janch

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About janch

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  1. Just found this excellent article about gold and miners etc on the front page of AJBell's website so anyone can access it and you don't have to be an investor on their platform: https://www.youinvest.co.uk/articles/investmentarticles/175869/how-play-gold-if-precious-metals-price-really-starts-shine I'm finding their free Shares magazine useful too for general advice and some share tips (I haven't bought any as yet!). This comes free every week if you have investments with them (over £4K) I think. DB please take encourgement that so far your roadmap has been spot on and I for one decided to give investing another go having had my fingers badly burnt in the past. Hopefully I have a more informed and considered approach than before. Many thanks too for all the other posters most of whom have far greater knowlege than me. I also like Max Keiser on RT 3x per week 8.30pm on Tues, Thurs, Sat although he does come across as a bit mad! He says to buy gold and bitcoin. I haven't taken the plunge with BTC yet............
  2. I'm back! Just been catching up on about 10 pages while my laptop was out of action. Poor thing stopped dead and now has a new hard drive (courtesy of my son). I also managed a look at my mini portfolio which is looking a bit healthier (thanks to GDX mainly) so things are looking up. Many thanks to DB who is "on the money" with predictions. I agree with the recent comments about council tax which at the moment accounts for approx 20% of my state pension income. I bet a good proportion of it goes on paying ex council employees pensions. They used to publish the figures and produced a handy pie chart but now they're hidden away somewhere on the local authority website. At least I managed a few minutes on their computer in the library for free so some return on the amount they charge me. (Some authorities make you pay extra for this) I also got a Tescos divi today and I'm with SP in buying shares in companies I use....it seems to make sense and every little helps...........
  3. I do have a few on that list but I'm holding my nerve...........our day will come. In retrospect I bought too soon But as I'm new to this game I obviously still have a lot to learn So far I'm down around 14% but it could be worse...........I could have some New Gold!
  4. Innovation at Royal Mail. Considering how much of their business is parcels now I should think this is a good thing which should help the business long term. https://www.bbc.co.uk/news/business-48334721
  5. DIY goldmining https://www.bbc.co.uk/news/world-australia-48331769
  6. Thanks both, my faith is restored. I don't have enough to invest for ladders unfortunately and in hindsight I would have been better to wait until about now to start investing but heh it's all part of my learning and it should all come good if I hang on. At least I'm not one of those with massive debts (mortgage/car) to pay off. Regarding Tescos I buy the less than own label brands eg Growers' Harvest (tinned tomatoes etc) and can't tell any difference in quality. TE Stockwell T-bags are 50p yet own make Tescos are more than double that. God only knows how much are "quality" brands as I never look. As far as I can tell I still get as good a brew as I always have done
  7. Debt deflation cometh................please soon My portfolio of well-known defensives and a few miners is down approx 11% this morning. Not one of them is up. I only started this investing lark in January and I may lose the faith if nothing happens soon..............(my middle name is gloom)
