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  • EdInvestor
    • #2
    • 31st May 05, 7:40 PM
    A good introduction
    • #2
    • 31st May 05, 7:40 PM
    I'd like to emphasise to anyone starting out buying shares not to overlook the importance of dividends.Most of the returns on stockmarket investing over the years come from reinvested divis, not changes in the share price.

    Many people know this because they bought shares in the Thatcher era "Sid" privatisations or got windfall demutualisation shares - most of these companies pay good divis.

    It's quite easy at the moment to put together a portfolio of shares which will give you a dividend yield of 5-6% a year (tax free to basic rate taxpayers, 25% to HRT). So you know that it's pretty certain you're going to get that 6% income return, even if the share price wobbles up and down.

    Here's a few shares you could consider - and if you can buy all 10, it will be safer, because they are in different sectors. It's rare for all types of company to be out of favour at the same time.

    Lloyds Bank 7.7% bank
    United Utilities 7.2% water company
    Northern Foods 5.9% food supplier to M&S
    Dixons 5.7% retailer
    BT 5.2% telecoms
    Legal and General 5.0% life assurance
    British American Tobacco 4.6% cigs
    Scottish and Newcastle 4.6% beer
    Pilkington 4.6% industrial/automotive glass
    Shell 3.8% oil

    Overall a 5.4% yield. This is the "forecast yield" - what analysts expect the company to pay out in dividends over the next year.
    Better than cash.

    These are mostly what they call "defensive" shares - when there's a downturn people tend to still use banks, pay their life insurance, drive cars, eat, drink, smoke and talk to each other on the phone. So shares like these did well during the dotcom crash and are still doing well today. They're all big well known companies too - size does matter

    I can't claim credit for inventing this idea of getting a basket of high yield shares - it was dreamed up by a very experienced share guru at the Motley Fool.He calls it a High Yield Portfolio (HYP).

    But I can say the idea works, I'm so keen on HYPs I now have two.

    If you're young and looking to grow your savings, just reinvest the dividends and buy more shares.Do this every 6 months when they've mounted up a bit -you don't want to trade a lot, as the charges cut into your profits. If you need income, take the divis to spend. Otherwise just buy and forget......of course some people just can't resist checking......
  • muckell
    • #3
    • 31st May 05, 8:12 PM
    • #3
    • 31st May 05, 8:12 PM
    I'll second that Editor, i've been using Fool.co.uk for years and my HYP has grown nicely...

    Would recommend
    You Can, If You Think You Can!
    • plumb1
    • By plumb1 31st May 05, 9:28 PM
    • 2,979 Posts
    • 899 Thanks
    plumb1
    • #4
    • 31st May 05, 9:28 PM
    • #4
    • 31st May 05, 9:28 PM
    Good post Editor,When starting out buying shares it is good to have a solid base of shares.
    If anyone is thinking of opening a share dealing account see my offer,lastest update from Comdirect is that the offer will end in July.
    http://forums.moneysavingexpert.com/showthread.html?t=235
    • mary
    • By mary 31st May 05, 9:39 PM
    • 1,537 Posts
    • 435 Thanks
    mary
    • #5
    • 31st May 05, 9:39 PM
    To sell or not to sell
    • #5
    • 31st May 05, 9:39 PM
    My father left me some shares about 5 years ago with Norwich Union, as it was then. It is only a small amount, 250 shares. They were then taken over by Aviva. I usually receive about £50 a year in dividends from it.

    By pure coincidence today I had a letter from them saying that they are making a new Postal Share Dealing Service available to our shareholders who hold 500 Aviva shares or less. This service which will enable you to either sell your shares or purchase further shares, is entirely voluntary .....

    They continue ...we appreciate that it may be uneconomical or inconvenient to hold a small number of shares and therefore you may prefer to sell them if you are able to do so without incurring a siginificant fee .....

    We have arranged for Lloyds TSB Registrars to offer a share dealing service, which will be available until 12th August. the charges for the service will be 20 p for each share you sell, with a maximum charge of £30. In addition, stamp duty reserve tax is also payable on purchases currently at the rate of 0.5% of the transaction value.

