Member Info for zac0_4

Agree with MrMath. Too many 'ifs and buts'.

However, ex-div date is usually towards the end of April so just stick your £20k into next years ISA and dividend payments etc will not be a concern

" . . . Companies (and therefore their shares) have a fundamental value, based on the fact that ultimately they make profits which they pay out to shareholders in the form of dividends . . . "

And thereby lies one of the issues.

Every time a dividend is announced / paid the value of the business is devalued by that amount.

Alternatively if a business produces high returns on capital in cash, has growth opportunities to allow reinvestment of that cash at a similar high rate of return (instead of paying a dividend) and has a sustainable competitive advantage in their market the value of that business will grow.

That's why the value of UK dividend payers is sluggish compared to some of the growing businesses in the USA who pay next to no dividends.

MB007 - I'm with you on this one. I came to the conclusion you're highlighing a number of years ago and have been reducing my exposure to dividend paying assets steadily over time. Currently they represent about 24%, in value, of my portfolio. I intend to reduce this down to around18% during 2024.

The majority of my portfolio is invested in global equity funds. Mainly managed some index trackers.

Why do I continue to hold some dividend payers? Well, I'm not seduced by the dividends received that's for sure! Everything I own is measued on a total return basis.

I'm all for diversification. And that includes how I receive my return ie growth or income or a combination of the two.

I've been hearing for years that the US stock market is overvalued. That the UK is undervalued. That there'll be a switch to value from growth. Maybe.

What I do base my investment strategy on is that, over the long term, I believe the global economy will continue to grow. On that basis I want to own the global economy. The UK is about 4% of it, so to achieve my aim I must invest elsewhere and there are plenty of either well run managed funds or low cost tracker funds that allow me to do that.

Just my view not intended as anything else!

Some really interesting posts of late. Good to hear other peoples perspective on their investment strategy. I'm always (almost) fully invested. I'm heading into 2024 with the following portfolio breakdown -

Large cap global growth -58% (78% managed / 22% tracker funds)

Direct technolgy - 7% ( 2 x funds / 2 direct shares)

Small cap equity - 5%

Global Income - 4%

Dividend payers - 24% (5 x trusts & LGEN which is 23% of my dividend portfolio)

Maybe a few tweaks along the way - more emphasis on trackers - but I can't see me deviating much from the above.

Good luck all and here's to a prosperous 2024!

Robleo - out of interest which funds do you hold?

Finished year with a total return of +10.7%. Best performer L&G Global Tech Fund at +54%. Worst performer HFEL at -13%. All 6 of my dividend paying holdings were a lag on overall performance in that they all came in below the total portfolio finish.

Started the year with dividend paying holdings at around 30% of overall portfolio value. This is now down to 24% due to selling BP and Shell, and reducing holdings in LGEN, HFEL and MRCH. Aim is to further reduce dividend holdings to below 20% of portfolio value.

Whilst I’m reasonably happy with the overall +10.7% total return had I simply consolidated everything into a global equity tracker fund I’d be looking at a return of close to +18.0%.

Plans for next year: (i) further reduce value of dividend paying holdings, (ii) consolidate number of holdings by increasing exposure to simple global tracker fund/etf, (iii) increase exposure to small / medium cap companies on back of likely interest rate reduction

For info current portfolio split is: 45% USA, 28% UK and 27% RoW

Good luck

". . . LGEN dividend just keeps up with inflation, that'll be an 8% real return . . ."

Over the last 10 years the average annualised return from LGEN has been 6.21%

". . . That's better than the long term market average . . ."

