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Author: kcchongnz   |   Latest post: Sun, 23 Jul 2017, 12:12 PM

 

High dividend Yield Investment In A Volatile Market: A Sure Win Strategy? kcchongnz

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High dividend Yield Investment In A Volatile Market: A Sure Win Strategy?

Tis goeth down to a fundamental aspect that “An investment in knowledge pays the best interest”  - Benjamin Franklin

This is what an investment banker told me when I enquired on behalf of my friend on her margin account. I didn’t change a single word from the email.

“- Her current Margin interest is at BLR - 2%, i.e,6.85 - 2.0 = 4.85% per annum. This interest rate will only charged when used the facility, and is debited once a month (on the last day of the month), from the margin a/c.

- With the interst of 4.85%, there are many stocks in Malaysia that pay dividend (not to mention the capital gain), which is above  4.85% per annum.

- Why not take advantage of Bank's low interest to seek investment that can give higher returns than 4.85%?”

 

With a low interest rate environment, and the apparent market correction now, and possibly a bear market soon, isn’t it a plausible reason why one should invest in stocks which provide dividend yields higher than the interest paid for a margin account? Isn’t that stupid if you don’t do that? Really?

I do agree with the investment banker’s statement that you can find stocks with dividend yield higher than the margin account interest of 4.85%. But there are two major problems here:

  1. Are you sure the margin account is a good idea for you?
  2. Are you sure high dividend yield stocks will provide you with higher total return?

For me the answer for question 1 is straightforward and I have expressed in my article here. For those who are new in investing inthe stock market, get that "save" into your head.

http://klse.i3investor.com/blogs/kcchongnz/61822.jsp

Investment in the equity market for me is to endeavour to obtain a slightly higher long-term return than the broad market with less risks, maybe 12%-15%, and not attempting to get phenomenal return from the market, 30%, 50% etc, with high risk with leverage, especially with a margin account. To achieve a reasonable return with less risk is not difficult but you must first have the necessary knowledge in fundamental investing which you must learn.  The ambition of getting very high return with leverage, well, I have fully expressed in the above article.

For problem number 2, I wonder if you invest, do you consider the total return on your investment, or just the dividend yield, bearing in mind that dividends are not a promised cash flows. For me, dividend forms just part of the return for investing in a company. The other part is the capital gain on the stock which comprises of earnings growth and expansion of the price-earnings ratio when it is sold later. Together they form the total return of a stock.


Total return = Dividend + Capital gain (earnings growth + PE change)

The US equity market provided a compounded annual return (CAR) of 10.4% from 1900 to 2000 which was made up of 5% in dividend yield, 4.8% from earnings growth and just 0.6% due to change in the PE ratio (John Bogle of Vanguard). One can see that dividend yield made up the highest portion in the total return. The important question is, “Can the high dividend payment sustainable?” and “Is a company which pays high dividend a more attractive investment?”

 

Let us imagine 5 years ago you were thinking of buying some high dividend stocks in Bursa for long term investment of more than 5 years. You would look at the high dividend paying Bursa stocks to add to your portfolio. Let say your main criterion is stocks must pay more than 7% dividend yield (DY). So using the Issue 20 from 5/10/2009-08/11/2009 from the booklet of Share Investment, you started your hunting and you found there were a total of 35 stocks from various industries with a DY of more than 7% as shown in Table 1 in the Appendix.

 

The average dividend yield of the 35 stocks was 16.0% with a median of 12.2%. The highest dividend yield was JHM Consolidated at 17.9%, followed by 10 more stocks with dividend yield higher than 10%. They are Jaycorp (8.75 sen, 11.9%), Mesiniaga (19 sen, 11.7%), CYL (6 sen, 11.4%), Weida (7.5 sen, 11.2%), THPlant (17.5 sen, 11.1%), Dayang (14 sen, 11.0%), Teo Guan Lee (10 sen, 10.7%), Eurospan (11 sen, 10.5%), Keladi Maju (1.5 sen, 10.3%), and CCK (7 sen, 10%).

 

About 5 years later on 10/10/2014, the total return of all the 35 stocks above were obtained from Yahoo Finance adjusted daily historical share prices. It is noted that the prices when the DY were worked out may vary a little from prices exactly 5 years ago.

 

Five years forward

Five years have passed and what happen to the dividend payment for those stocks? Have they increase, decrease, or stays the same? What about their total returns? Are the total returns higher than the broad market?

