Are High Ratio Dividend Payout Stocks Make A Low Risk Investment? - Part 2

http://createwealth8888.blogspot.com/2009/11/are-high-ratio-dividend-payout-stocks.html

Stocks can have high dividend yield for two reasons:

1. The company's future earning doesn't seen rosy and investors are valuing it at lower stock price causing the yield to increase temporary and not really attractive to potential investors.
2. The company is unfamiliar to investors, its price will be a poor reflection of the stock's true value. But, if the company has been around for many years, can the company still unfamiliar to the market?

Dr Michael Leong is a private investor who focuses on investing long term in selected stocks and shares has this advice in one of the chapters in his book: "Your First Million" on buying stocks based solely on "dividend yield" and he doesn't think that is the right way. Capital appreciation is far important than high dividend yield. Go and read this chapter to find out more.

I also love dividend play stocks but I treat the dividend as safety net if the stock price falls temporary but not as a buying decision. Technically on chart-wise, I must see that the stock price has the probability of moving higher before considering it in the watch-list.