I started serious Investing Journey in Jan 2000 to create wealth through long-term investing and short-term trading; but as from April 2013 my Journey in Investing has changed to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Since 2017 after retiring from full-time job as employee; I am moving towards Investing Nirvana - Freehold Investment Income for Life investing strategy where 100% of investment income from portfolio investment is cashed out to support household expenses i.e. not a single cent of re-investing!

It is 57% (2017 to Aug 2022) to the Land of Investing Nirvana - Freehold Income for Life!


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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

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Value Investing
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Wednesday 17 March 2021

It is quite unreasonable for investors to expect both High Growth AND High Dividends???

Read?  How to Lose All Your Capital through P2P or Venture Capital(CoAssets, Gobear), 1M65 SG stocks, etc

He makes a serious point about dividends - I've written about it before, but a factor I missed was about how profits reinvested are usually ultimately used in development of the business.

SEE ALSO: How I got an 9% dividend every year - and why I gave it up 

In fact, that's kind of the purpose of why a company would sell its shares in the first place. 

Aside from the reasons why a high dividend can be unsustainable as written above, it stands to reason that a company has to keep developing at the rate of its profit payout - or it starts to go into major decline. 

In other words, a stock that pays out high dividends often compromises growth to a certain degree. 

It is quite unreasonable for investors to expect both High Growth AND High Dividends. 

That's likely why not a lot of stocks - including REITs, have succeeded in paying out high dividends over a 5 - 10 year period without having some kind of growth kick in the face. 

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Uncle8888's comment to the above

High dividend yield is very personal to the holders of that stocks depending on their Entry price and future company earning growth and dividend payout ratio across economics and company life cycles


















2 comments:

  1. Hi Uncle8888,

    I tuned out when that guy mentioned that he still sells ILPs. I mean if you really want to help clients ... 🤣

    And 1M65 SG stocks? The only SG stocks in CPF fanboy's book are called CPF-OA and CPF-SA lol. He advocates s&p500 index fund or etf if you really want to invest your cpf money (but he doesn't explain how to do that previously).

    ReplyDelete

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