Merchants Share Discussion Threads

[ctrader3] 18/7/2023 15:01

If u bought twenty years ago the current yield on
your investment is 11.7%, which unless they change
their dividend policy will only increase.
Get Rich Slow.

[ctrader3] 18/7/2023 12:18

MRCH
If u had bought 20 years ago the price was 240p
2009 the price was 230p
2020 the price was 305p.

The dividend in 2003 was 17.6p a yield of around 7%,
u have never earned less than 7% as the dividend has
gently increased over the years.
The earned dividends could either have been re-invested
in MRCH or another high yielder.
A win win situation if the share price falls
from here u can re-invest at 7%, get rich slow.
If the share price rises the
the buying yield remains similar but the current
yield will fall in tandem.
U could re-invest in a tracker or whatever u wanted too.
I prefer a dividend as even if my share choice is poor
I still have dividends to re-invest.
Today u could put the dividends risk free in a deposit account
and wait for the market to crash or the bank
rate is cut.

[zac0_4] 18/7/2023 11:09

Tag57 - no particular reason. Just the way my portfolio has developed over the years.

I started investing, probably 25+ years ago, in individual shares. In tandem I sort of discovered funds. I really like the choice and the fact that most of them have no spread ie same buy & sell price, no trading cost and as such it's cost effective to buy even £100 worth.

Then I decided to start to move away from individual dividend paying shares into trusts. I (wrongly) thought they would offer less risk than single shares. And that's where I am today. In reality I've too many investments - 8 Inv Trusts, 13 Funds and 3 shares (LGEN, Nvidia & Microsoft).

A certain amount of consolidation is required!

[tag57] 18/7/2023 08:46

Zac, why invest in IT for income and funds for growth?

[zac0_4] 17/7/2023 22:11

You're correct. Any profit is better than no profit!

And good luck to you in your investments . . . even if we have some opposing views!

[ctrader3] 17/7/2023 18:14

A small profit is better than a small loss.

GL

[zac0_4] 17/7/2023 16:52

Standard Life (Aberdeen), Shell and BP have been sold. I still own LGEN in my normal fund & share account, my ISA and my SIPP.

I bought into L&G Global Thematic fund back in June 2021 and have added a few times since. It's made up of various L&G ETFs ie Cyber Security, Automation and Robotics, AI, Battery Value Chain, Pharma Breakthrough and others. Pretty flat so far.

My intention has been for some time to move away from individual shares and into investment trusts for income and funds for capital growth. I've pretty much stuck to that strategy. However, with all the hype around ChatGPT I bought into both Microsoft and Nvidia. I could kick myself! I only took a small position in each. Microsoft is up 30% and Nvidia 104% since I first purchased.

The above makes it sound as if I'm a trader. I'm definately not. Buy and hold works for me.

[ctrader3] 17/7/2023 16:27

Legal & General, Standard Life, Shell & BP are my 4 individual holdings. Total returns over the year of -6%, -5%, -41% & -42%!

The only saving grace is that I tend to hold for the long term. So, if you take my Shell holding I'm currently sitting on a 22% capital loss but this is offset by the 29% dividend return I've had since buying. Thankfully I'm well diversified in other areas.

Just looking at Cyber Security and Artificial Intelligence ETFs as possible long-term additions to my portfolio.

I guess u have switched horses since then, did u buy AI and were u early ?

[ctrader3] 17/7/2023 16:12

I am indeed totally against anything that doesn't pay a dividend
as I have a plan I want to meet.
As I previously posted the value of a buy to let property
is of no interest if u need the rent to pay the bills and of
course until u sell your L&G global tracker u haven't made
any profit, have u ?
I guess this debate might have a different end point if we
use the covid low figures, maybe I will have to wait for the next
market crash.

[zac0_4] 17/7/2023 15:48

ctrader3 - with the absence of a crystal ball historical data is pretty much all we have. You used historical data to make your point with the EWI trust, so I make no apologies for using the same.

Let's take your rental property as an example. To provide an income I would suggest you need a substantial amount to buy the property. Let's say £100k.

Your £100k investment in SUPR over the last 5 years would have earned you £28.5k in dividends, but your capital has lost £27.0k in value. You do the maths!
Now let's take the L&G global tracker. Same investment, but at the end of each year you sell down units to provide you with the same income as per the annual SUPR dividend. Over the same 5 year period you've taken £28.5k of capital to match the dividend, but you capital is now worth £128k. Again, you do the maths.

I have both dividend payers and growth funds in my portfolio and I think that's a balance that's needed. You seem to be totally against anything that doesn't pay a dividend and as the example above clearly demonstrates you could be missing out.

[ctrader3] 17/7/2023 15:29

yep, it takes two opposing views to make a market and both
views will be right and wrong at different times.
For me hope is not a reason to invest.
Risk free is cash on deposit but of course that doesn't keep
up with inflation.
Now run your DCF calculation and SUPR over twenty years and watch
the snowball effect.

[apparition1] 17/7/2023 14:51

Sorry ctrader3 but you will not have got your money back because you are totally ignoring inflation.
If you do a discounted cash flow on the annual money you receive it will come to a lot less than your compound return. Of course the exact amount depends on the DCF rate you choose.
Don't get me wrong I'm a lover of some trusts and companies that I hope are sound and pay increasing juicy dividends but like Zac I also spread the risk by investing in some lower yielding trusts that I hope will give me capital returns. At the end of the day it's about balancing the risks and each of us has a different take on that.

