Dividend ETA

Thrugelmir

Yesterdays laggard often becomes tomorrow's best short term performer. The time to buy is when the mantra is negative. While the fundamentals remain sound.  Was listening to an interesting discussion earlier in the week. Where the ratings between a number of UK companies and their international counterparts were compared.  No logic in the discount applied to the UK companies on any measure. 

Alexland

Thrugelmir said:

No logic in the discount applied to the UK companies on any measure. 

Digging into the numbers behind CTY it looks like the virus caused about 1% of that 5.4% dividend yield to come from the revenue reserve during their last accounting year and they expect to do the same again this year so to avoid selling down too many holdings the rate of dividend growth is likely to be the smallest possible to keep their 54 year record going. Still they can draw upon both revenue and capital reserves (which together make up around 20% of the assets) it seems unlikely their record will be beaten any time soon. The use of capital reserves also means they don't get forced into buying the high yield dividend traps in IUKD as they can use growth to pay the dividends. It's clearly a very well run operation and would be my choice for UK income (although some exposure overseas to Microsoft etc) but I wonder if it would fall to a 10% discount if Job Curtis ever retires. They don't seem to have lined up a co-manager successor yet. It's so tempting to put some money in as my global passives are becoming US heavy growth funds.

Thrugelmir

Alexland said:

Thrugelmir said:

No logic in the discount applied to the UK companies on any measure. 

Digging into the numbers behind CTY it looks like the virus caused about 1% of that 5.4% dividend yield to come from the revenue reserve during their last accounting year and they expect to do the same again this year so to avoid selling down too many holdings the rate of dividend growth is likely to be the smallest possible to keep their 54 year record going. Still they can draw upon both revenue and capital reserves (which together make up around 20% of the assets) it seems unlikely their record will be beaten any time soon. The use of capital reserves also means they don't get forced into buying the high yield dividend traps in IUKD as they can use growth to pay the dividends. It's clearly a very well run operation and would be my choice for UK income (although some exposure overseas to Microsoft etc) but I wonder if it would fall to a 10% discount if Job Curtis ever retires. They don't seem to have lined up a co-manager successor yet. It's so tempting to put some money in as my global passives are becoming US heavy growth funds.

Recently I've added holdings in FGT, MUT and DIG to my portfolio.  Valuation metrics alone suggests there's good value to be had. Last time UK shares were this cheap was 1973. 

sirarthur

I'm very new to all this but on the face of it, MUT and DIG seem very similar what is it that I'm not seeing that would make it advantageous to hold both?

talexuser

Funnily enough I sold CGT a while ago because of its total return, not needing income it was just a good solid UK core fund. Still have FGT though. TIGT has been the worst of my capital preservation funds through the pandemic.

Thrugelmir

sirarthur said:

I'm very new to all this but on the face of it, MUT and DIG seem very similar what is it that I'm not seeing that would make it advantageous to hold both?

Personally I like to keep my options open. Take advantage of a fair price being available. Though didn't buy them at the same time. My holdings are of a reasonable size. Having realised a sizable sum from a share that had become overweight. 

sirarthur

Thrugelmir said:

sirarthur said:

I'm very new to all this but on the face of it, MUT and DIG seem very similar what is it that I'm not seeing that would make it advantageous to hold both?

Personally I like to keep my options open. Take advantage of a fair price being available. Though didn't buy them at the same time. My holdings are of a reasonable size. Having realised a sizable sum from a share that had become overweight. 

Thanks for that, I was just curious in case there was something basic I wasn't grasping.