 

The broad KLCI index has increased from 1267 to 1841 at the close on 10/10/2014. The compounded annual return (CAR) on capital of the market is 7.8%. With an approximate dividend yield of 3%, the total return of the broad market is estimated to be about 10.8% a year for the last five years.

 

The total CAR of the 35 stocks was 16% a year with a median of 12.2%. Both are higher than the return of the market. That is not bad at all.

 

However, of all those 12 stocks which paid had dividend yield above 10% 5 years ago, only four, or just one third, have managed a total return higher than the broad market of 10.8% a year; they are Dayang (40.4%), Weida (21.6%), Keladi Maju (20.8%) and Teo Guan Lee (17.9%).  In term of absolute dividend payment 5 years later, only one company, Dayang has its dividend increased and one company Teo Guan Lee which managed to maintain the same dividend of 10 sen as 5 years ago. Eurospan in fact has a negative CAR of 5.6% and had its dividend cut from 11 sen to nothing last year. One of the highest dividend yield stock 5 years ago, Maybulk (13.3%), had a dismal negative return of 11.6%!

 

For all the 35 stocks, only 4 managed to maintain the same dividend payment as 5 years ago, and 6 managed to increase their dividend payment. The rest of 25 stocks had their dividend reduced, some of them drastically, or even none.

 

The star performer is Pintaras Jaya with its dividend increased 3 folds from 10 sen to 15 sen after 1:1 bonus issue, and its total CAR is a whopping 62%. TDM is even better with a CAR of 71% with its bonus and share split. The other high performers are Wellcall (41%), Dayang (40.4%), Willowglen (27.8%), TM (22.5%), Weida (21.6%), Yi Lai, Prestima, Keladi Maju and Oriental Interest, all at 21%.

 

It is worthwhile to note that those high dividend stocks which out-performed the broad market the last 5 years have their total CAR twice or more than that of KLCI.

 

Hence if you had bought a basket of high dividend stocks 5 years ago using the farmer’s method, you are likely to have made a small alpha now as you have seen from the median total return of 12.2%, 1.4% higher than KLCI. However, if you had done a thorough financial statement analysis and valuation to hunt for those high dividend stocks then, you would most probably have chosen the right stocks such as Pintaras Jaya, Wellcall, Dayang, TDM, Willoglen. With those analysis, you would also most probably have avoided investing in the other high DY stocks such as Maybulk, CNI and Eurospan which have negative CAR for the last 5 years. As a result, you would have obtained handsome extra-ordinary return 5 years later which is now. 


Academic Research

Of course we can’t just pick a few stocks and prove that a high dividend yield stock will provide investors with higher or lower return like that. Academic research studies in the US market concluded that while raw returns from buying the top dividend paying stocks is higher than the index, adjusting for risk and taxes eliminates all the excess return. (McQueen, Shields and Thorley, 1997, Does the Dow-10 Investment Strategy beat the Dow statistically and economically?; Hirschey 2000, The “Dogs of the Dow” Myth)

 

The caveats on high dividend stock

High dividend payment may not be good for the company if there is inadequate normalized earnings and free cash flows. It is especially so if there is none excess cash in its balance sheet. This dividend payment is hence unsustainable as the company has to borrow or issues new shares in order to pay dividend. Paying too much dividend also negatively affect growth as less money is spent on capital expenses for the future growth of the company. A company with low return on reinvested capital is also unlikely to sustain high dividend payment.

 

Conclusions

Investing in high dividend stocks is not necessary a sure win strategy as it has shown that the total return of many high dividend yields stocks in the past did not provide satisfactory total return compared to the broad market. However, it is still a viable strategy though if you can separate the chaff from the wheat. If you embark on the high dividend investing strategy, it is better if you carry out the following checks:

 

  1. Dividend yields exceed the bank fixed interest rate, currently about 3.5%.
  2. Dividend payout ratio should be less than a cut-off, say 65-80% to have growth
  3. Reasonable growth rate in earnings at least matches the overall economy, say >4%.
  4. Strong balance sheet
  5. High return of equity and capitals > 12%

 

Most of all, never never use margin financing to invest in stocks, any stock, doesn't matter its dividend is higher than the interest rate of the margin finance or not.

