Member Info for zac0_4

. . . poor year ahead for my dividend paying holdings?

I have 6 dividend payers in my portfolio. As of today 5 are down ytd, including any dividends paid. Collectively they are -2.2% behind the 2023 year end figure.

My funds, which thankfully represents around 81% of my portfolio, are collectively up +7.4% . In total my portfolio is up +5.6%.

I know it's very early days in the year but the signs, once again, look ominous for my dividend payers!

" . . . My strategy with LGEN ( as I've mentioned a few times on this board over the years) is to build my investment here by means of re-investing the dividend. Once, I retire (in 30 months time) convert the dividend payments to income. I can take this tax free in an ISA . . ."

It's a pity you don't have a bit more time on your hands. Over the long term, taking into account you want to use dividends as income in retirement, a better strategy might well have been to use a simple index tracker fund to build capital. When ready release the capital and buy LGEN for the dividend income. History would indicate this would have resulted in a much healthier dividend in monetary terms.

I'm reducing my exposure to dividend payers. I'm happy to simply sell funds to raise capital as and when required.

". . . the initiation of a £150 million per annum buyback programme . . ." call me a sceptic but I don't see how a buyback programme equating to 1% of LGEN market cap is going to be a major catalyst to the share price. I don't like buybacks per say as to me they indicate the company has nothing better to spend its profits on

Meconopsis - many thanks for the link. Unfortunately I'm unable to gain access to the article.

Meconopsis - you are of course correct in what you say, however, even an isa is potentially exposed to changes in tax legislation. Wasn't there a rumour circulating not so long ago that there was going to be a £100k cap on isas? Thankfully, nothing came of it!

I only raised the point of a sipp as I think far too many people think an isa is far more tax efficient when, under certain circumstances, a sipp can prove be more beneficial.

I'm fully retired. I ensure my income streams keep me in the 20% tax bracket. I have a sipp in drawdown but contribute £3,600 to a separate sipp every year. On a like for like basis the same investment in my sipp will return 6.25% more when crystalised than an identical investment in an isa.

Plus, capital in a sipp (any pension) sits outside your estate for inheritance tax purposes.

I might add I hold both isas and pensions.

". . . my ISA as an important part of my pension with LGEN providing the tax free dividend element . . . "

The same value investment in a sipp would pay you, assuming you are a 20% tax payer, an identical nett dividend and if you sold your invetment you'd be 6.25% better off with your sipp than your isa!

" . . . Would buy more but it's already 14% of my portfolio . . ."

I'm heading the other way. My holding here was 5%, by value, of my portfolio up until recently. It's now down to 3.5% after a part sale and will reduce further to around 2.5% post ex-div date.

Robleo - it's an ETF so traded like a share. The ticker is LGGG.L. It's name is L&G Global Equity UCITS ETF

Hope that helps.

Robleo - LGGG is a global equity tracker ETF from Legal & General. Its make up, and consequently performance, is pretty much identical to the L&G International Index trust.

I use it as it helps to reduce platform costs with HL.

. . . today.

I've held LGEN in my fund & share account, Sipp and ISA for years. I've just sold my Sipp holding this morning. I'll probably sell the holding in my fund & share account after ex-div date and review my ISA holding later in the year. As somebody who invests for the long term (min 5 years +) this simply doesn't deliver over that type of timescale for me any more.

The capital has been reallocated into tracker type etfs as follows: LGGG 50%, RSGL 20%, IUQF 20% and WLDS 10%.

I'll review returns in 12 months time. My plan is to continue to reduce my exposure to dividend paying holdings. I sold both BP and Shell 12 months ago and my investment in a simple global equity tracker fund (LGGG) has outperformed both by 17.5% and 12.5% respectively.

Let's see how my decision looks in 12 months time!

. . . I can't beat 'the market' and I've been trying for years.

If 'the market' is simply the global economy then that's what's available for me to invest in. Year in and year out I try but (with the odd exception) invariably fall short. My investment here continues to fail to beat 'the market'. I'm probably at the stage where I'm accepting that I just can't do it. So, on that basis, I'm going to increase my exposure to something that just tracks 'the market' and decrease my holdings in things that I invest in that continue to underperform 'the market'

Here's an example of what I mean - LGEN 5 year total return +24%, LGGG Global equity etf +83%. Very few of my holdings beat that . . . do yours?

