Taehyung

?

2019-10-09 21:21

Ricky Yeo

Why does dividend investing has snowball effect?

2019-10-10 06:56

dividend4lifeZ

snowball effect is a metaphor for compounding, by using the dividend received to repurchase the stock or subscribe to DRS

2019-10-10 07:12

Ricky Yeo

But you can achieve compounding without dividend. And there is overwhelming reasons that dividend investing actually lowers compounding.

2019-10-10 07:35

dividend4lifeZ

may i know what is the reason? and how do you plan to compounding without the dividend since compounding is using the interest earned (in this case the dividend) to reinvest back.

2019-10-10 07:59

Ricky Yeo

Think it this way, if you invest your money in a stock that earns 20% ROC (return on capital) year in year out for 30-40 years, your money will compound at 20% (assume PE doesn't change). And this assume the stock has 0% dividend. So your money can still compound even with 0% payout ratio.

Now if the same stock pays out half (50%) of what it earns every year as dividend, will you still compound your money at 20%? That depends on few factors:
1. Can you find another stock that provide a similar return i.e 20% ROC?
2. If you reinvest back into the same stock, valuation becomes another issue, what if that stock has a high valuation, if you wait, there is the time opportunity cost; if you don't wait, the your risk lowering your compound return when the stock's valuation gets rerated.

So you can imagine when you receive dividend, the company is transferring some 'jobs to you'. Because you have to make decisions when and where to invest. And not to mention there's more reason for investors to spend their dividend rather than reinvest.

2019-10-10 08:58

dividend4lifeZ

wow 20% ROC..have you able to identify consistently for 30 to 40 years? GOOD JOB!! i was a trader and yes i too have successfully 20%~100% ROC but unfortunately i cant consistently get 20% and i still have my job so i cant monitory the stock market closely

btw, what is the stock that provided you ROC of 20%? for my 100% ROC,
bought ECONBHD-WA @ 0.12 40000 unit total = 4814.92 on 13/03/2019
sold ECONBHD-WA @ 0.2675 40000 unit total = 10674.45 on 25/04/2019

of course i cannot promise i am capable finding such gem, ROC 100%, hence im diversifying into dividend investing

seriously i am very impress with your performance, may i know how do identify a consistently 20% ROC? do share with us your tips and tricks. THANKS!!

lets profit together!!

2019-10-10 09:20

mykasih99

Please share if there are any good dividend stocks. I did that many years back with Maxis & TM, quarterly dividend very good average 4% each quarter. Was going through the Funds we can buy using our EPF online, performance all in red, no new funds launched since 2015. LTAT dividend 2%, I think EPF dividend will also take a dive this year.

2019-10-10 10:55

dividend4lifeZ

yes, definitely will be sharing in my channel if found any good dividend stocks. so stay tuned..
i bought global titan using i-invest tho.. but unfortunately epf only allow us to invest min 1k and once used up the allocated fund, need to wait another 3 month which tbh it is stupid.
i dont think epf interest will be significant down tho, i remember vaguely epf quarterly report higher than expected

2019-10-10 21:57