The close of business on 12 November marked the tenth anniversary of HYP1. For anyone who is not aware, this is a no tinker demo portfolio, the only decisions made are those arising from mandatory events like bids, rights, cash returns etc. Other than that, the porfolio is left alone, designed for the individual, the original HYPer, who wishes to exercise little or no monitoring or voluntary action, ever.
The start capital was £75,000 in November 2000 in 15 shares of £5,000 each. There was a lot of corporate activity, particularly in the earlier years, so that the HYP1 you see today is to a certain extent different from the original.
HYPs are primarily about income so here it is. As in all prior years, this is based on xd dates.
£
Anglo American 77.07
British American Tobacco 904.42
BT Group 392.06
Dixons 0
Intercontinental Hotels 168.48
Ladbrokes 101.02
Land Sex 201.88
Lloyds 0
Mitchells & Butlers 0
Persimmon 31.71
Pearson 323.43
Shell B 416.58
Rio Tinto 294.95
RSA 152.35
United Utilities 232.90
Total 3,296.85
Here is the ten year income record rounded.
2001 3,451
2002 3,474
2003 3,197
2004 3,205
2005 3,546
2006 4,131
2007 4,452
2008 5,040
2009 3,187
2010 3,297
Total to date 36,980
The income has recovered by 3.5% from 2009 but disappointingly, remains below the start years. The effects of the widespread recessionary dividend cuts continue to be felt, with three shares still paying nothing though that's an improvement on last year's five suspenders. The two resumers are Anglo American and Persimmon though with only one payment each in 2010.
It's far too early to be sure of course but it looks like 2011 may see a fair boost to the total, with Anglo and Persimmon probably returning to two payouts per year plus forecast increases from most of the others though I don't expect much in 2011 from the three remaining suspenders. Whatever happens, it always the total that matters, not individual share dividends, that's why it is a portfolio.
Of secondary importance, the capital.
£
AAL 14,442
BATS 20,716
BT.A 9,580
DXNS 1,520
IHG 6,941
LAD 3,508
LAND 4,986
LLOY 831
MAB 2,333
PSN 3,813
PSON 8,451
RDSB 7,887
RIO 22,321
RSA 2,286
UU. 4,278
Total 113,893
At start 75,000
Change +51.9%
FTSE100 at start 6,274.8
Now 5,796.9
Change (7.6%)
HYP1 outperformance 64.4%
An outstanding result here. In the last twelve months, HYP1 has gained 16.8% against the index's 9.9% so that whilst in 2009 it was ahead 54.6% over the then total period to date, that lead has now risen to 64.4%.
So there you have it, like last year a somewhat odd set of figures with great capital performance but patchy income performance over the whole period.
The recession, one of the worst for a very long time, had a nasty effect on dividends, which fell from the peak figure of £5,040 reached in 2008 by 37% to £3,187 in 2009 then recovering a little in 2010, with continued increases now looking quite probable. But that's nothing compared with what happened to interest rates which collapsing by some 80% over recent years and very bad news for investors relying on interest income from bank deposits.
Another way of considering HYP1 income when comparing it with deposit interest is that it has never returned less than 4.2% pa on the original capital, even in its worst year of 2007. In the peak 2008 it reached 6.7%.
Massive recessions like we've just experiened will happen. Not that often but they will happen. When they do, shares will cut dividends. Most recessions will be nowhere near as deep as the recent one and the effect on portfolio income will be minor. But if you want to be a HYPer, you cannot avoid such events. In a sense it was a worthwhile experience for HYP1 to have lived through such a rarely rough time so that we can see the effect on it. It has come through reasonably well under the circumstances I think.
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