Getafgrip - I agree. I'm an advocate of using average annualised data over a long(ish) time horizon in order to provide a true picture of returns.

Over the last 10 years BP's average annualised return has been around 3.7% pa. I held BP for years and, although a difficult decision, sold just over 12 months ago. I didn't see anything to suggest any change in performance going forward.

A simple global equity tracker fund has delivered an average annualised return of 12.4% pa over the same period. Do the maths and look at the difference in cumulative performance over that time period . . . it's staggering!

MarkGo - I totally agree that 'time in the market' is far more important than trying to 'time the market' I'm pretty much always fully invested!

As you say, if you're invested in quality companies then over the long term you should do ok. Have you a definition of a what makes a 'quality' company?

It will be the asset management side of the business holding Apple shares as a nominee. Any dividends will go to holders of the L&G funds invested in Apple.

Let's keep thing in perspective, shall we?!!

Robleo - I've stopped trying to 2nd guess which geographies / themes / sectors etc will outperform. I'm consolidating the number of managed funds I own and increasing my exposure to simple global equity tracker funds. In that way the tracker funds will allocate capital according to geographical and sector size.

My top 5 funds by value with 5 year returns are: Fundsmith +72%, WS Blue Whale Growth +86%, Rathbone Global Opportunies +82%, L&G Global Tech +194% and L&G International Index +79%

Here's my dividend payers with 5 year returns (dividends reinvested): MRCH +43%, LGEN +28%, HHI +25%, HFEL -11%, UKW +28% and EAT +23%

I sold most of my dividend payers held in my SIPP throughout 2023. It's gone from strength to strength ever since. I've pretty much decided to sell 1 per month in my ISA so that by July I will have moved completely away from dividend payers and reinvested predominantly into Global Index Tracker funds.

I'm tired of waiting for some decent returns from my dividend payers!

I'm mulling over the idea of selling all my dividend paying holdings and simply buying a global index tracker fund which I'll draw down from as and when required.

Without exception long term performance is poor.

" . . . 4% is not great . . . "

In my opinion you shouldn't be comparing it with ' dividend yields of LGEN et al' (who else do you have in mind?) You should compare it with the total return acheived from 'LGEN et al'

Over the last 5 year period LGEN has averaged an annual total return of around 5.5% pa

Neither do it for me I'm afraid, although I continue to hold here in the faint hope that we might see some positive movement in the share price!

" . . . That fund appears to be heavily concentrated in US growth stocks . . . " - of course it is. That's where a large proportion of the global top 100 companies are listed.

" . . . you might be buying near the top of a bubble . . . " - I've no idea. However, if I'd have been put off investing in the US everytime I've heard that statement made over the years it would have hit my finances hard.

These companies produce healthy profits and have opportunity for growth. The compounding effect in reinvesting your profits into your growing business is very powerful. I wish some of my UK based holdings could do the same.

As a long term investor, who generally drip feeds into funds, whether this fund is in a 'bubble' or not is irrelevant. Do I think most of the companies in the fund will be significantly more valuable in 10 years time? Yes!

' . . . I suppose the question is, will this mini bull run continue? . . . '

As a long term investor that's of little interest to me. The fund has an average annualised 10 year return of 13.9% pa. I ask myself is there any reason to suppose a continued double digit average annualised growth rate is unlikely to occur over the next 10 years?

Johnychainlocker - thanks for highlighting the L&G Global 100 Index fund. It's probably not put forward because it's a really concentrated fund. The top 2 holdings represent 25% of the fund's value and the top 10, 50%

However, it's definately worth consideration. Thanks.

L&G International Index produces an identical performance to the Fidelity World Index fund. I move from one to the other for capital gains tax purposes. As the allowance reduces, I think it's essential to realise capital profit up to the allowance on an annual basis for holdings sitting outside an ISA or SIPP. I also transfer holdings to my wife on a regular basis in order to make use of her allowance as well.

Good luck!