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mark_cycling00

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Eyeful

1. No one can foretell the future, so I do not think you will get an answer.

2. However you can use some simple basic rules of thumb.

UK equity income funds max yield = 1.25 x Average yield of market.
High risk = 1.5 x Average yield of market.
Very high risk = 2 x Average yield of market.

3. FTSE 100 yield is about 4%.

4. So 12% is over three times that of the FTSE100:-          I personally would not touch it!

masonic

There is a very tenuous link between commodity prices and the share price of any single company in the sector. A long time ago an ex-poster of some notoriety made the claim that gold mining companies would give an equivalent return to a 3 x leveraged gold ETF. It took only a brief exploration of returns over different 1 and 3 year periods to debunk this notion. Perhaps you could back-test your hypothesis in the same way.

Though I agree entirely about the level of risk in this particular share.

EthicsGradient

The 12% won't last - that was announced in February:

On Wednesday, the Norwegian company raised its ordinary quarterly dividend payment to $0.35 per share from $0.30 but said its extraordinary cash dividend would be cut to $0.35 per quarter from $0.60.

...
The extraordinary dividend, first announced in early February 2022 at $0.20 for the fourth quarter of 2021, peaked at $0.70 for the third quarter of 2022.
The regular part of its quarterly dividend payments would increase by $0.02 each year going forward, but the extraordinary dividends would come to an end after 2024.
Equinor trims cash payouts, share price drops 7% | Reuters

So in 2025 it should be 37 cents per quarter, which works out at about 5.5% with the current $27 share price.

Remember this is the old Statoil, the Norwegian national oil and gas company, and is still 2/3rds owned by the Norwegian government, so its dividend and buyback policies are basically set to suit the Norwegian government.

wmb194

I'd say they're down quite a bit from their 2022 highs. As Ethicsgradient writes, the dividend has been slashed and historically it's varied quite a bit. You also need to bear in mind Norwegian dividend withholding tax. Looks like the default rate is 25% but there's a double taxation treaty with the UK that might allow you to reclaim some of that (good luck, not always very easy).

Personally I'd prefer BP, Shell and TotalEnergies.

https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2020/08/norway-country-profile-2020.pdf

mark_cycling00

Thanks..That's really interesting. So that 12% is too good to be true and that fact is reflected in the market price.

Given I have bp, I might add some shell in case the middle east kicks off. Had a very enlightening chat with some Israelis last week....

Thanks for the advice 

Hoenir

mark_cycling00 said:

 So that 12% is too good to be true 

Quoted yields are always based on historic data. 

edgex

Do you have no way of reducing your energy costs?

cloud_dog

Could you not buy a oil based ETF to spread the risk (if that is not a contradiction in terms)?

https://www.justetf.com/uk/how-to/invest-in-oil.html

I appreciate the ones listed aren't income generating, but you would, in theory, protect your costs.

* In theory because there are always variations between actual prices/costs and the reflected value in an ETF fund using swaps etc, which may create a variation.

mark_cycling00

edgex said:

Do you have no way of reducing your energy costs?

Well it might feel difficult to be very stingy with a new baby. We'll probably have heating set to 18, we'll close off the conservatory and a spare room that we don't use.

If it's safe well have the log burner in eves as that warms the living room, nursery and main bedroom as heat rises. We don't have baths but little one will. 

Roof's insulated well and all windows double glazed. Hopefully will be £1000 for heating and hot water for the year