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LLOYDS is going to FLY

lse:lloy

#3558

Hi Again @J_Westlock, Well I added those two currency rates to my previous chart and yes they both show about a 2% drop in the GBP vs both the USD and the EUR since 13-Dec. (Sorry I’d post the chart but on the iPad that’s not so easy, but you have your own chart anyway.) But the FTSE 100 is up about 4%. GBP moving higher against both right now up about 0.3% ATM doesn’t bode well for the FTSE tomorrow methinks ?.

Re renewables, yes TRIGs down a bit and a couple of the others have dropped a few pence. Nothing major. BSIF up to 144.5 some compensation. UKW has dropped back from over 150 which I never thought would hold, sold mine at ~149 and bought more NESF a while back. ORIT closing in on your 10% gain, you’ll have to make your mind up soon whether to hold or not…

All those ETFs of yours look to be up today and VUSA too I’m sure given US markets today. I am slightly regretting selling my VWRL and VHYL but I did think that DT had likely gone too far with his Iraq attack. But no plans to buy them back and am putting the cash to work elsewhere.

ATB

Pref


#3559

Hi @regardless, Yes those two dividends should add up to close to 3p a share if things go as expected and there are no nasty dividend surprises, personally not expecting any but that’s no guarantee. With your mega holding that comes to around £17,000 – I just hope it’s all in ISAs or the tax man is going to take his share, even if you aren’t working. :slightly_frowning_face:

While you have built a large holding, as I recall you did buy them all from income when you were working – so it’s your savings pot really, and a nice one it is too. But if as I suspect your average is still over 60 with these recent falls you are probably back underwater again now ?. Only paper losses though as they say.

So back to the waiting game for you, but you are good at that. Better than me. I think LLOY will come good at some point, just not sure exactly when that will be. But you are being paid to wait. I thought (hoped) LLOY might turn more positive given what happened after the election. But it seems that it is still suffering the effects of Brexit and from being seen as the barometer of the UK economy. On recent performance seems you could be waiting a while yet.

Best of luck, as always

Pref


#3560

Hi @Eadwig, Well I am probably mad but I’m having another go at US direct investing. Having watched Microsoft go up up and up and then further up for years on end (all the while telling myself one day I should buy some) well I did a little while ago, and so far they have performed as described. I bought at 152.x and yesterday they closed at 166.x and I was up close to 6% even including FX charges on both buying and selling in that calculation. They have a great diverse product base and ecosystem and the recent JEDI and DOD Office contracts wont do them any harm either.

Looking for more of the same I bought a few Apple shares the other day (also considered Mastercard another stock which looking back seems to just have a stock price that only goes one way – famous last words). But I went for Apple given their highly profitable ecosystem, likely benefits from the China trade deal and 5G refresh cycle this year (amongst other things).

I know Facebook is one of your favourites, but I have failed to make a profit twice before there and have a thing about revisiting old failures. Stocks like Google and Amazon are simply too expensive and I’d only be prepared to buy a really small number.

Anyway it’s a bit of a distraction from my normal fare. Results for both Apple & Microsoft due on 28th & 29th and hoping for a bounce in both.

Hope you are well. AFC Energy up nicely today I see….

ATB

Pref


#3561

Hi Pref,

All my pharmas up over 2% today except Smith & Nephew up only a measly 1.2%.

I suppose these increases are a positive reaction to the news on the Chinese economy which appears not to have been too seriously damaged by tariffs.

My portfolio is approaching its all time high.

Cheers,

Frog in a tree


#3562

Hi @frog_in_a_tree, Good to hear it’s going well. However for the likes of AZN and GSK as the price goes up the yield goes down, as neither have raised their dividend in quite some time. Your other pharma picks already offered pretty non existent yields, GSK and AZN are fast going the same way. And both these are currently at all time highs, that always makes me uncomfortable……

Capital gain is great obviously and not to be sneezed at. But as you know I prefer a decent yield on my investments in the main (apart from my 2 recent US adventures obviously !). Capital gain can quickly slip away with market pullbacks, but companies don’t tend to cut their dividends unless they are really in trouble.

So congratulations on your success, but I will not be following your lead. In fact I have just bought another renewable energy trust today for its RPI linked dividend……back to fully invested now so can just watch the divis roll in.

ATB

Pref


#3563

Yes, it is swings and roundabouts on capital gains and yields. I tend to take the Warren Buffet approach which is to buy good companies and then hold them.

What was the renewables trust that you bought?

Cheers,

Frog


#3564

Hi Again @frog_in_a_tree, Just got back from my regular walk and as it happens I was reading about Pharma in the Telegraph business section at the pub. Thursday was a bad day for pharma apparently, everything was down but DCH had a horrible day down almost 10% it said. So I took a look at the charts when I got back:-

Looks like Thursday afternoon would have been a really good time to buy, If you took advantage then well done. If you were already in DCH then bad luck, thats single stocks for you…

Anyway you asked what I bought. The answer was I bought back into UKW at a smidge over 147. I had previously sold this at close to 149 a while back thinking it couldnt go much higher and the yield was suffering. Actually it did go above 150 after the election as you can see on the chart below.

