Aviva 8 3/8% Pf Discussion Threads

[yf23_1] 06/9/2016 10:14

these go ex-div this week which will knock circa 4p from the price.
Expect a 1-2p gain versus the AV.A
Current ex-div price would be 146p versus 157 for AV.A (accrued 2p div), giving a 9p diff, a bit much IMO.

[skyship] 03/7/2016 15:50

The Aviva prefs have been a poor Market since Brexit; though rallied off the bottom on Friday. The average yield has dropped back to c6.2%:

# AV.A 8.75% - 137.0p-141.0p – Yld on the offer share price = 6.20%
# AV.B 8.375% - 132.0p-135.0p – Yld on the offer share price = 6.20%
# GACA 8.875% - 137.0p-139.0p – Yld on the offer share price = 6.38%
# GACB 7.875% - 123.0p-128.0p – Yld on the offer share price = 6.15%

[yf23_1] 09/5/2016 12:27

I'm finding this hard to believe that people are paying 152 for the 8 3/4% A version rather than 139 for the 8 3/8% B version.
Do they not know about the B version ?

For the extra 3/8% you are paying 13-2 (for the div date diff) = 11p
which is 11/139 = 7.9% more.

Yet the difference in divi is 3/8 / 8 3/8 = 24/536 = 4.4%

??????

Or to put it another way, your extra 11p is earning 3.4%

[yf23_1] 28/4/2016 17:14

Expecting the bid price to get marked up on these after moves up in GACA, GACB, and AV.A.
Seem to be lagging AV.A a bit now.

[yf23_1] 10/4/2016 12:02

This link shows winners/losers fom new regime.
BRT is same

hxxp://www.professionaladviser.com/IMG/719/342719/0803-winners-and-losers-table-1-540x334.png?1457452238

[skyship] 09/4/2016 17:28

The pref market in general burst into life last week, especially Friday; and the Aviva prefs were no exception. Time to have a look across the piece where the the average yield has dropped back to 6.0%

# AV.A 8.75% - 145.0p-146.5p – Yld on the offer share price = 5.97%
# AV.B 8.375% - 136.0p-138.0p – Yld on the offer share price = 6.07%
# GACA 8.875% - 144.0p-146.5p – Yld on the offer share price = 6.06%
# GACB 7.875% - 128.5p-132.0p – Yld on the offer share price = 5.97%

E&OE

AV.A & GACA best buys as nearest to the next dividend.

[yf23_1] 09/4/2016 13:23

Hmmm, apparently we get divis gross already

hxxp://www.theaic.co.uk/sites/default/files/AICTaxationofDividendsConsumerguide.pdf

[yf23_1] 09/4/2016 12:59

Don't understand this answer..

As a basic rate taxpayer , does this mean from april 2016 the dividends I receive from my individual shares portfolio [= £1200 a year] which sits outside of an isa, I would pay no tax at all on the dividends as it will be under this new £5,000 threshold ,where currently I pay 10 % tax which is automatically deducted from the dividend?

You already don’t pay any tax on your £1,200 dividends.

................
Eh ? Of course you're paying tax on your divis, that's why they get grossed up and a tax credit applied !!

I'm baffled now, how does anyone actually pay less tax using the new divi tax band ?

[yf23_1] 09/4/2016 12:05

Yeah, thought that couldn't be right.....

Some investors think they will receive more dividend income within their Isas under the new rules – but they won’t. This is because they expect the abolition of the old dividend tax credit to mean that, after next year, dividends will be paid “gross”.

But this “credit” was entirely notional and could not be reclaimed in hard cash even within tax-efficient vehicles such as Isas.

Instead, the following is what happened. A company declared a dividend of (say) 90p from its (already taxed) profits. This was “grossed up” to 100p – using a “notional̶1; process under which no money changed hands. When the dividend was handed over to shareholders it was “netted” back to 90p, along with a “tax credit” that meant a basic-rate taxpayer had no further tax liability.

Both the notional grossing up and netting down will be abolished and shareholders both within and outside Isas will continue to receive 90p under the new system. Inside Isas nothing will change; outside them the new tax outlined above will apply.