[ctrader3] 17/7/2023 14:10

If u buy SUPR today and in 9 years the dividend doesn't change,
what happens to the price is irrelevant, as u have
received all your capital back

What is the yield on your holding of SUPR ?

[ctrader3] 17/7/2023 13:37

SUPR also trades at 20% discount to NAV, where else can u buy
a pounds worth of assets for 80p and be paid for the privilege.
There are lots of REITS trading at a discount with high yields
so it's best to DYOR.

[ctrader3] 17/7/2023 13:33

SUPR pays their dividend at the start of next month,
investor A who bought when they were issued and simply re-invested their
dividends will receive next year a yield of 9.3% on seed capital.
And they will not have to sell any shares to receive the cash.

Investing in dividend paying shares is the same as buying a buy
to let property without the hassle.
The value of your buy to let property is of no concern
if u rely on the rent to pay your bills.

[ctrader3] 17/7/2023 13:12

and, of course, selling down units in a fund to provide income is something pretty much all workplace pensions do! But, of course that's gambling . . . isn't it?!!!!

............

yep, as one day u could run out of units to sell.

[ctrader3] 17/7/2023 13:06

yep, great if u are captain hindsight.
u are confusing now with will happen in the future.
If u can tell me how much Investor B's gain in 5 years time
I will change my mind.
I do know how much Investor A will have earned to spend
or re-invest in the market.
The general get out of jail card is only invest for a
minimum of 5 years, tough luck is year 5 and the market
has crashed.
u can get un-risked 6% on cash for 2 years but u
do not know what the yield will be when the term
ends.

[zac0_4] 17/7/2023 11:08

Investor A did, in fact, invest 5 years ago in SUPR, whilst Investor B invested in the Legal & General International Index fund.
Roll forward to today and Investor A is sitting on a loss of -6%, and that's with dividends reinvested, Investor B . . . well Investor B is sitting on a total gain of +57%!
And, as for 'gambling' well all Investor B needs is for the global economy to grow over time, something it's been doing for hundreds of years . . . and, of course, selling down units in a fund to provide income is something pretty much all workplace pensions do! But, of course that's gambling . . . isn't it?!!!!

[ctrader3] 17/7/2023 07:48

The emotional benefits of dividend re-investment.
In fact, with this investment strategy you can actually
welcome falling share prices.




Anyone who wants a quasi tracker could buy IUKD
i share FTSE Div plus

Top 10 Holdings

Name Holdings

HSBC Holdings PLC 4.9%
Rio Tinto PLC Registered Shares 4.9%
British American Tobacco PLC 4.6%
Imperial Brands PLC 4.1%
Legal & General Group PLC 3.9%
Vodafone Group PLC 3.8%
National Grid PLC 3.6%
Schroders PLC 3.5%
Anglo American PLC 3.3%
SSE PLC 3.2%


They yield around 6%, although the dividend paid fluctuates
as they have no reserves to fall back on.
When the market goes back up, they always do when is the
unknown, you should print a profit.
Until then u can re-invest the dividends back into the
share or buy another high yielder.



2020 26.59p
2021 42.82p
2022 44.62p

[ctrader3] 17/7/2023 07:21

Investor A wants to plan for their retirement and buys SUPR
yielding 7.9%, other Trusts are available, knowing that
in 9 years time they will have received all their capital back.
In 9 years time they could have SUPR yielding 9%
and another trust yielding lets say 7%.

Investor B wants to gamble with their future and buys
a tracker hoping that the trust outperforms Investor A's
plan and that when they start to sell part of the tracker to
fund their retirement the markets haven't crashed.

GL

[ctrader3] 17/7/2023 06:57

at the start of 2019 u may have decided to buy EWI,
the position develops favourably until the end of July
and then falls until Oct.
no cause for alarm, apart from the waiting, then it makes
a new high until it falls out of bed.
with the benefit of hindsight it would have been great
to sell and buy back but the plan is to buy and hold forever.
after 15 months of investing u are showing a 10% loss.
then the market rides to your rescue and as things
develop u become a top trader.
the only problem is when to take profits, u could
have taken good profits to re-invest elsewhere or spend
leaving the original stake in place, with the view
of making more profits or buying back when Mr.Market
gives u the opportunity.
always easier with hindsight, not always a bed of roses.

[zac0_4] 16/7/2023 11:52

I don't think picking EWI as your example against relying on capital growth for an income is a fair representation. Here's what they're invested in . . . "a global portfolio of initially immature entrepreneurial companies . . ." That's not something I'd be relying upon, in any major way, if I was already retired (which I am)
Why not use a simple global tracker fund as an example? Legal & General International Index Trust for example. Over 2,000 holdings across multiple sectors and geographies so plenty of diversification. And over the last 5 years a total return of 57% compared to MRCH at 33%. I'm invested in both and will remain so.

[mbu69] 16/7/2023 11:30

That's great for MRCH which I hold in a SIPP. So I hope the past repeats over the next 20 years. But I would not put all the eggs in one basket. Personally I like global trust with a smaller but rising dividend and a bit more capital growth. So something like SAIN or FCIT how would they compare ?

[ctrader3] 16/7/2023 08:06

If u look at EWI once the darling of TR holders.
Anyone looking at EWI to fund their pension
have watched the price rise from the covid
low of 142p to 423p and then back to 142p.
The price is now the same as 2017, so anyone
relying on EWI to contribute to their pension
will be off to the job centre when they retire.

GL