 

For enquiry, please email: ckc14training2@gmail.com

 

K C Chong (13/10/14)

 

Appendix

Table 1

 

Stock

Stock

Dividend

Price now

Adj price

Total return

CAGR

No

Consumer

Symbol

Yield %

10/10/2014

5 years ago

%

%

1

Jaycorp

7152

11.9

0.700

0.53

32.1

5.7

2

Teo Guan Lee

9369

10.7

1.66

0.73

127.4

17.9

3

Eurospan

7094

10.5

0.75

1.00

-25.0

-5.6

4

CCK

7035

10.0

0.900

0.56

60.7

10.0

5

Ni shin Resources

7215

8.5

0.425

0.19

123.7

17.5

6

Formosa Prosonic Ind.

9172

8.4

0.915

0.46

98.9

14.7

               

6

Construction

           

7

Prostasco

5070

9.1

1.56

0.63

147.6

19.9

8

Melati Ehsan

5129

7.3

1.33

0.67

98.5

14.7

9

Pintaras Jaya

9598

7.2

4.34

0.39

1012.8

61.9

               

9

Industrial Products

           

10

Weida

7111

11.2

1.65

0.62

166.1

21.6

11

Uchi Tech

7100

9.4

1.37

0.96

42.7

7.4

12

ScanwolfCorp

7239

9.1

0.57

0.33

72.7

11.6

13

YI-Lai

5048

8.6

1.15

0.45

155.6

20.6

14

Tien Wah

7374

8.1

2.1

1.18

78.0

12.2

15

CSC Steel

5094

8.0

1.14

0.98

16.3

3.1

16

Perstima

5436

7.7

4.29

1.67

156.9

20.8

17

CYL Corp

7157

11.4

0.56

0.42

33.3

5.9

18

Southern Steel

5665

7.4

1.40

1.38

1.4

0.3

19

Well Call

7231

8.9

1.56

0.28

457.1

41.0

               

19

Infrastructure

           

20

Litrak

6645

9.2

3.75

2.35

59.6

9.8

               

20

Plantation

           

21

NSOP

2038

9.9

5.33

3.25

64.0

10.4

22

TDM

2054

9.1

0.875

0.06

1358.3

70.9

23

Boustead Hldg

2771

8.7

4.95

2.29

116.2

16.7

24

Chin Teck

1929

9.8

9.51

6.25

52.2

8.8

25

TH Plantation

5112

11.1

1.71

1.03

66.0

10.7

               

25

Properties

           

26

Keladi Maju

6769

10.3

0.335

0.130

157.7

20.8

27

Oriental Interest*

5827

8.0

2.57

1.00

157.0

20.8

               

27

Trading and Services

           

28

Malaysian bulk carriers

5077

13.3

1.53

2.83

-45.9

-11.6

29

Dayang

5141

11.0

3.06

0.560

446.4

40.4

30

Complete logistics

5136

9.7

0.81

0.570

42.1

7.3

31

Telecom Malaysia

4863

8.5

6.85

2.48

176.2

22.5

32

CNI Holding

5104

7.8

0.105

0.200

-47.5

-12.1

               

32

Technology

           

33

JHM Consolidated

*0127

17.9

0.16

0.120

33.3

5.9

34

Mesiniaga

5011

11.7

1.81

1.10

64.5

10.5

35

Willow

*0008

7.7

0.75

0.22

240.9

27.8

               
 

Average

 

9.6

   

165.7

16.0

 

Median

 

9.1

   

78.0

12.2

               
 

KLCI

   

1841

1267

45.3

7.8

 

Dividend

         

3.0

 

Total KLCI

         

10.8

 

Share this

  7 people like this.
 
stockoperator good read on KC articles.

The first criteria must be the winner and leader of respective industry of utmost good business value.
18/10/2014 15:02
sense maker Analysis of relationship between share price performance over 5 years should be made against dividend yield over the same period, not against dividend yield in just 2009.

For companies paying dividends, their profitability (current and projected) is a key driver of both their share price performance and dividend amounts which should move in a same direction over a period of time- except for cases like cash preservation for expansion plans.
18/10/2014 16:29
kcchongnz We are talking about 5 years ago you invested in high dividend yield stocks basing on the dividend and share price then, hoping that you would get a good total return 5 years later. 5 years ago the dividend yield should be based on the price then and the amount of dividend. If not what other price can you base on? Stock price in 2013 which we had no idea in 2009?

But that didn't happen 5 years later as shown in some high dividend yield stocks 5 years ago, because their share prices have gone down substantially now, compared to 5 years ago.

