Balfour B.10tqp Discussion Threads

[skyship] 29/9/2015 16:59

Boadicea - yes, saw the decline. Interesting again at this level as the GRY is back up to 6%; however concerned at a repetition of the bizarre flash crash of last October.

JIMCAR - sorry, never saw your post back on 16th July. I suspect you subsequently found your error - namely you were calculating the yield at par rather than the opportunity price of the then 120p.

[boadicea] 29/9/2015 15:15

There currently seems to be some selling pressure.
As an effectively fixed yield (unless there is risk of pref div being passed - unlikely) it is normally relatively stable even in turbulent markets.

Any clues as to why??

[jimcar] 16/7/2015 22:02

Why do you compound? You do not have to reinvest the divis to get the received sum (53.75).

My main argument however is that I think there is a reasonable chance of a takeover or conversion opportunity that might preserve the current capital value. Though agreed its more prudent to leave this possibility out of yield calcuations

[skyship] 16/7/2015 17:44

JIMCAR - If the dividends are received gross; then the GRY rises to 5.3%pa at the 119p bid price.

Do a simple calculation. Start at 119p & compound at 105.3% for 5yrs. You end up at the sum received of 153.75p (100p + (5 x 10.75p))

[jimcar] 15/7/2015 17:52

Won't the yield be closer to
5 payments of 10.75 (as dividends now paid gross) =53.75 - 18.75 (capital loss) = 35 / 5 = 7% approx

plus there is the the chance of conversion if the share price rises to 400p+ through turnaround in the business or takeover offer?

[skyship] 15/7/2015 13:51

"...as time passes the yield to redemption becomes more and more a factor in any buying decision..."

Quite right. By way of example the position at 120p is a follows:

# Gross Yield = 8.96%

# Net Yield = 8.06%

# Gross REDEMPTION Yield = 4.46%

Makes BBYB look fully valued IMO...

If I were a holder I would be looking for a good opportunity to sell; especially in the light of the moves we've seen in the Aviva prefs over the past month. The Gross Yields there have moved from 5.5% to 6.5%; wiping 15% off their market values.

[coleridge4] 14/7/2015 23:29

Tournesol - yes, I agree with your comment about the Santander prefs - indeed they seem to be even more explicit about the fact that the removal of the tax credit means that they will have to increase the payable dividend. Key downside I think seems to be that they are non-cumulative.

Grahamburn - yes, as time passes the yield to redemption becomes more and more a factor in any buying decision. If management ever manage to turn the company around the conversion rights that come with these particular prefs might have some value. Regrettably the company must have issued 5 or 6 profit warnings in the last 2 years alone! Last time I looked at this the ord share price would need to be near £4 to make conversion worthwhile at redemption. At the moment the ords are trading at around £2.25, I think, so some way to go.....

[grahamburn] 14/7/2015 19:27

But, the converse is that the yield to redemption is getting squeezed as that date is not that far away now.

[tournesol] 14/7/2015 18:40

Exactly same should apply to SAN and SANB - see Motley Fool for extended discussion

the wider market does not seem to have cottoned on to this implication of the Budget yet

I am already very overweight in BBYB, so bought SAN yesterday…R30;….

[coleridge4] 14/7/2015 17:31

I have held BBYB for a few years now, receiving the usual 90% of the 10.75p notional gross dividend, as a physical cash payment. As the recent Summer Budget proposes to abolish the tax credit my reading of the terms of these shares is that the running yield on should be boosted i.e for dividend payments after 5 April 2016 Balfour Beatty will have to pay a full 10.75 pence per share p.a not the 9.675 pence payable in recent years.

I believe that this is a peculiarity of this particular share and will not apply to most other common prefs (eg GACA/ GACB)where the dividend coupon is expressed as a net percentage. If correct, this is a nice boost as it means that recipients of the BBYB dividend will effectively have their extra tax charge paid by the company! Doubly nice if the share is held in a tax free environment such as a SIPP/ ISA / offshore etc.....or even if covered by the £5k exemption.

[boadicea] 10/7/2015 00:39

The new dividend tax rules should give a theoretical boost to high dividend shares, esp the few redeemable preference shares available on the market - such as BBYB and RECP.

For a higher rate taxpayer, it will no longer be necessary to protect the first £5k of dividend (£10k for a couple if shared equally) within an ISA to avoid the 25% tax which would become payable on the amount received. (Under Brown's weird system this was treated as 32.5% on the amount grossed up for 10% imputed tax.)

Hence, to make maximum use of the tax free dividend allowance it becomes attractive to maximise dividends outside an ISA or SIPP up to the £5k limit.

Other high yield shares such as GLIF may similarly benefit.

[spittingbarrel] 24/6/2015 09:19

CWAI - just joined you back in.

[cwa1] 22/6/2015 11:37

After getting out at the same time as spittingbarrel, I've decided to buy back a few this morning. Anyone else considering it/done it? Cheers

[spittingbarrel] 09/6/2015 14:57

Takeover or no takeover, I've just sold for 123.5 and that'll do for me.

[jaf111] 08/6/2015 07:26

BBY take-over rumours resurface.....wondering what reaction there might be in the Prefs

[eeza] 21/5/2015 20:00

Try this link for Prefs etc - from the FIX thread

Scroll to bottom of page and select - Fixed Income Stocks Table
or - Preference Shares Prices & Details


hxxp://www.fixedincomeinvestments.org.uk/

[cwa1] 21/5/2015 19:46

Good link for some Skinny and I use it myself from time to time. But IIRC they don't do things like BBYB, prefs, etc?

[skinny] 21/5/2015 16:50

This isn't a bad link for the majority -

[cwa1] 21/5/2015 16:22

Probably plenty of places to find the XD date. I use digital look a lot for this type of data but they don't seem to have the BBYB data ironically. Here's another one that is free and gives the XD date, I'm sure there are others:-

[jaf111] 21/5/2015 16:00

Yes... I was wondering if there was a central info source for all companies?

Thanks again for confirming for BBYB

[jaf111] 21/5/2015 15:53

thanks....how do you find out this info?

[spittingbarrel] 12/5/2015 14:33

Agreed MRF, look at ENQ1 the last couple of days. Prefs also been doing well.