  8. Maybe some of the HY aren't going to be so high going forward especially VOD and possibly CNA........
  9. I posted the above from AJ Bell (had to cut and paste it) as it seemed very relevant and useful (to me at any rate)
  10. Four ways to tell whether a dividend may be safe Writer, Russ Mould Monday, May 13, 2019 Vodafone Group PLC Marks & Spencer has already taken the plunge and announced a plan to cut its dividend and although BT has decided to keep its payment unchanged investors are understandably nervous about some of the yields offered by some of the UK’s biggest firms. With the best cash ISAs offering an interest rate of around 1.5% and the UK 10-year Government bond yield – or risk-free rate – coming in at barely 1.1% investors need to think about why a stock is offering a yield of 8%, 9% or even 10%. The main reason companies such as Centrica, Persimmon, Taylor Wimpey, Evraz and Vodafone are offering huge dividend yields is that investors are demanding this as compensation for the capital risk that comes with owning the shares. In plain English, the huge yield is investors’ polite way of saying they do not believe the analysts’ forecasts for profits and the dividend – or at the very least that they want more proof that the dividend can be sustained. This is because there are few worse investments than a stock with a high yield that cuts its dividend. In these cases, the injury caused by loss of the yield is compounded by the insult of a share price fall – although in the case of Centrica and Vodafone (and BT for that matter) persistent share price falls mean that investors are already braced for a dividend cut. As such, you might start to wonder whether Iain Conn at Centrica and Nick Read don’t just get on with it and remove a millstone from their own necks and their companies’ share prices. To help decide whether a chief executive is going to bite the bullet and cut a dividend, investors can carry out four checks to see how safe a payment might be. They are: Dividend cover, according to earnings Dividend cover, according to free cash flow Interest cover and net debt The size of the pension deficit or surplus Vodafone will be used as an example below, in all four cases. 1. Dividend cover Dividend cover is calculated as follows and is expressed as a ratio: Prospective earnings per share (EPS) DIVIDED BY prospective dividend per share (DPS) Ideally cover should exceed 2.0. Anything below two needs to be watched and a ratio under 1.0 suggests danger – unless the firm is a Real Estate Investment Trust, obliged to pay out 90% of its earnings to maintain its tax status; it has fabulous free cash flow and a strong balance sheet; demand is relatively stable and insensitive to swings in the economy, which really means utilities and consumer staples (although the increasingly active role of the regulator must be watched here rather than the economic cycle). In the case of Vodafone in the year to March 2019, the forecast earnings per share figure is 9.9p and the dividend 12.9p, according to consensus. That is dividend cover of 0.76, less than ideal. For the year to March 2020, the analysts’ consensus expects EPS of 11.4p and a dividend of 12.9p, so again cover looks lower than you would like at 0.88 times. March 2019E March 2020E Earnings per share 9.9p 11.4 Dividend per share 12.88p 12.88 Dividend cover 0.76 0.88x Source: Sharecast, consensus analysts’ forecasts. Assumes an unchanged dividend payment of €0.1507 2. Operating free cashflow cover Operating free cashflow cover adds extra reassurance, because it is cash that funds dividends – and there is another old saying here: “profits are a matter of opinion, cash is a matter of fact.” An extreme example of this is Carillion which was profitable and in theory offering an 8%-plus dividend yield just before it went bust owing to weak cash flow. Operating free cash flow (OpFcF) - this can be calculated in the four-step process below. Quite simply the higher the figure the better, especially when taken as a percentage of sales or operating profit. Net operating profit MINUS tax PLUS depreciation and amortisation MINUS capital expenditure MINUS increase in working capital. The operating free cash flow number can then be measured against the actual total cash value of the annual dividend payment. Companies publish how many shares they have in issue, so multiplying that figure by the value of the distribution will quantify the total cost in millions of pounds. If free cash flow cover exceeds 2.0 then that is a good start though again it may be worth looking at where operating profit and operating margins are compared to prior cyclical highs and lows and the average over the last decade. Vodafone does at the moment generate enough cash, even after unavoidable expenses such as interest on debt, tax and licensing and spectrum payments. However, the margin of safety is getting thinner and three factors may start to work against Vodafone: competitive pressure on mobile margins in key mobile markets like the UK, Spain and Italy is growing; interest payments will rise if the acquisition of European cable TV assets from Liberty Global gets regulatory approval; and spectrum and licensing costs are going up as Vodafone prepares to launch 5G mobile services. € millions 2016 2017 2018 Sales 49,810 47,631 46,571 Operating profit 1,320 3,725 4,298 Depreciation & amortisation 11,724 12,086 10,884 Net working capital -496 -48 -858 Capital expenditure -10,561 -7,675 -7,321 Operating Cash Flow 1,987 8,088 7,003 OpFcF from discontinued operations 1,645 1,203 858 Operating Cash Flow 3,632 9,291 