Then it concludes that looking for high dividend yield stocks to invest now, you may be disappointed too as history has shown that there is no evidence to suggest that high dividend yield stocks provided high total return.
18/10/2014 17:19
apini it seems correct and it also seems not so correct, 5 years same portfolio.
I like dividend but if you do not evaluate your portfolio annually then it seem not so correct. so continue invested into the company that has the cash to pay you dividend. some financial knowledge is a must.
18/10/2014 18:46
sense maker It is simplistic n not meaningful as the criteria for both dividend paying company identification (a few years to 2009) n subsequent comparison (a few years from 2014) should be made for a period of time to examine any causation or correlation. All variables are dynamic n should be examined as such.
18/10/2014 18:58
aunloke It works well when we start with new bull.
18/10/2014 19:05
kcchongnz "(a few years to 2009) n subsequent comparison (a few years from 2014)"

Good point. I like simplicity. But I would be happy to see how your analysis is.
18/10/2014 19:05
sense maker Subsequent years from 2009, not from 2014. Typo. I don't have much patience to make presentation like you kcchongnz.:d
18/10/2014 19:12
kcchongnz For simplicity I did take a short cut to assume a holding period of 5 years, for the dividend yield 5 years ago based on the dividend and share price then. Investors don't invest based on dividend yield in the past like 6 years, 7 years or 10 years ago from 2009. They would base on the present dividend yield then.

Of course it would be better if we adjust the portfolio at the end of each year and readjust the portfolio to select those high dividend yield stocks every year. That is definitely the right way to do, but I prefer to leave it to you to do it. I am not doing an academic research.
18/10/2014 19:20
hng33 kcchongnz

Agreed, buy high dividend stock should mitigate volatile market risk, especially when these stock is on weakness in line with market, offering even better dividend yield. However, in the short term, high yield dividend stock can't perform well due to market condition, investor at least rewarded with stream of dividend and indirectly reduce holding cost, without a need to cut loss.

Some of these stock even offer to payout dividend quarterly, like Bjtoto and Magnum. No doubt, with high living cost, impending GST, it will also affect these company, but at least these company is relatively defensive due to nature of their business.
18/10/2014 19:26
kk123 When market is down high dividend is useless also as loss is much more haha
18/10/2014 19:32
kcchongnz hng33,

Good points.

I would agree with you for Magnum, but for BJtoto, it is a disaster. Look at the total return chart for BJtoto from Yahoo Finance you will understand what I mean.

http://finance.yahoo.com/q/bc?t=5y&s=%5EKLSE&l=on&z=l&q=l&c=1562.kl&ql=1
18/10/2014 19:37
sunztzhe In a volatile market, it is better to be opportunistic and nimble than be sorry. In a benign market , high dividend yields is good investment but in reality does benign market exist at all times in the world of stocks? The low beta high dividend stocks in benign market can also transform into medium or high beta stocks in volatile market if earnings, roe,roce, roic disappoints. In essence there is no such axiom as "sure win strategy at all times with high dividend stocks" but there is an axiom at all times in "the pursuit of preservation of capital."
18/10/2014 20:06
sense maker The mechanism should be this:

One looks at dividend yield, ratio and policy for past few years to establish if the management believes in paying out good dividend on a sustainable basis throughout the period. Importantly, one should prefer a company that pays high dividend yield and yet maintains a low dividend over profit after tax ratio, which represents a potential higher dividend payout in future and current low PE.

Once shortlisted, one buy stocks based on the companies' projected profitability which determines both future the share price and dividend.
18/10/2014 20:12
hng33 One of the reason company opt for high dividend is due to its business model, offer very limited growth prospect or expose to highly regulated business such as Power, telco, NFO. For instance, YTLP nowadays declare almost all of its financial earning as dividend, presumably due to company outed to involve project 3B power project, less capex require prompting YTLP to resume high dividend payout.

But, the sustainability of the company to keep payout high dividend yield is still subject to availability and recurring stream of profit from their core business. Beware, some company when declaring 'special dividend' due to one off assets disposal or one of reward accumulated earning.
18/10/2014 20:31
hng33 Another question is, how high the dividend yield is consider high ?

Is the benchmark return a year should against 12 month FD, Bond yield, EPF dividend or unit trust?
18/10/2014 20:39
sense maker It is relative.

