high yield dividend stratgey

fizio

I have a diverse portfolio but its mostly based around index trackers (uk and ww)and having read various articles, I've decided to stick my 2012 ISA into some of blue chips that are solid dividend providers.
So, I'm after some pointers on both where to get relevant data from to help me pick and any words of wisdom eg when is a good time to buy (before/after dividends?
Obviously there are some 'usual suspects' eg vodafone, aviva, etc but i'd welcome any advice or starting point

Linton

haf63 wrote: »

I have a diverse portfolio but its mostly based around index trackers (uk and ww)and having read various articles, I've decided to stick my 2012 ISA into some of blue chips that are solid dividend providers.
So, I'm after some pointers on both where to get relevant data from to help me pick and any words of wisdom eg when is a good time to buy (before/after dividends?
Obviously there are some 'usual suspects' eg vodafone, aviva, etc but i'd welcome any advice or starting point

There are very active forums on motleyfool which discuss the HYP (High Yield Portfolio) strategy and shares.

DigitalLook provides facilities for searching for shares that meet various criteria, including high dividend. You may well need to register, but it's free for a good range of tools and data.

One word of warning - companies can be paying high % dividends because they are highly profitable or because their share price has recently collapsed but their difficulties have yet to be reflected in the dividend. You obviously want to avoid the latter, so some research is necessary.

Newbie2saving

I have been reading up on this strategy for awhile now, but this year I limited my risk and went into Vanguard & IT's instead. Did you read monkey with a pin? Also this site is great http://monevator.com/buying-high-yield-portfolio/

Good luck and let us know what you pick...

Rob_192

haf83

I made exactly the same decision and have built up a HYP (high yield portfolio) over the last year or so.

In theory, when you invest shouldn't make much defierence as the price should account for whether the shares are ex div or not, but I have to say, if you buy shares ex div, you seems like a long wait before you get your first divi, especially if they only pay one divi and interim a year.

I try to hold a reasonable sum in cash and then buy when the price drops, but remember if you're not invested, your not getting divis. That having been said, it's so much more satisfying buying and seeing the price rise rather than the opposite, not that one should be too concerned if you're looking at long term buy and hold - I just like to get as many shares for my money.

To start with, the decision as to what to buy is easy as the usual suspects are fairly obvious - just look to diversify. I now hold 26 shares and it's getting a bit more difficult trying to decide on the next purchase whilst not getting over exposed to any particular sector.

One thing I would strongly recommend is setting up a good spreadsheet to record and monitor perfomance - this has taken me a long time and I still haven't got it right yet, but am getting there.

There is some good stuff on the Motley Fool, although some of it is a bit OTT! Certainly to start with it is worth looking there to see what others are holding in their HYP's, but then you'll start to develop your own thoughts, for instance I refuse to hold tobacco shares which are generally regarded as good to hold in a HYP, so I have to look for alternatives.

In terms of logistics, I use Sippdeal and make deposits using my debit card. You get next to no interest, so if you're waiting for the market to drop before buying, you might as well keep the money on deposit elsewhere. On the other hand you may prefer to make regular investments which is cheaper, but as I say, I like to buy when the markets are low. I tend to buy in £2.5k chunks which I consider units and sometimes buy a half unit and then top up if the price drops. This value just suits me and is reasonably costs effective in terms of fees - £10 on a £2.5k purchase being 0.4% (remember you also have 0.5% stamp duty on purchases), but after that there are no further charges, so it's so much cheaper than being invested in the same companies through funds.

Good luck

R

fizio

Thanks for the great pointer (newbie) and the comprehensive advice (Rob). My plan is to go for around 5 shares at £2k each and use up this years isa allowance. I'll do some more research and tracking and then wait for a price drop due to another eurozone or other crisis before i make my purchase. Last years ISA went into a dividend ETF so I'll see how that went and try to beat it with my picks.

Rob_192

haf

Personally, I would wait for a drop, I'm not buying now.

The FTSE is back up at over 5850 - only a few months ago it was below 5300.

Also, if you're only buying 5 shares, you're not going to be very well diversified. Look to buy more soon or consider smaller units - albeit this costs more in % terms.

I would say as a rule you should be aiming at 15-20 shares min in a HYP.

R

gadgetmind

My wife has a 20 share HYP, which was mostly bought when the FTSE was down closer to 5000.

Of course, you can find yourself waiting a long time when playing the market timing game ...

fizio

Rob_192 wrote: »

haf

Personally, I would wait for a drop, I'm not buying now.

The FTSE is back up at over 5850 - only a few months ago it was below 5300.

Also, if you're only buying 5 shares, you're not going to be very well diversified. Look to buy more soon or consider smaller units - albeit this costs more in % terms.

I would say as a rule you should be aiming at 15-20 shares min in a HYP.

R

Agreed that 5800 is way to high and will not be jumping in till below 5500 as I'm not in a great rush.

I will get to 15-20 over time as i'd rather not buy them in £500 chunks and would prefer closer to a £2k per share. Maybe 6-7 per ISA which means 12-14 if i include my wifes ISA. I am pretty well diversified already so the HYP part of my strategy is to complement my bonds/shares/property and various other investments.
Thanks for the advicee though and I have been looking through motley fool forums to broaden my knowledge