Anyway this is just a holding arrangement really while I finalise a more permanent home for the money. I had planned to buy Taylor Wimpey and SSE roughly half each with the money, but since they have both soared out of sight this week thats no longer on. I figure that placing the money here for a bit will pick up the imminent dividend and may bounce back a bit too. I will have the option to leave it there but it would leave me a bit overweight on renewables. If I find something I want to buy then I can always sell it once Ive made a plus score. Been looking for a while though and not found anything I fancy TBH. Everythings getting too pricey and low yield (or risky).

ATB

Pref


#3565

Hi Pref,

I had a very busy day yesterday and missed the 10% fall in DCH…somehow! Not good but it takes us back to where we were in autumn.

I will look into UKW. I am still building my TRIG holding.

Cheers,

Frog in a tree


#3566

Hi Again @frog_in_a_tree, Well UKW is pricey and trades at a huge premium as do most of them, as I’m sure you know. If you only have TRIG then I’d look at the likes of FSFL, NESF, JLEN or the new one ORIT in preference to UKW. Prices are much lower, yield better and less of a premium. You can see them all in one place at the AIC, link below:-

https://www.theaic.co.uk/aic/find-compare-investment-companies?sector=Renewable+Energy+Infrastructure&name=&region=&manager=&country=&objective=&op=Filter&sort=&form_build_id=form-eNK2u7wvToesjiOtrmG2m1TNGQl_QSKtRFDsU87L4Tw&form_id=aic_data_search_form

I already hold all of those and TRIG and BSIF too (but not ORIT which has just been IPO’d). Now I have roughly the same sized holding in them all which as I said leaves me overweight in renewables…not an immediate problem though.

ATB

Pref


#3567

Also note that apart from being at substantial premiums they are also at or close to all time highs.
Despite that, the demand is there and for the near future they show little sign of being priced lower.
My only concern is whether some of the companies being invested in are still receiving Government (not necessarily UK Gov) subsidies that might quickly be withdrawn… though I haven’t done any research to find that out in recent times… if they are then I’d try and avoid those.


#3568

Well @J_Westlock the future of subsidies is certainly an issue for the renewables sector, but personally I don’t see it as an immediate threat. Subsidies were essential in the early days of renewables to provide companies with a long term guaranteed return to offset the major investments they were making. There were a variety of schemes UK and European and installations would be certified under one of these and gain the appropriate financial benefit. If you look in the Portfolio area of any of the renewable trusts you will find a list of their assets and usually a statement of which subsidy scheme they operate under. These schemes have durations of sort of 15 to 25 years so they aren’t going to disappear overnight, and right now I think that the vast majority of assets are still being funded in this way.

For the future though things are changing. Governments want to reduce/withdraw subsidies and developments in solar (and more recently wind) has led to some companies going ahead with subsidy free schemes, presumably because they believe that they can still make a return without a subsidy. This is particularly true of solar where costs and generation efficiency have increased enormously. The renewable energy trusts are all trying to grow their output (and their profits) and some are now starting to move into subsidy free schemes – but I don’t believe that there are a great many around right now, but they are the next phase.

Anyone prepared to do some further reading may find the following article of interest:-

I cant recall which trusts are trying out subsidy free operation, but most likely right now are the solar trusts BSIF, FSFL, NESF and possibly TRIG. Wind likely to be the next phase. To find out for sure you would need to have a read of their website materials.

Personally I see the current pressure for clean energy and climate change action as only strengthening the case for renewables and I don’t see the subsidy issue as an immediate threat (though if some of these subsidy free experiments don’t prove profitable that might start to become an issue). But as I said most of these trusts’ assets are covered by long term schemes ATM as I understand it.

I am long renewables and likely to remain so - but may sell my UKW again after the divi if I find a better home for the money…

ATB

Pref


#3569

Hi All, A quick pass around the renewable energy trust websites this morning would seem to indicate that they are all starting off down the subsidy free route.

The following article provides interesting clarification for anyone interested:-

ATB

Pref


#3570

Yes, indeed. There are many more opportunities in Europe than around the UK for renewable projects.

Just to be clear, I see the term “subsidy-free” being splashed out a lot usually by self-interest groups supporting Renewables. However, the industry is nothing of the sort. It is a new industry that only exists because of previous and ongoing support from several Governments in various guises.
It is riddled with Government intervention that can be withdrawn as it suits them at any time.

In the UK alone there are an array of government subsidies, tax breaks or mandates: Non-Fossil Fuel Obligation, the Renewables Obligation, Feed-in Tariffs (FiTs) and Contracts for Difference (CfDs), the Capacity Market, the Carbon Budget and the Levy Control Framework.