For companies experiencing and projecting high growth in profits and has big economic moats, investors should tolerate a lower dividend yield. E.g. >3.5%

For companies with rather more volatile earnings, investors normally demand a "dividend premium". E.g. > 5%
18/10/2014 20:48
apini Anyhow I want to give you many thumb up for you hard work and sharing.TQ
18/10/2014 21:07
stockoperator common sense telling us that there is No point in the market for the dividend given the market volatility.

Good dividend must come with long term growth and Good Business value and stable business model.
18/10/2014 22:05
sense maker The recent correction is a result of re-pricing of risks in all risky asset classes including equity market, stemming from the spectre of rising interest rate pursued by FED which douses valuation. In valuation exercises of any kind for biz, companies, assets, financial instruments, etc, higher interest rate means lower fair value.

Expected Return on shares which comprises capital gain and dividend yield is rising in tandem with cost of borrowing (i.e. interest). Dividend remains as relevant as ever no matter what the investment climate we are in.
18/10/2014 22:15
stockoperator Dear sense maker,

it is going to surprise investor that the expected return could be dividend yield minus capital gain. We know many reasons for this to happen.
18/10/2014 22:25
stockoperator The selection criteria must follow the sequence of A B and C.

But it is so hard to find business with good value and long term growth, and we have no patience to hold forever, so what do we do in short term?

Lets go for High yield. Lets go for company below net asset value.Lets go for turnaround stories. Lets go for transformation. Lets go for a wild ride. Let's go for Trading.
18/10/2014 22:31
stockoperator Correction is always of mismatch of Supply and Demand.

In recent case, the supply is flooded such as big IPO, Bonus issue, Right Issue, Oil discovery, Big shale gas supply, good palm harvest and new plantation in africa and so on. Well the demand is expected to be sluggish due to national debt, Ebola, GST, Rate hike and so on. So there is a mis match ya.
18/10/2014 22:38
stockoperator Having said that Big supply with slower growth expectation might provide low cost environment for Business.

And we would not have another price shock and high inflation when demand picks up as happened in 2008-2009 when crude spikes to USD120.

I see positives in all happened for long term Good.
18/10/2014 22:46
sense maker The boom and bust is part of an economic cycle of allocating resources efficiently. With QE, first introduced in 2008, the rules of the game changed forever as a floor could be artificially and promptly inserted by FED whenever needed, and a L shape recovery was then easy to envisage. And so it turned out to be and we did not see any major correction in the past 5 years. What we have seen since is manufactured inflation (to avoid deflation) that causes stagflation as economic excesses were not quickly pared back, rising risk appetite, soaring asset prices and the resultant social inequality on a world-wide basis. Euro will pump enough money to avoid deflation and China will stage a managed property price reduction, while Russia has been and will likely be set back financially seriously for a long time. As for Malaysia, if economic reforms continue to be deferred, Ringgit will languish as the economy cannot take another interest rate hike by BNM. So, in short, stock picking skills will count more than ever as some share prices are now trading at lofty levels and would crash if earnings disappoint in the future. Companies that perform well in the past year mainly benefit from falling raw material prices while maintaining reasonable degree of pricing power. Interest is to risky assets what oil price is to raw material costs. In 2004 when interest rate rose, equity corrected 20% but then was a conventional time. With QE-forever, a severe correction of say 40% is really unlikely and rebound will come faster if it happens.
18/10/2014 23:08
sunztzhe The recent market correction was indeed a re-pricing of risks in a slowing global economy in anticipation of credit tightening by the FED with interest rate increase hence dousing valuation. It is very obvious that any credit tightening measures wont be good for stock valuation. Of late it is not a certainty that QE will end in view of the slowing economy and consequently a de-pricing of risks is taking place. I would focus on
- will the FED dealy tapering as world economy slows
- will ECB and Germany aggressively QE.
- will the Euro depreciate to 1.15 to 1.10 USD as a result of aggressive QE by ECB?
- will ebola be contained(the general expectation is it will be)
- will crude oil stabilize at USD 80 - USD 90 per barrel
- will China's economy improve

de-pricing of risk indeed is already happening since last Friday and barring any explosive outbreak of ebola, the stock market will resume its upward climb in Q4 2014 into 2015.
18/10/2014 23:08
stockoperator Wah somebody name plate is shining at my eyes.
18/10/2014 23:08
sunztzhe The light shined forth and darkness disappears at an instant..hahahahah
18/10/2014 23:13
stockoperator ya ya I can see that it is a sun behind. Luckily i am not a dracula.
18/10/2014 23:15
sunztzhe So what will be your decision?
- go for High yield
- go for >50% discount below net asset value
- go for turnaround stories
- go for transformation
- go for a wild ride
- go for Trading
- keep cash in bank and wait for market to kaput