Whilst a simple global tracker fund ie Legal & General International Index, has returned an average annualised return over the same 10 year period of 11.78%

" . . . Due to reinvesting my LGEN dividends, this has both reduced my average cost per share but has also increased the yield to 8.25% . . . "

I'm sorry but I don't agree. If you started out with a £10k investment 5 years ago your initial cost per share would have been £2.31 and you would have started with 4,329 shares. A reinvestment of dividends over the last 5 years, on an annual basis, would mean that today you would have 5,534 shares, however, you would have spent a total of £14,432. So, an average cost per share of £2.60

"Do you ignore COVID and inflation and just see a downwards direction? . . . "

Absolutely not. The share price recovered its Covid losses by the end of 2021. Since then, probably due to inflation and increasing interest rates it's been on a downward trend. Inflation figures have started to improve and as such the share price has rallied over the last 2 or so months.

My original post was on the back of a comment stating that this can only go one way . . . up! That's a dangerous assumption to make. However, I hope it does contine on its recent upward trend. For me, though, I'd be more than happy with a share price increase to around £2.60 by the end of 2024.

I would just add that I've held this since 2015 and out of a portfolio of 27 holdings this is still my 3rd largest despite selling some recently.

" . . . As for 2024, nothing moves in straight lines, but we know it’s up . . . "

Do we? The share price has declined in 3 out of the last 5 years to date . . . so, what's different next year?

No, no raw spot touched at all. Just don't necessarily agree with some of your comments.

Congratulations to your son, by the way. Does he still hold Lloyds?

"there must have been a fair few dumkopfs selling . . . " - well not at £2.06 but at £2.17 on 6th October. My choice, my decision and one I'm more than happy with and confident that it's the correct one.

"Much of the up and down behaviour is caused by silly people who are financially clueless . . . " - so you think the share price of a business with a market cap of £14.5bn is driven by 'silly people who are financially clueless'? I've got to say I'm not so sure!!!!!!!!

" . . . If there is a better place to put some money dear posters please enlighten me . . ."

How about the Legal & General International Index Trust Acc? Better anualised returns over 1, 3, 5 & 10 years. Much safer as extremely well diversified compared to a single share. I hold both in my portfolio.

Eccles04 - just for clarity on my statement below . . . I mean a large number of both investment funds and dividend paying assets both underperform simple global equity index funds over the long term

"our fund manager . . . never once beat the index . . . "

I still hold a number of managed funds but on an annual basis consolidate poor performers into global equity tracker funds. I've also adopted a strategy to move away from individual shares, LGEN is my last individual dividend paying share, and to reduce my exposure to dividend paying holdings. I've reduced it from 30% to 25% over the last 12 months and will have it down to 20% of my portfolio value this time next year.

It's amazing how, not only a number of managed f unds underperform the market, but also dividend paying investments.

For info my index trackers are: LGGG, IUQF, RSGL, WLDS and L&G Global Tech Index. Compare your own holdings to them!

I don't think there's a single avenue to follow when deciding what to do when sitting on an investment that's devalued your capital. For me, though, simply holding on in the hope of it recovering is a non-starter. Not unless you've good reason to believe a recovery is likely. If not then sell and move on to something with more promise. Hard to do, I know, I sold out of NRR a number of years ago at 80p (ish) for a 5 figure loss. Its price today . . . 80p (ish)

I still sit with a couple of real dividend paying 'dogs'. However, for various reasons they'll stay in the portfolio for the time being. I have been reducing my relience on dividend paying holding over the last couple of years and dividend payers now account for only about 25%, by value, of my portfolio. My aim is to reduce this further to about 20% by q1 2024.

I hold LGEN in a fund & share account, an ISA and a SIPP. My LGEN holding in both my fund & share account and my SIPP will be sold at some point over the next 12 months.

With such a small amount, ie 0.068% of shares in circulation, I don't see the point. They're saving £27k against an annual dividend cost of £39.8m! It's peanuts and insignificant and it's on that basis that I don't see the point.

What, a massive saving of £9,760 on dividend payments! I say again, what's the point? It's 0.02% of their dividend bill!! I don't see the point.

I don't see the point of these low value buy backs. This latest one was 0.02% of the current shares in circulation. What benefit is that?

Thanks for the link. Interesting read.