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The Dividend Letter
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# 1
bigfreddiel
Old 13-02-2009, 9:37 PM
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Default The Dividend Letter

Yet another newsletter from Fleet Street Publications called the Dividend Letter being touted by Moneyweek this week.

Its a high yield portfolio (HYP) method of investing.

I would appreciate any comments on this, do any of our bb members subscibe and could they comment.

Cheers

fj
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# 2
bigfreddiel
Old 14-02-2009, 7:05 PM
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does no one have any opinion or experince of this?

cheers

fj
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# 3
Biggles
Old 14-02-2009, 8:23 PM
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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.

If you like the HYP theory, it's a very simple method of investing (there is a board devoted to it over on the Motley Fool site) and you really don't need a newsletter to tell you how to work out a yield.
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# 4
dunstonh
Old 14-02-2009, 8:53 PM
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Quote:
does no one have any opinion or experince of this?
Head Vestor does

Fleet St Publications = assume waste of money and largely telling you nothing that you dont already know, wont be able to utilise or totally ignorant of real world scenarios.

HYP = valid long term medium/high to high risk strategy which for most people that followed the MF examples would have seen above market average losses in recent times due to a reliance on bank shares paying good dividends.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 5
EdInvestor
Old 14-02-2009, 9:26 PM
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Quote:
Originally Posted by dunstonh View Post
HYP = valid long term medium/high to high risk strategy which for most people that followed the MF examples would have seen above market average losses in recent times due to a reliance on bank shares paying good dividends.
Nonsense.The HYP idea is an income based strategy based on a diversified portfolio of at least 15 shares, of which a tiny minority will be banks. The Dividend Letter is written by Stephen Bland who invented the idea, and is well worth a subscription if you are new to this style of investing.
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# 6
dunstonh
Old 14-02-2009, 10:07 PM
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really? The HYP portfolio you posted in the past is over 45% down against the FTSE at 30% in the same period.
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# 7
jem16
Old 14-02-2009, 10:26 PM
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Quote:
Originally Posted by dunstonh View Post
Head Vestor does
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# 8
Biggles
Old 14-02-2009, 11:55 PM
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Quote:
Originally Posted by EdInvestor View Post
The Dividend Letter is written by Stephen Bland who invented the idea, and is well worth a subscription if you are new to this style of investing.
Whilst he may (or may not) have devised the idea that his version should contain 15 shares, and possibly even came up with the term 'HYP' for it, there's certainly nothing new about the idea of a high yield portfolio. Basically, he's just a journalist who wrote about it a lot, not an inventor.
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# 9
Linton
Old 15-02-2009, 9:44 AM
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really? The HYP portfolio you posted in the past is over 45% down against the FTSE at 30% in the same period.
Oh dear - looks like we will be moving the long standing argument on Motley Fool over to here!

There are two points of view - one is as suggested above, that HYP is an investment strategy which has recently been unsuccessful in dealing with the credit crunch..

The other, which I favour, is that HYP is a successful income strategy for people who need a reasonably safe and steady income with some protection against inflation. Because there is to intention to sell HYP shares, temporary ups and downs in individual share prices do not matter. What does matter is that dividends continue to be paid.

Companies are very reluctant to cut dividends and will only do so if there are serious problems. In fact dividends will tend to rise over time as company profits increase with inflation.

Currently my dividend income is about 7% of current share value or 4% of original cost.

I suggest anyone who is interested goes through the posts on the MF site.
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# 10
opinions4u
Old 15-02-2009, 10:02 AM
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What does matter is that dividends continue to be paid.
Not if paying a dividend out of profits that haven't actually been made affects the underlying value of the shares.

Quote:
Companies are very reluctant to cut dividends and will only do so if there are serious problems. In fact dividends will tend to rise over time as company profits increase with inflation.
In a low inflation environment where profits in real terms are falling across the board, what use is this?

Quote:
Currently my dividend income is about 7% of current share value or 4% of original cost.
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.
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# 11
jem16
Old 15-02-2009, 11:13 AM
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Originally Posted by Linton View Post
The other, which I favour, is that HYP is a successful income strategy for people who need a reasonably safe and steady income with some protection against inflation. Because there is to intention to sell HYP shares, temporary ups and downs in individual share prices do not matter. What does matter is that dividends continue to be paid.
Looks like this person didn't quite understand the concept of, "as long as your dividends continue to be paid what does it matter what your capital is doing."

http://forums.moneysavingexpert.com/...html?t=1486859
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# 12
dunstonh
Old 15-02-2009, 11:31 AM
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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.

Quote:
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).
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# 13
EdInvestor
Old 15-02-2009, 6:22 PM
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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...whole#11439524
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# 14
bigfreddiel
Old 15-02-2009, 6:55 PM
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Originally Posted by Biggles View Post
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
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# 15
bigfreddiel
Old 15-02-2009, 6:57 PM
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Originally Posted by opinions4u View Post
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
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# 16
jamesd
Old 15-02-2009, 8:31 PM
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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.
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# 17
Aegis
Old 15-02-2009, 8:47 PM
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Originally Posted by jamesd View Post
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?
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# 18
Biggles
Old 15-02-2009, 11:42 PM
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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.
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