DIVIDEND INCOME PLUS

There are no annual fees. There is just a 1% commission whenever a trade is executed. It’s a very simple and fair pricing system. No complex and opaque charges as you often find with funds.

No - This is not a fund or collective investment scheme.

This is a bespoke portfolio service that is tailor made to suit each of our client’s individual requirements. Our clients complete a simple questionnaire which allows our team to build a DIP strategy which most closely satisfies their needs.

The benefit of this type of account is that it can be adapted to the market very quickly when required. Funds are usually very passively managed with very few changes to the portfolio.

This means that most funds end up tracking the stock market index – that’s good when the market is going up but not so great when the market is going down.

Managed funds charge an annual fee regardless of performance, they lock you in with exit penalties and worst of all they give you no control.

After the Neil Woodford scandal where investors lost millions of pounds, more and more people want to take back control. They want to know where their money is being invested, they want greater transparency and they want access to their money at any time. The Neil Woodford fund was one of the most popular flagship funds in the country and it was suspended which meant that investors couldn’t access their cash.

If the stock market crashes or your fund manager invests in illiquid shares then you may find it difficult to get access to your money.

The DIP strategy allows you 100% control and most importantly you can access the funds at any time. You can also see the companies that are being invested into and they will be household names that you recognise. If you’re not happy with any particular company we can remove it from the portfolio.

No – the DIP strategy is a fully managed service which means that we take care of everything for you.

Our team does the research and analysis, picks the stocks, chooses the entry and exit prices and implements all of the necessary limit orders. Then we wait for the orders to be filled and make the necessary calculations to ensure that we maximise the income and growth potential on each stock.

Both. The system runs on a basic trading algorithm which identifies the relative risk of each stock from which the price of the stock is decided. This allows us to automate our buy and sell prices.

However, we also monitor all positions daily and will change the prices according to corporate earnings, announcements and general market developments. Therefore, we implement the initial strategy using automated orders but will move prices manually whenever we need to.

Every time that a transaction is executed you will receive a contract note (usually within a few minutes) and an email at the end of the day detailing the profit or loss, plus any accrued dividends on that position. You also have 24-hour online access to your portfolio. If you wish to speak to us at any time you can also always call the office and we will be happy to run through the numbers with you.

No, you can stop using the DIP at any point you wish. However, for the best results we normally suggest to implement the strategy at least for a 6-12 month period as this strategy is based on capturing dividends (usually paid twice a year) and capital growth.

There are many reasons but one of the main reasons is that it only focusses on FTSE100 and FTSE250 companies which pay dividends. This means that if the shares fall in value you are being paid to wait whilst they recover.

The biggest risk is that a company cuts its dividend but this is mitigated through the stringent screening process that all stocks must go through before they can even qualify to be part of the DIP strategy. For example, choosing a company that has a strong dividend cover helps to reduce the likelihood of a dividend cut.

Our system also allows us to sell losing positions if we feel that the share price has little chance of recovery. This helps to put a ceiling on the maximum loss that a client can have. In very extreme cases a company share price can fall to zero but it’s highly unusual that this would happen without significant warnings beforehand which gives you the opportunity to sell beforehand.

It’s a strategy which combines all of the best things that investors look for. Typically, clients look for low risk investments and buy low-risk dividend paying companies but then struggle to know when the best time is to sell. They therefore miss the capital appreciation and can end up holding shares for years collecting the dividends but not maximising the value of their portfolio.

Many of those companies fall back in price and the opportunity to sell and crystallise a strong profit is lost.

The DIP strategy combines the high income that investors want with strong capital appreciation. It also gives greater protection than traditional buy and hold strategies.

Both.

Short Term - If the shares increase in value quickly then we are prepared to take a profit in which case the DIP becomes a short-term strategy.

Long Term - If the shares don’t increase in value then we simply sit back and collect the dividends. Because we are buying at a discount to the market price when we enter the trade, we will usually collect a much higher dividend. The FTSE100 average yield is around 4.2% but the DIP strategy portfolio yield will typically average 5.5% or higher (this number will vary according to the specific strategy).

Yes. There are three main types of market conditions and the DIP strategy can be adapted for all of them:

• Bull (Rising) Market – we aim to capture a higher capital appreciation and so the exit price will typically be higher; for example, we might enter sell limit orders at 20% above the entry price as opposed to 10%
  
  
• Bear (Falling) Market – we would typically hold more cash to offer greater protection. The yields that the client receives would also be greater because of better (lower) entry prices.
  
  
• Neutral (Up and Down) Market – the DIP works particularly well during volatile market conditions because it offers more opportunities for investors to maximise the number of profitable trades in any given year.

Yes of course. It’s impossible for a strategy to only generate winners and our clients don’t expect a 100% success ratio.

Therefore, our job is to recognise the losers quickly and keep those losses to a minimum by selling when we have to. This is something that the majority of private investors don’t do – they don’t know when to sell. The DIP strategy on the other hand gives a very clear indicator about when we need to exit.

The DIP tells us when to exit when there is a profit as defined by the higher end of the risk range and it also shows when to exit when there is a loss. Selling at the right time helps to protect the client portfolio and accepting a manageable loss is part of the DIP strategy.

However, it’s also important to know when NOT to sell. If a share price falls for no justifiable reason (e.g. because it’s being shorted) we can identify this immediately. Provided that the firm continues to pay a healthy dividend, we don’t need to panic because we know that the price is likely to recover once the shorting is covered.

The problem is that most private investors never sell – they don’t sell when their shares go up and they don’t sell when their shares go down.

That’s not really a strategy, that’s more like gambling.

It is UK based because this strategy has been designed in mind for the FTSE350 blue-chip stocks. Investing in overseas companies also incurs higher fees and exposes investors to foreign exchange risk.

However, as a firm we can offer diversification by investing in any other area which may be of interest to you including global funds, preference shares, bonds and other investments. This depends entirely on the client’s specific objectives and personal choice of the client.

You don’t have to invest in the DIP if you don’t wish to or you could implement the DIP as part of a wider managed portfolio strategy.

No. The increased market volatility actually helps to improve the performance of the DIP strategy. Blue-chip companies are being ‘over-sold’ by investors who panic which drives down share prices to artificially low levels which gives our clients better buying opportunities.

Because it gives investors more than just dividends. It gives them the usual dividend income plus capital appreciation.