    I don't have any other shares and it's something I know little about.
    Last year the "Indicative value of the shares was £1,426 and this year it is £1,632" I think this means they went up by some 14%??
    The current estimated value of the shares is £1,566. I really haven't a clue whether their postal share dealing service means it is a good deal for selling. Is it something that is likely to be repeated? I don't need the money as such. I feel happier chasing high interest savings accounts, stoozing from credit cards and being in more "personal control" of my money.
    So, should I just sell it and add it to my savings pot?

    Any advice welcome.
  • davidcampbell
    • #6
    • 31st May 05, 10:34 PM
    • #6
    • 31st May 05, 10:34 PM
    I'd like to emphasise to anyone starting out buying shares not to overlook the importance of dividends.Most of the returns on stockmarket investing over the years come from reinvested divis, not changes in the share price.
    i have to confesss tto knowing nothing about shares however i do recall reading something a while back about 2 sons who received an inheritance from their father.

    father gave both something like £10,000 (i think) with one proviso - that they invest the £10,000 in shares and can spend only the dividends not the original £10k

    one son withdrew his dividends every year and spend them while the other reinvested the dividends in more shares.

    30 years later son 2 was something like 500 times better off just because of the reinvestment.

    ill try to find a link because it pretty backs up your quote perfectly editor.

    DC
  • EdInvestor
    • #7
    • 1st Jun 05, 11:07 AM
    • #7
    • 1st Jun 05, 11:07 AM
    Hi Mary

    I usually receive about £50 a year in dividends from it.I don't have any other shares and it's something I know little about.
    Last year the "Indicative value of the shares was £1,426 and this year it is £1,632" I think this means they went up by some 14%??
    by mary
    So last year your Aviva shares returned you 18% - 14% in capital growth and 4% in dividends

    Can you give me a good reason why you should get rid of this investment?
    Can you think of any other investment that returns 18%?

    I would hold onto these shares and buy some more similar (perhaps from the list above - but not Legal and General, as you already have an assurer with Aviva).

    I suggest you move them to Halifax Sharebuilder, which is extremely cheap on charges. Don't use that expensive offer.

    Then I'd consider putting more money in and buying some more shares with divis as you can afford it.
    • payless
    • By payless 1st Jun 05, 11:46 AM
    • 6,573 Posts
    • 2,335 Thanks
    payless
    • #8
    • 1st Jun 05, 11:46 AM
    • #8
    • 1st Jun 05, 11:46 AM
    Was under the impression this thread was to discuss the different providers of share dealing services, and not actual shares or investment theories/ methods. ( as these discussions were not allowed on this site - or has it changed ?)

    ( edit ... the title and links seem now to refer to another article as well)
    Last edited by payless; 01-06-2005 at 1:44 PM.
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
  • MSE Controller2
    • #9
    • 1st Jun 05, 12:22 PM
    • #9
    • 1st Jun 05, 12:22 PM
    Just to confirm what Payless has said here - Please keep conversation limited to the discussion of providers and services. This forum cannot be used to offer advice about specific share dealings.

    Regards
    • mary
    • By mary 1st Jun 05, 1:11 PM
    • 1,537 Posts
    • 435 Thanks
    mary
    I appreciate what you are saying and didn't think I was doing anything wrong. It is an area I know little about and was genuinely seeking advice. I have been on MSE daily for over a year now and frequently visit the Credit Card, Savings and Current account boards, where people are asking for advice as to which move next and I didn't really see my enquiry as being any different.
  • EdInvestor
    WARNING: This site is not a regulated investment site, please do not discuss any individual shares, investment or stock picking. In the article linked to above a range of sites which do welcome those kind of discussions are linked to.


    Just as a point of information Moderators, it's not a requirement to be regulated to discuss shares and investments. The Motley Fool is definitely not regulated and AFAIK neither is ADVFN.

    It will be a bit difficult to talk about pensions or ISAs or SIPPs if you can't discuss investments, which include all funds, and gilts, and even property, of course.

