGEN annual dividend you'd have paid yourself the same as the dividends, ie £2,887, however your capital is now worth £20,221. A total return of 131% v 13% here. Good diversified funds offer less risk, less sleepless nights and far better returns. The above is my opinion, fact based however, only. Good luck.

Thronegames - I'm in a similar situation, in that my dividend paying UK listed shares have underperformed for many years and have not protected my capital at all during this difficult period. I'll probably continue to hold L&G so long as the dividend remains in tact. My other holdings, BP, RDSB and SLA will be sold once I have feel the time is right. Luckily only about 20-25% of my total portfolio is in individual shares. The majority is held in a combination of managed and index funds, about 12 in total. No real complaints I'm happy to say. The only point I would add is that my index funds track sectors rather than simply the FTSE or Dow etc. As examples I hold 3 index funds tracking global technology, global health & pharmaceutical and global infrastructure. Good luck with your investments!

XF-MAN - No and No!

Krustysmegma - yes, somewhat differing views but similar portfolio make up!

I will continue, when the time is right, to move away from individual dividend paying UK shares. They seem to do nothing but destroy my capital. Taylor Wimpey is a prime example. 49% down from its February high. We're now looking for 97% growth from here to get back to Feb levels!

Good luck with your investments and thanks for the constructive discussion.

Krustysmegma - I realise there's no guarantees. I can only base my decisions on what's worked for me so far, and how I see things in the future. I used 3 years as I thought it was a reasonable timescale. However, here's some of my own holdings with figures for 5 years and also 6 months to see how they've protected my investments both long and short-term.

At present I hold (i) individual dividend paying shares, (ii) dividend paying investment trusts, and (iii) investment funds (all accumulation versions of fund)

Individual shares 5 years & 6 months - L&G +19% / -22% Standard Life -29% / - 9% TW +4% / -37%
Investment Trusts 5 years & 6 months - MRCH 0% / -33% HHI -4% / - 24% HFEL +44% / -8%
Funds 5 years & 6 months - Fundsmith +143% / +7% Lindsell Train Global Eq +120% / +3% L&G Global Tech +217% / +14%

So, on the basis of my own experience my funds have delivered against my dividend paying investments on 2 counts (i) overall return over a 5 year period, and (ii) capital protection during the market downturn

Good Luck in your investing.

Hi Bamps21 - each to their own. Some real winners, there. At my time of life I want to invest and forget. As long as I can provide myself with a good income, either via dividends or from capital, I'm happy. What I don't want is to suffer capital destruction along the way. Far too many dividend paying shares simply don't return an acceptable long term overall return. Maybe my stock picking has been poor in this respect!

We'll have to disagree where funds are concerned. I'm a massive fan for many reasons!

Krustysmegma - I invest in the Fundsmith Equity fund accumulation version ie no dividend. Here's my logic below:

Taylor Wimpey - £10,000 invested on 29th July 2017 is now worth £6,635. On top of that you've had 3 annual dividends £810, £906 and £205. So total return (loss) of -£1,443 / -14.4%

Fundsmith - £10,000 invested on 29th July 2017 was worth £11,936 12 months later. Take out £810. Carry forward £11,126 and 12 months later that's worth £13,077. Take out £906. Carry forward and today it's worth £13,057. Take out £205. You've made payments to yourself over 3 years of £1,921 exactly the same vale as the 3 annual TW dividends and your capital is now £12,851. A total return of £4,773 / +47.7%

Hope this helps explain my logic.