[yf23_1] 09/4/2016 12:01

OK, some thoughts.
The new tax takes effect on April 6, 2016. No tax will be deducted at source; taxpayers must use self-assessment to pay any tax due.
So the quoted 8.375% is the coupon rate after tax, so this should be grossed up by 7.5% (or more since it had a 10% tax credit before).
HMRC say ISA divs are not affected, but HEY if they are paying gross and you have to fill in self assessment if you go over £5,000 (outsideof ISA) then you will get more inside the ISA because before you couldn't claim tax credit back.
Now there is no tax credit.
Am I missing something here ???
This is a huge windfall for divi paying inside ISAs.

[yf23_1] 08/4/2016 12:54

All prefs have seen sharp movement up last 2 days. Some talk that its because of New dividend tax guidelines (on BBYB thread).
I thought this might happen as mentioned earlier but I later dismissed it as I was told the new nil band interest was deemed only on interest bearing accounts not bond types.
I'm confused now.
The 8 3/4% is the rate after tax has been paid by company ?
So this would get grossed up at 7.5% ?

[cwa1] 10/3/2016 08:47

XD today and pay day 1/4

[yf23_1] 22/1/2016 15:49

Liquidity in these is not so good which leads to sharper moves than should be. It just gives a chance to play the movements either way.
Of course it may be some freeing up cash to move into equities to take advantage of the cheaper prices.

[nerja] 22/1/2016 09:01

1q I sold MRCH at 515p purely by luck, but I am looking at them, also CTY, SMT, these have never cut dividends during all the crashes. The trick they have is to keep issuing equity from treasury to raise cash, this they can use for the div or to buy cheaper stock out there. This does cap rises on the up days but also adds stability to them, they buy back stock when the nav spread is high as well.

[nerja] 22/1/2016 08:36

1q just added two lots of LLPC at 131.375,( they are over 7% now) so it looks like you are correct with the price indication of the trades, buys looking like sells

[1q] 21/1/2016 21:40

Looks like MRCH has had a pretty similar year to the investment trust I'm invested in, alas - BRWM. Maybe not quite as brutal a decline though.

Well at the moment, BRWM is paying a dividend of a massive 12.37 %. But if you think these investment trusts are going to maintain their yield in this market, then you have your head in the sand. They will be cut - and cut again. I do appreciate that MRCH made a defiant rise in their yield yesterday - but that won't be sustained.

Investment trusts v Aviva prefs. Maybe you'd want some of your money backing the former to make a recovery. However I'd hazard a guess that AV.B is a safer bet. All IMHO.

[1q] 21/1/2016 21:12

Well those "sells" indicated on ADVFN trades are misleading. The lowest priced "sell" today at 130.99 was in fact - a buy. By me. A top-up of an already reasonable holding in Aviva prefs. I'm looking at these as my retirement fund, and I'll be topping up on further weakness.

Probably a few other sells were buys too. Hardly panic selling occurring. As long as Aviva doesn't go bust, these prefs should form part of a decent long-term income-based portfolio.

As for cash. Now let me think. Mmmm - 1.5% at best maybe....?

[jonwig] 21/1/2016 15:34

If it's risk aversion, the ords ought to be leading the way, but they're up today and haven't fallen all that much recently.

As most would agree, interest rates are heading nowhere (nowhere upwards!) soon. So what's left: a big seller wants to cash in his pension to buy a Lamborghini? (I.e. just noise.)

[nerja] 21/1/2016 15:15

yf23

So would I, but it don't seem to be happening, moves in these can be brutal at times. Plus when you consider the divs that some stocks are now paying and the likes of MRCH investment trust paying over 6%, it looks like going to cash moves going on to me.

[yf23_1] 21/1/2016 14:46

I don't see them putting interest rates up, its just panicking. I would have thought bonds would be safe with the market gloom.

[nerja] 21/1/2016 11:48

Prefs charts not looking great, lots of head and shoulders forming, if they play out there could be some big falls from here.

[yf23_1] 31/8/2015 19:23

AV.B go ex-div on Thursday

[fangorn2] 31/8/2015 15:54

Cheers , as ever, for the prefs update Sky.

[skyship] 31/8/2015 10:44

The Aviva prefs have been a better market over the past 6weeks, with the average yielding dropping back to 6.3%

# AV.A 8.75% - 138.0p-139.75p – Yld on the offer share price = 6.26%
# AV.B 8.375% - 131.0p-133.0p – Yld on the offer share price = 6.30%
# GACA 8.875% - 136.0p-137.85p – Yld on the offer share price = 6.44%
# GACB 7.875% - 126.0p-127.5p – Yld on the offer share price = 6.18%

GACB looks to be a sell; perhaps after they go XD this Thursday (3rd Sept'15).