In Europe there is an even more diverse range.

For anyone interested, this article explains more: https://www.carbonbrief.org/what-does-subsidy-free-renewables-actually-mean

See back to my chart what happened when in 2015 the UK Government pulled it’s support for certain solar subsidies: they all fell by around 10% very quickly.

I’m not knocking the Renewables industry. Clearly, it is something that must happen… or at least as we see things today… but you need to invest in the knowledge that you are paying substantial premiums to such trusts that are highly geared, at record highs, the SPs are well above NAV and where the companies invested in are still dependent on an array of political support that may or may not be there all the time.

I’d recommend Renewable play a part in anyone’s portfolio but IMHO I won’t put more that 5% of it into this industry that is laden with large risks.

Ride the wave whilst it’s there but do so knowing what happens to all waves.


#3571

Whilst I’m on Renewables… I thought I’d add a tab to my Total Returns s/sheet… the order is based on Total Returns over 1, 3 and 5 years:

image

(Little known about ORIT performance thus far as so new)


#3572

Hi @J_Westlock, I confess I normally use the AIC website (see link in my earlier post) when I’m comparing renewables. Their data is usually up to date, includes a comprehensive list of all of the trusts and you can sort it by yield, premium/discount, charges or total return over 1, 5 or 10 years using the “twisties” at the top of the columns and you don’t have to maintain the data !.

I think that the AIC is a great site for everything to do with investment trusts (which are its whole reason for existence). If you don’t use it much all I can say is that I find it very useful. For instance if you want you can get it present a list of EVERY investment trust by yield, something I have used quite a bit…

But I realise that your spreadsheet might have other uses ?. Obviously you can’t compare Investment Trusts with ETFs using the AIC which I can see is something you might want to do.

Anyway ATB

Pref


#3573

I didn’t know of the AIC website until you said and yes that is useful.
You reminded me to include the only other UK ETF that I’m aware of that give exposure to Renewables, the iShares Global Clean Energy UCITS ETF (INRG).

I’ve updated the above Total Returns chart to reflect that.
Notably that ETF moves straight into 2nd place but it has a poor yield. Still, if you don’t mind that then it has a low cost and in the last year it easily outperformed all the others.


#3574

Yes @J_Westlock, Interesting set of holdings in that INRG ETF, the green energy trusts all tend to be owner/operators of renewable assets – INRG has more companies that are just “in the business” eg SolarEdge (make solar inverters – I have one), Vestas (make wind systems and turbines).

You mentioned limiting exposure to renewables to 5% in an earlier post, with my UKW purchase on Friday I am at ~20% ATM. As an income seeker I really like renewables – yields of ~5%, quarterly dividends, annual RPI dividend increases, many are Guernsey trusts so no stamp duty. I also like the fact that they are not market correlated ie they typically don’t follow equity market movements. And with the current public and political focus on climate change and clean energy I am feeling pretty comfortable with this – though as I said I will likely sell out of UKW again pretty quickly. Just need another decent defensive dividend earner……

I am also at ~20% on prefs ATM too. Personally I think that prefs are pretty much the ideal investment for an income seeker, they are the closest thing you can get to an old fashioned savings account. You buy something like NWBD (a 9% pref) for about 160p right now and it pays you a fixed 4.5p dividend twice a year FOREVER thereafter (well unless RBS goes bust). Yields are 5-6% ATM and pref prices perform like bonds, so increase with falling interest rates and vice versa. With the BOE planning rate cuts this year I am also happy with my positioning here. Bought most of what I have now for about 115p, they are 130-145p now plus have paid some dividends. Prefs are also not market correlated and often completely ignore even major moves in equity markets. Prior to March 2018 I was 80%+ in prefs (hence Pref Investor….) but I have no plans to go back to that extreme position !.

These are my largest positions, everything else is far more modest……

ATB

Pref


#3575

I’ve read in the past what you’ve said about pref shares.
What’s the downside to them? Why did you stop holding them?
Can you trade in and out easily if needed?
Any links to something explaining them?


#3576

Hi @J_Westlock, I posted something over on the Lemon Fool some while ago that might help:-

https://www.lemonfool.co.uk/viewtopic.php?f=8&t=16775#p208168

The pref crash is coming up on 2 years ago now and preference share prices have recovered a lot, but are still some way off where they were prior to the events in March 2018. No other company has shown any sign of trying to cancel their prefs and I am now of the view that this threat is probably a thing of the past (but can you ever be sure ?). Anyway as you will have noted I now have built up quite significant pref holdings again and personally my confidence in the asset class is returning.

ATB

Pref


#3577

Given up on lemon fool tbh mainly as it keeps refusing my login as it blocks my IP for some reason (no clue why)… which is the case again today.

I have read up on pref shares though… easy to find out about the mechanics and fundamentals but they rarely answer my specific questions.