Current Dividend Yield is good but avoid falling into potential Dividend Traps (3)

Read? Dividend Yield is good but avoid falling into potential Dividend Traps (2)

Recently, I realized that I have been reading more blog posts championing dividend yield investing as the way forward to invest as the market diving deeper into the Bear Market. We can easily understand the sentiment of fears in a bear market of falling stock prices. It can hurt us badly and force us to appreciate the attractive bird-in-hand element in dividend yielding stocks.

But avoid falling into dividend trap by seriously looking and evaluating their dividend payout ratio and potential capital appreciation when the Bull comes roaring back. In Bear market, potential good dividend yield and high capital appreciation is not mutually exclusive.

For example, I realized that my long-term holding position in Noble which is never a dividend yield play stock still gave me decent yield for the past 3 years: 6.7% (FY 2008),  5.3% (FY2009), and 4.5% (FY2010).

Noble reports its earning and pays its dividends in USD so dividends received will be subjected to currency risks.