7,861 Tax -738 -761 -1,010 Interest -982 -830 -753 Pension contribution 0 0 0 Licensing and spectrum spend -3,182 -474 -1,123 Operating Free Cash Flow -1,270 7,226 4,975 Dividend -4,188 -3,714 -3,920 Remaining free cash flow -3,921 2,783 1,320 Source: Company accounts. Financial year to March 3. Net debt and interest cover A badly-stretched balance sheet can jeopardise a dividend payout, since a heavily-indebted firm will have to pay interest on its liabilities and repay those obligations at some stage. Ultimately a firm could have to reduce or pass its dividend to preserve cash and ensure its banks and lenders are paid so they do not pull the plug. One good measure of a firm's balance sheet is its gearing, or net debt/equity ratio. This is calculated as follows and expressed as a percentage: Short-term borrowings PLUS long-term borrowings MINUS and cash equivalents DIVIDED BY Shareholders funds MULTIPLIED BY 100. A more thorough analysis will include pension liabilities and assets, as well as off-balance sheet liabilities such as leases (which are now coming on balance sheet under IFRS16 accounting rules) and contingent payments. Just looking at Vodafone’s basic cash and debt figures takes us to a net figure of €38.5 billion. Although this only presents a gearing ratio of 56%, Vodafone is about to take on another €18.4 billion of debt thanks to the European cable TV deal. Moreover, Vodafone also has some substantial leases on network equipment so the total net debt figure is nearer to €45 billion, once other items are accounted for. € million Mar-18 Cash 4,674 Retirement benefit assets 110 Assets for sale 13,820 Cash and cash equivalent 18,604 Short term debt 10,351 Long term debt 32,908 Liabilities for sale 10,999 Retirement benefit liabilities 520 Leases 8,835 Debt and liabilities 63,613 Net debt 45,009 Equity 68,607 Net debt / equity ratio (“gearing”) 66% Source: Company accounts You can then add interest cover to the mix. This ratio is also a good litmus test of a group's financial soundness. It is calculated as: Operating income PLUS interest income DIVIDED BY interest expense. The higher the ratio, the stronger a firm's finances and although Vodafone has plenty of debt, its interest cover ratio of 3.85 times suggest it is currently profitable enough to easily fund such a burden. € million Mar-18 Operating profit 4,299 Net interest income 339 Total 4,638 Net interest expense 1,202 Interest cover 3.85x Source: Company accounts 4. The final check involves the pension fund, not least as this is becoming a political as well as an economic issue, following, Carillion, BHS and others. The regulator is clearly becoming increasingly intolerant of companies that distribute cash to shareholders via dividends or share buybacks while they still have a big pension deficit. To check for the risk of political interference, or the possibility that a company must plug a financial hole, always look to see whether a company has a pension deficit or surplus. The good news is that Vodafone has a tiny deficit, with the balance sheet showing a net deficit of just €410 million. The annual costs of topping up the pension fund to profits in the year to March 2018 was a perfectly manageable €222 million. Conclusion In conclusion, Vodafone passes three of the four tests, which may be why boss Nick Read has so far stated it was his intention to hold the dividend unchanged at 15.07 euro cents for the year to March 2019 (even if this in itself was a big decision as it ended a streak of annual dividend increases that dates back to 1998). Free cash flow cover looks adequate, there is no pension problem and the company seems built to withstand its debts. However, earnings cover is weak, debt will rise if the Liberty Global deal is approved and free cash flow could be put under pressure by spectrum and network equipment costs relating to 5G, so it would be no shock if Mr Read were to decide to prioritise investment in the company’s long-term competitive position and sacrifice some of the dividend payment. The share price is already expecting it and for the long-term good of the business it could well be the right thing to do.
  11. I got some GDX from AJ Bell a couple of months back but couldn't get SIL or GDXJ from them (no KID document I think). They also do individual miners and the merian gold and silver fund. I've no idea if the fund would be better than individual stocks or ETFs as like you I'm clueless! PS GDX hasn't done anything since I purchased it, if anything it's a bit down so far
  12. Interesting headline and article: https://www.zerohedge.com/news/2019-05-10/get-popcorn-ready-why-worlds-most-bearish-hedge-fund-thinks-biggest-crash-almost
  13. Another women's fashion retailer bites the dust: https://www.bbc.co.uk/news/business-48193336
  14. Maybe they will charge a fee to keep our money for us...............sounds different from negative interest rate
  15. Yes....same here but I seem to remember DB saying everything could go down by up to 15% before the "turn" and we're in that bit before the "solid" companies return into favour. Let's hope so or it's an awful lot of divis before I get back my lossesI think Woodford is doing the same type of investing from what I read and investors in his funds are losing patience https://www.thisismoney.co.uk/.../Should-sell-Woodford-fund-investment-loss.html Also SP I've just learnt something which I didn't know about "scrip divi"(shares instead of a divi) which I think only applies if you have paper certificates?? I find myself looking up a lot of the terms bandied about on here. {Thanks go to Google).