The Dividend Letter

dunstonh · 15 February 2009 at 12:31PM

Oh dear - looks like we will be moving the long standing argument on Motley Fool over to here!

Not really. I think it is a valid strategy. However, I do think the MF application of it using just a small number of shares and having no lower risk, higher yielding investments makes it riskier than it needs to be.

I suggest anyone who is interested goes through the posts on the MF site.

Unfortunately, there isn't a lot of balance there. (although I will admit I haven't visited recently).

EdInvestor · 15 February 2009 at 7:22PM

Here's a recent update of the original HY portfolio bought at the top of the market in 2000.

Note that an investor would still have more than the original capital invested and would have received almost half that amount in income over the period. This trounces the performance of an annuity, and it is this kind of investor that the strategy is aimed at.

Note also the comparative performance of the FTSE, -32% and a much lower dividend return..

http://boards.fool.co.uk/Message.asp?mid=11438816&sort=whole#11439524

bigfreddiel · 15 February 2009 at 7:55PM

Biggles wrote: »

I have a (painful) experience of Fleet Street Publications/MoneyWeek (all part of the same company) and I avoid their myriad of publications like the plague.

Hmmm..., I have had experience of Fleet Street Pubs many years ago - and it wasn't that good - I'm wondering whether or not to keep my subscription to Moneyweek going - I thinks its for the chop.

Cheers

fj

bigfreddiel · 15 February 2009 at 7:57PM

opinions4u wrote: »

Not if paying a dividend out of profits that haven't actually been made affects the underlying value of the shares.

In a low inflation environment where profits in real terms are falling across the board, what use is this?

And if the value of those companies halved again but they were stupid enough to maintain their dividends you'd have a 14% income to shout about.

Doesn't make it a winner though.

Feelings seem mixed on the HYP method tho' so I'm just going to keep an eye on this for now.

Thanks to all that replied.

fj

jamesd · 15 February 2009 at 9:31PM

EdInvestor, has it managed to catch up with the Invesco Perpetual equity invcome funds yet or is it lagging even further behind than it was before?

The HYP is a nice concept but when you can beat it easily just by buying one of the most popular funds in the UK and get lower risk as well as the greater returns it seems pointless.

Aegis · 15 February 2009 at 9:47PM

jamesd wrote: »

EdInvestor, has it managed to catch up with the Invesco Perpetual equity invcome funds yet or is it lagging even further behind than it was before?

The HYP is a nice concept but when you can beat it easily just by buying one of the most popular funds in the UK and get lower risk as well as the greater returns it seems pointless.

Presumably lower purchase charges too?

Biggles · 16 February 2009 at 12:42AM

EdInvestor wrote: »

Note that an investor would still have more than the original capital invested and would have received almost half that amount in income over the period. This trounces the performance of an annuity, and it is this kind of investor that the strategy is aimed at.

Whilst I do subscribe to the general principle of high yield investing, to report a net gain of 5% over 9 years as being a success isn't really making it look too good, when you could have been getting that per annum over the same period with most savings accounts.

The Dividend Letter

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