Single company Shares v Portfolio

Credit-Crunched

What are peoples thoughts on single company shares in their SIPP's.

I have recently amalgamated some of my pensions into AJ Bell and utilised the VG LS100. I have 20+ years to retirement.

I am in a fortunate position to be able to pay a £30k (penny stock on AIM came good) lump into my pension this tax year.

I was looking at the advantages of high divi stocks and the benefit of compounding with divi reinvestment.

I was looking at £3k each into:
Aviva
BP
GSK
HSBC
Lloyds
National Grd
Royal Dutch Shell
Tesco
Unilever
VOdafone

With my investment timeframe, I feel that dividend reinvestment will be a great addition to my 'main' portfolio.

Thoughts?

BLB53

Individual shares are a high risk strategy so for most (if not all) SIPP investors I would say they would be better off long term (which is what pension saving is all about) going with a low cost global multi-asset index fund such as Vanguard Lifestrategy as a core of the portfolio.

Maybe have a few investment trusts such as Scottish Mortgage or global smaller companies as satellites.

Brynsam

Depends on your attitude to risk - and dealing costs, which are significantly higher with lots of relatively small holdings of individual shares.

dunstonh

I was looking at the advantages of high divi stocks and the benefit of compounding with divi reinvestment.

But dont forget the disadvantages. HYP was vogue in the early 2000s with DIY investors but it suffered big time in the credit crunch.

Share price growth tends to be lower.

atush

Basically, single shares are very high risk. Whereas, funds hold tens if not hundreds of different companies shares. so tend to be less risky as if any one comapny fails or takes a big hit, all is not lost. Holding a portion of your portfolio in single shares- say 10-15% would be less risky than 100%.

I hold quite a lot of the shares in your list and have done well with some of them (esp Vodaphone as been holding it a long time).

But BP took a big hit over the GOM oil spill, and Lloyds from the credit crunch. So the only big positions I will take in my pensions is in shares in Investment trusts.

Drp8713

Just buy the Finsbury Growth & Income Trust.

It is a concentrated portfolio of 25 (mostly UK) shares, picked by Nick Train. Who I am sure has much more time, resource and experience picking them than you.

The 0.71% fee he charges would be less than the dealing fees to buy all those shares.

Credit-Crunched

Drp8713 wrote: »

Just buy the Finsbury Growth & Income Trust.

It is a concentrated portfolio of 25 (mostly UK) shares, picked by Nick Train. Who I am sure has much more time, resource and experience picking them than you.

The 0.71% fee he charges would be less than the dealing fees to buy all those shares.

Thanks for this information, I have taken a look at the dividend payments are roughly in line with what I would look at with my list of 10. Obviously with the added advantage of a wider spread of investments.

I think I will place 50/50 within this and the rest into my existing holding of VG lS100 - Maybe invest the tax relief into a few of the single company shares.

Credit-Crunched

Brynsam wrote: »

Depends on your attitude to risk - and dealing costs, which are significantly higher with lots of relatively small holdings of individual shares.

My attitude to risk is very high, I hold several holdings in AIM shares. Based upon my job, I am able to assess the Oilies quite well. The RNS's show a lot and I can assess the geology and tech details. Overall I have done very well, with a few de listings in the process! Overall, up 342% in my trading ISA!!

This is <10k money though, and my pension means a lot more to me, hence the VGLS100.

atush

Drp8713 wrote: »

Just buy the Finsbury Growth & Income Trust.

It is a concentrated portfolio of 25 (mostly UK) shares, picked by Nick Train. Who I am sure has much more time, resource and experience picking them than you.

The 0.71% fee he charges would be less than the dealing fees to buy all those shares.

Again, risky if a total uK focus. Would be better to buy this with other ITs that are more global in nature.

Tom99

[FONT=Verdana, sans-serif]I did almost exactly the same as you are intending to do 2 yrs ago. The same 10 stocks as you plus another 10 so 20x £5,000.[/FONT]

[FONT=Verdana, sans-serif]The idea being the same, high div stock and div reinvested. Something a bit more interesting than a fund.[/FONT]

[FONT=Verdana, sans-serif]All went reasonable well and it is nice to see 2 or 3 dividends being paid each month but the initial cost and the div reinvestment all come at a price, a dealing fee for each, buy/sell spread and stamp duty. Some Co's pay a div 4 times a year.[/FONT]

[FONT=Verdana, sans-serif]I found my 'portfolio' tracked the FTSE100 fairly closely but even so did not perform quite as well as a FTSE100 Acc tracker I also owned over the same period.[/FONT]

[FONT=Verdana, sans-serif]Also whilst to start off with the risk was evenly balanced at £5k per share, in 18/24 mths time there was a significant imbalance, some shares had gone up 40% (HSBC) and other down 35% (M&S).[/FONT]

[FONT=Verdana, sans-serif]I the end I sold the lot recently and reinvested in a small number of Acc funds. It was an interesting experiment but at the end of the day produced a slightly less than average result.[/FONT]

kidmugsy

Tom99 wrote: »

in 18/24 mths time there was a significant imbalance, some shares had gone up 40% (HSBC) and other down 35% (M&S). ... It was an interesting experiment but at the end of the day produced a slightly less than average result.

It was likely to produce a somewhat less than average result because you failed to rebalance.