I welcome your valued input on the above decision choices with stock recommendations except waiting for market crash hahahahaha
18/10/2014 23:25
18/10/2014 23:25
stockoperator well i decide to make myself a name plate first to attract all good lucks and chase away all bad lucks.
18/10/2014 23:29
sunztzhe .. better go chase after all the female draculas hahahahahaha
18/10/2014 23:34
stockoperator Dear Sun, shine for me everywhere that i go.
18/10/2014 23:35
sunztzhe No I shan't
Go where darkness reigns , where the draculas are and where no one dares to go
You shall enjoy the fruits of your labour using high hurdle rates of investment in identifying G spot stocks that thrills you to the hilt..hahahahaahha
18/10/2014 23:40
stockoperator i will smell my way to the company where there is lots of cash. Good smell and cash is shining like a Sun.
18/10/2014 23:55
sunztzhe Better do all the smelling to your heart's fulfillment. Just don't part with your cash though hahahahahaha
19/10/2014 00:01
kcchongnz Posted by hng33 > Oct 18, 2014 08:39 PM | Report Abuse
Another question is, how high the dividend yield is consider high ?
Is the benchmark return a year should against 12 month FD, Bond yield, EPF dividend or unit trust?

When we talk about high dividend yield investing strategy, of course the higher the dividend, the better because that is the essence of the strategy. I would think the rate must be equivalent to FD rate. You can’t put money in EPF as you wish to earn that higher return. Bond is not easily purchased by retail investor in Malaysia. Bond fund? Be aware that it is a risky assets which is correlated with interest rate and interest rate is likely to rise in the future which is detrimental to bond funds. Unit trust? I don’t have trust that it will give you a fixed income.

But bear in mind that high dividend payment has a cost to shareholders. A high pay-out ratio will results in low retention ratio, which in turn stifle growth. For a company at a stable growth stage, all companies will eventually reach that stage, the growth rate is related to the following:

Expected growth rate in Equity income, g = Retention ratio x Return on Equity (ROE)

The higher the pay-out ratio, the lower the retention ratio and hence the lower the expected growth

You can see the other factor is the return on equity, ROE. So theoretically the most crucial factor is how the return on reinvested capital, not growth in earnings.

A company can borrow an additional 1 billion and makes 2% from this borrowing and still grow its earnings by 20 million each year. But is this good for shareholders?

A higher retention ratio actually doesn’t guarantee success too if the return on reinvested capital is below its cost of capital. Instead it is a value destroyer.
19/10/2014 05:26
sunztzhe So what will be your decision?
- go for High yield
- go for >50% discount below net asset value
- go for turnaround stories
- go for transformation
- go for a wild ride
- go for Trading
- keep cash in bank and wait for market to kaput
19/10/2014 08:50
AzmiMerican Saya tahu you are doing a study, but in real life using just one constant criteria in the ever changing share market which is affected by many variables mana boleh??

In real life one mesti check one's portfolio every week if not day kan... mana boleh tunggu dapat dividend payment dulu only decide nak jual ke apa ke when it is obvious that a market correction is coming. .


I think if you want to study dividen it is more relevant and close to real life to study "Is it a good idea to buy into high dividend stock in a crashing market to survive better while waiting for market to recover?"

Saya punya opinion, based on the few high dividend cos that have been delisted that you can apply have been excluded in you punya list, I think no lo
19/10/2014 09:08
AzmiMerican Mungkin over a shorter time frame, 1 2 years not 5 years.

You chase the dividend, announced je you beli until dapat dividend tu, then you chase the next company for its dividend macam ni. But even macam ni kan the share price akan adjust downward selepas payment of dividend? Ada gain ke??

Lagi pun dividend policy banyak yang tak jadi, cakap je.
19/10/2014 10:39
rlch Reit dividend policy must be at least 90% profit, if not not qualified as Reit. Reit is like owning property and collecting rent minus the tenants issue.
19/10/2014 10:54
bsngpg Some people apply High Dividend Strategy in these ways:

Criterion 1: Is the management RELIABLE? (Follow up quarterly reports, press releases, interviews, ARs, analyst reports, news about the company etc.)

