Investing in high dividend companies

BLB53

There are quite a few smaller companies paying good dividends so I wouldnt rule out the FTSE250 - eg Marstons, Chesnara, Arriva, GoAhead,Halfords, Cineworld. You could go smaller but then you are into a riskier style of investing.

I don't regard FTSE 250 as smaller companies - more sort of mid cap. I hold quite a few in my higher yield portfolio - Kentz, Lamprell, Carillion. Also have a few higher yielding small caps - Albermarle, Paypoint, Abbey Protection and Braemar.
I don't regard small caps as necessarily riskier ( look at some of the so called safe blue chips over the past few years - Lloyds, RBS, BP, Taylor Wimpey etc )- some have very good fundamentals and sound long-term track records.
Its just that most are set on a growth path and tend to reinvest most of their profits to grow the business whereas the FTSE 100 companies are mostly more mature and able to focus less on growth and more on rewarding shareholders by way of dividends.

gadgetmind

Linton wrote: »

The difficulty I see with any passive dividend instrument is that it may not differentiate between a high yield because the company is doing well and a high yield because the share price has crashed. A person can of course see this immediately.

Yes, but the person still might decide to invest/hold.

My Vanguard UK Equity Income holding isn't something I hold with massive conviction, but it's a low single digit percentage of my portfolio, and the holdings all looked sane when I checked.

I have a *much* larger portfolio of hand-chosen high-yield shares, so I'm not feeling too uncomfortable.

fizio

[/QUOTE]My Vanguard UK Equity Income holding isn't something I hold with massive conviction, but it's a low single digit percentage of my portfolio, and the holdings all looked sane when I checked.

I have a *much* larger portfolio of hand-chosen high-yield shares, so I'm not feeling too uncomfortable.[/QUOTE]

This is pretty much my thinking also so will take a look at the vanguard option as I have my ISA's with H-L anyway so already have some Vanguard lifestyle investments

ds1980

http://boards.fool.co.uk/investors-roundtable-5007.aspx

There is a section on high yield investing.

gadgetmind

haf63 - you need to take the leading slash off the first bracketed quote.

gadgetmind

ds1980 wrote: »

There is a section on high yield investing.

It's worth noting that "HYP" (High Yield Portfolio) is a specific form of high yield investing, with a number of "rules", including cap size, dividend cover, dividend record, number of holdings, max exposure per company/sector, not timing purchases, not "tinkering" (no trading or even balancing!), and many more, some stated but others implied.

I'm a "rules are for breaking" kind of guy, so I also hold ITs in the same portfolio, indulge in market timing, have some non-UK holdings, and also sprinkle in any juicy FTSE250 or even small caps that catch my eye.

However, the underlying rule is to look for well-run companies that understand the importance of rewarding investors via a healthy and growing stream of dividends.

I don't punish "cutters" with quite the zeal of others, but I think long and hard before buying any that haven't stood in the naughty corner for 5+ years, while reliably delivering dividends as described above.

And no, calling it "rebasing" doesn't work, we're wise to that one.

sabretoothtigger

The data is sorted by estimated dividend yield in descending order. Dividends are paid on a semi-annual basis unless noted. Payout ratios are calculated based on the latest annual dividend paid divided by earnings. The projected dividend yield is calculated by Bloomberg of the dividends projected over the coming 12 month.

http://www.bloomberg.com/news/2012-03-01/estimated-dividend-yield-rankings-of-ftse-100-company.html?cmpid=yhoo