[Stephen Bland]

Thanks Chris

FGP is not the worst offender of suspended dividends amongst the three. That dubious honour goes to RBS as I said in the article.

As mentioned, the eternity hold approach is based on the likelihood that on balance, sufficient suspender shares will recover payouts to justify holding but by taking this overall view, it follows that there will be some poor performers that take far longer than expected to recover. The approach will also capture some good recoveries too such as for example BP and Persimmon which both suspended dividends in the past. We know with hindsight how things turned out but it’s not necessarily clear at an earlier date so how long do you give it? I decided that forever was probably long enough.

But it’s your money so if you feel you should dump such shares you must do so, TDL is only advisory.

[Stephen Bland]

Stop losses have no place in an income strategy like HYPs because share prices are of little or no concern. Therefore there is no reason to sell a share in my strategy just because its price has fallen. Overwhelmingly, price falls are just market noise.

Stop losses are used principally by traders attempting to make money from capital gains but trading is not part of the HYP approach. In fact the opposite is true, non-trading is part of the HYP approach.

Eternity hold exists with me because on balance I believe, and have seen, that most shares will recover. Enough to vindicate this approach on balance.

It would be contradictory for me to advise you on using stop losses in my strategy when I totally disagree with their use in HYPs and also, it would constitute personal investment advice which I am legally prohibited from giving to individual readers.

You use the expression “support levels” which is a chartist term. Charting, or technical analysis, is for traders trying to profit from price action so I see no place for it within HYP income investing where the sole aim is to earn dividends. In contrast your message is focussing on capital values which is entirely the wrong way to consider the method. HYPers buy a share exclusively for its income potential, not for its price potential.

[Stephen Bland]

I point out that CLLN is in difficulties and has suspended dividends. As a result it is is currently a Hold in TDL, not a Buy, so I do not agree from an HYP viewpoint with your decision.

[Stephen Bland]

I read it but I frequently refrain from commenting on trading updates because in most cases they have little to say that’s of particular interest to us. A dividend payment is not something on which I’d normally comment.

My Hold view on TCAP is unchanged as shown on the Dividend Schedule and that view takes into account the trading update. Generally, the status of every company shown on this schedule takes into account all the latest news available at the time I write it, assuming I haven’t missed something which is always possible.

Had the update resulted in changing my view of the company, I would then have published my comments on it and reason for the change.

[Stephen Bland]

Yes, that’s just a normal way to build up an HYP for those who don’t have a large initial sum, something I’ve mentioned repeatedly over the years and a lot of HYPers are doing just that. But the aim, even if they start with a small number of diversified holdings, should be to construct the full 15 sector minimum HYP over time by adding shares in new sectors with a mixture of new money and accumulated dividends.

An HYP with only about five different sectors may well not “come to serious grief” as you put it, but there is a sharply greater risk that it may do so over time compared with my 15 min view. Remember that the whole purpose of HYPing is income, whether that income is withdrawn or reinvested. Income investors in individual equities, more than most and especially if they are depending upon that income, need to lower risk as far as that is possible with shares, though it cannot be eliminated.

Diversification is the only way to achieve a lowering of specific industry risk in an HYP and I see a minimum of 15 sectors as necessary to achieve that. Note that there is not a direct relationship between greater diversification and lowering risk, instead the trade-off reduces with the number of existing diversified shares in it. For example a one share portfolio has its risk lowered very substantially by adding just one diversfied share to make a two share portfolio. But a 15 share portfolio achieves only a much smaller risk trade-off with one further diversified share to make a 16 share HYP, and so on.

[Stephen Bland]

It’s one of those questions John to which the answer will vary between individuals. You don’t mention HYPs specifically but in order to be able to construct a suitably diversified portfolio in my strategy requires a minimum of 15 sectors, so with one share per sector that’s 15 times whatever the economically viable minimum investment per share is for any particular broker, having regard to costs.

I doubt that the £2,500 you mention would be anywhere near adequate and would suit more like 1-5 shares perhaps, thus increasing risk. Not that there’s necessarily anything wrong with taking on greater risk if the person understands what they are doing, it’s just it would not be an HYP as I define it and this is an HYP discussion forum, not a general investment forum.

Also I point out that if you are charged £90 per year, that 4% yield on £2,500 would be just about swallowed up by the annual charge and leaving next to nothing to reinvest.

An alternative for such a small sum might be a fund, of which there is an enormous choice, especially for a more risk averse investor.

[Stephen Bland]

Glad this has been resolved and thanks for the comments George.

[Stephen Bland]

Thanks for the message George and I was unhappy to hear of your difficulty. As you may be aware I have little to do with the admin of TDL, I just write it and Southbank handles all the rest. However I have passed your complaint on to the top but it is possible that they may not be able to solve your problem.

If it’s of assistance, I’ve thought of one possible answer which is that you create your own hard copy by printing out the missing back issues from the website.

[Stephen Bland]

I ceased publishing old portfolios some time ago. Only the latest HYP under construction is shown in every issue and online. Annually in January I publish the past performance by income and capital of all old portfolios.

All shares ever selected where still held in any portfolio appear in the dividend schedule in every issue and online, showing the latest status though not the yield.

[Stephen Bland]

Indeed it is. I have reported it to the tech people and my apologies for the omission, even though this is outside my control.

However until it is amended by the next update, right now it is the same as the last week’s TDL email update which you should have received.

[Stephen Bland]

It’s not my policy to recommend any particular brokers but other readers are welcome to comment.

[Stephen Bland]

Yup, more errors Pete. Again not down to me but to the techies who put the tables up on the site and embarrassing for me, coming as it does on the back of earlier omitting the table entirely. It looks like all the foreign currency dividends, which I take care to identify as US or euro cents, have omitted this indicator when my table was transferred to the online version, making them appear wrongly to be in pence. Apologies and l have reported this to them, thanks for picking up this error which I hope will be rectified tomorrow though it’s not in my hands.

Update 10:36 on 31/08
This has now been corrected by the web techs so that all FX dividends not yet converted to sterling should now show the ¢ indicator, whether US or Euro.

[Stephen Bland]

Quite right Pete, it’s not there. I don’t know why this occurred because I certainly prepared the DS but I don’t manage the site personally, that’s done by my publisher, so I’m immediately taking this up with them and apologise for the omission which should not have happened. Thanks for bringing it to my attention and for your appreciation of TDL.

Update 09.55: This has now been corrected.

[Stephen Bland]

This is a personal financial advice question that I am not permitted to answer due to financial services legislation which prohibits my doing so. Other readers may comment though.

[Stephen Bland]

I do use Stockopedia as a very good source of locating potential HYP shares but note that the screen to which you refer has nothing to do with HYPs as featured in TDL but is based on my “pyad” value share trading strategy that I used to write extensively about elsewhere but have not done so for a long time now. That’s why the filter criteria and the sort of shares selected are completely different.

I should point out also that the Stockopedia screen, though based on my value trading approach, in fact differs in several important respects from the actual strategy I used to follow. Some time ago Stockopedia decided to feature the “pyad” strategy because they found it to be an effective trading style worth displaying on their site.

Value share trading and HYPs are completely distinct strategies which should not be confused with each other but, because I have been associated with both methods over the years, people sometimes, and quite understandably, don’t always appreciate the difference. In practice HYPs are designed for income whereas value is for trading to make capital profits and the two approaches have entirely different rules and types of share within them.

Thanks for the endorsement of TDL.

[Author]

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