Criterion 2: Past trend of company’s PROFITABILITY and forecasted profitability.( need to understand the industry, company’s plans/vision and the company’s competitiveness etc)

Criterion 3: Trend of the past GROWTH and forecasted growth prospect. (need to understand the industry, company’s plans/vision and the company’s competitiveness etc)

Criterion 4: Is BAL. SHEET healthy? (net cash ? debt level etc)

Criterion 5: Is the share traded at attractive PRICE ?(PE, self-judgment if it is fair or overvalue based on type of industry, size of company, market sentiment and self-experience etc)

Criterion 6: Then only come to the last thing-DIVIDENT Policy, past record on yield, forecasted yield. The high div yield is normally defined in the range of 4.5 - 7% at the time of purchase.
19/10/2014 12:03
lcwin In a bull mkt, Risk premium is low so All sorts of Stocks will fly just look at our mkt now salted fish is swimming, over price warrant is being chase up like mad. In fact during these time best strategy for me is look for low volume stock with a bit of turnaround story and wait.So far it work well.I don't bother with good dividen as most of these will be highly priced so upside is limited.
So if you ask me we are still in a bull mkt stage. Liquidity is at all time high after the round of properties speculation so these money have to go somewhere ( Bursa of course!)
19/10/2014 13:05
sunztzhe bsngpg, I know how some people will decide but How will you decide?
19/10/2014 14:18
sunztzhe lcwin, Thanks for sharing your input. For me I will go for
- turnaround stocks
- stocks that is bombed out but with improving fundamentals
- stocks with fresh catalyst
- dividends is not my main criteria but capital appreciation is.
19/10/2014 14:21
r°Moi TUAJAYA. ... IS THE STOCK, BUY!

- turnaround stock YES
- stock that is bombed out but with improving fundamentals YES
- stocks with fresh catalyst YES

HELL, TUAJAYA EVEN HAS HIGH DIVIDEN YIELD TO BRAG NOWADAYS AT 3 SEN PER QUATER 0.12/2.00 = 6% PER ANNUM


TUAJAYA. ... IS THE STOCK TO BUY



http://klse.i3investor.com/servlets/stk/5085.jsp
19/10/2014 16:06
sunztzhe The recent market correction was a re-pricing of risks in a slowing global economy in anticipation of credit tightening by the FED with interest rate increase hence dousing valuation. It is very obvious that any credit tightening measures wont be good for stock valuation. Last Friday, it was not a certainty that QE will end in view of the slowing economy and consequently a de-pricing of risks is already taking place. Rather than predicting a dead cat bounce and waiting for it, I would rather focus on
- will the FED delay tapering as world economy slows, how long will the delay be
- will ECB and Germany QE aggressively.
- will the Euro depreciate to 1.15 to 1.10 USD or even parity with USD as a result of aggressive QE by ECB?
- will Germany's and the European economy rebound with a weakened euro?
- will ebola be contained(the general expectation is it will be)
- will crude oil stabilize at USD 80 - USD 90 per barrel and how would the major producers decide
- if the European economies rebound, what will be the price of crude oil then?
- will China's economy improve

A de-pricing of risk indeed had already happened since last Friday and barring any explosive outbreak of ebola, the stock market will resume its upward climb in Q4 2014 into 2015 if the above scenario pans out gradually.

At this stage, I will long stocks.
19/10/2014 22:21
sy1226 The investment banker that told you that......not licensed to advice retail/priority/private banking clients
20/10/2014 14:07
kcchongnz Posted by sy1226 > Oct 20, 2014 02:07 PM | Report Abuse
The investment banker that told you that......not licensed to advice retail/priority/private banking clients

You are right. But you know what? Even licensed advisers with Bank Negara who are Financial Adviser Representative (FAR), or with Security Commission who have Capital Markets Services Representative’s Licence (CMSRL), most of them will give you the same advice, ie borrow and invest.

First they probably get more commission if you borrow and invest more as they charge by asset under management (AUM). Understand the agency problem. Or they just can't fathom the peril of leverage in investing. They are not trained academically,neither are they trained in their company about this stuff which is detrimental to the well being of the company they work for.

Scary but it is true. How I know? No need to ask this question. Ignore what I say at your own peril.
21/10/2014 19:47


 

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