    The only real problem websites like this need to watch out for is share ramping, but that usually only applies to obscure small stocks that nobody has ever heard of. And if it happens, it's the ramper that gets it in the neck, not the site. You can check this easily with the FSA.
    • cheerfulcat
    • By cheerfulcat 1st Jun 05, 5:53 PM
    • 3,173 Posts
    • 1,350 Thanks
    cheerfulcat
    WARNING: This site is not a regulated investment site, please do not discuss any individual shares, investment or stock picking. In the article linked to above a range of sites which do welcome those kind of discussions are linked to.


    Just as a point of information Moderators, it's not a requirement to be regulated to discuss shares and investments. The Motley Fool is definitely not regulated and AFAIK neither is ADVFN.

    It will be a bit difficult to talk about pensions or ISAs or SIPPs if you can't discuss investments, which include all funds, and gilts, and even property, of course.
    by Editor
    I'm with Editor on this one. There is no reason to be afraid of discussing individual shares or even specific collective investments. For copyright reasons I won't reproduce the contents here but moderators might like to look at this post by a TMF staffer regarding share discussions -

    http://boards.fool.co.uk/Message.asp?mid=9309924


    HTH

    Cheerfulcat
    • payless
    • By payless 1st Jun 05, 8:00 PM
    • 6,573 Posts
    • 2,335 Thanks
    payless
    Just to say, I was just repeating a previous statement- I don't know why its not allowed on these boards - interesting post on TMF, but suppose its up to each site owner what they want.

    Perhaps MSE don't want the hassle of "moderating"

    Notice someone got fined £15K recently , in connection ( have not read it all- not sure of all facts) with posts on ADVFN
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
  • EdInvestor
    Notice someone got fined £15K recently , in connection ( have not read it all- not sure of all facts) with posts on ADVFN
    Yes, here's the FSA report on the case: it was the poster not the site that was fined, for insider trading.

    http://www.fsa.gov.uk/pages/Library/Communication/PR/2005/024.shtml

    MSE shouldn't be worried about this IMHO, the current moderator level is quite adequate.But of course the site should make certain it's comfortable with the rules.
    • MSE Martin
    • By MSE Martin 2nd Jun 05, 12:50 AM
    • 8,093 Posts
    • 42,219 Thanks
    MSE Martin
    OK let me put it this way. I dont want this site to be a share tipping site or an investment site. There are many great chat forums to that (i link to them in the article). The idea of regulating (ie us regulating) what is share pumping and what isn't and policing it - simply isn't somewhere i'd like this site to go.

    martin
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.

    Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.

    Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 000
  • deemy2004
    Stick to sector leaders - big cap stocks !

    Don't make the mistake I made !

    A few years back I bought Morrisons instead of Tescos cos I thought Morrisions would catch up and pass Tescos ! NEVER HAPPENED !

    Morrisons sunk... tesco took off ........

    So stick to the big cap market leaders in the sector your looking to invest in !
  • deemy2004
    United Utilities 7.2% water company
    by Editor
    UU my biggest single holdling - reporting today.. fingers crossed...
    • payless
    • By payless 2nd Jun 05, 7:35 AM
    • 6,573 Posts
    • 2,335 Thanks
    payless
    Yes, here's the FSA report on the case: it was the poster not the site that was fined, for insider trading.

    http://www.fsa.gov.uk/pages/Library/Communication/PR/2005/024.shtml

    MSE shouldn't be worried about this IMHO, the current moderator level is quite adequate.But of course the site should make certain it's comfortable with the rules.
    by Editor
    yes but sure that Martin does not want to provide a vehicle for people like these
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
  • EdInvestor
    Although I think it's a pity not to discuss direct share investment - cutting out the middleman here is a great way of moneysaving - it's obviously up to Martin to decide the direction of his site.

    So here's a link to the relevant discussion board at the Fool covering the easy to understand HYP strategy I outlined above for those interested. There's an excellent FAQ there which gives more details of how to go about it.

    Note to Deemy: and some good news for you (and me) too
  • deemy2004
    Very nice 6.6% dividend on current prices...

    People will always need water....
    Last edited by deemy2004; 03-06-2005 at 2:28 AM.
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