Read? After Point X .....
After Point X, the joy of Panadol investing to ease heartache will transit into lifelong joy of Funadol investing as one source of retirement income on top of CPF in Singapore. Truly passive income! No?
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1 hour ago
CW,
ReplyDeleteNothing is "bao jiak"... (as some long term investors have found out)
Passive can be harmful to our pockets if its sleeping at the wheel...
Regular dividends are a sign of healthy businesses except:
1) When management is borrowing and using debt to maintain or increase the dividends.
2) When dividends are paid out to yield hogs instead of reinvesting back to the business for future growth, R&D, etc...
3) When the company is under challenge from new disruptors. ComfortDelgro and SPH anyone?
Dividend GROWTH stocks where dividends GROW slowly every year are a better gauge of healthy businesses ;)
Hi Uncle8888 & Smol,
ReplyDelete"Dividend GROWTH stocks where dividends GROW slowly every year are a better gauge of healthy businesses"
True .... but (there's always a but! LOL) many people won't go for it ... or won't stick with it for the long term, coz:
1) current dividend yield tends to be low, often below 2%. Even during Covid crash the average yield of such companies maybe around 3%-4%.
2) Hence, it's a loooooong-term thing, during which you'll have to sit thru -30% or -50% bear markets & recessions. The benefits only come after a couple of decades of holding & RE-INVESTING the dividends.
3) These are usually value oriented stocks, so you WILL experience DECADES of losing out to even the broad index like S&P500, let alone growth stocks. Like from 2009-2021.
But like I always say, in investing there isn't a yes or no thing. You can allocate a portion of your portfolio to such stocks or funds & test it out.
S&P doesn't publish its list of Dividend Aristocrats or Dividend Achievers (they expect you to pay for it, cheap bastards). But you can see the constituents from info published by funds or ETFs investing in these companies.
E.g. This is the portfolio of NOBL, an etf replicating the Dividend Aristocrats.
Since the investing is done quantitatively by formula i.e. just follow index criteria, some dogs will be inside until they fail the criteria e.g. stop increasing dividends.
For e.g. I view IBM as a current dog. Exxon & Chevron are also potential long-term challenged businesses unless they can pivot adroitly.
But the vast majority are GOOD STUFF. ;)
Spur,
DeleteYou think why I like to poke so called passive "investors" and yield hogs?
Nothing is "bao jiak"!
All investing strategies are "sound", in theory and with back-testing, but often we are our own worst enemies...
We say one thing; do another thing altogether. Little lies we tell ourselves!
On the other hand, fee-based and commissioned financial snake oils will be out of their jobs if they can't come up with a portfolio of dividend growth stocks (calling them Aristocrats is marketing spin genius) that can beat 1M65 hands down within a 30 years time horizon ;)
Why bother otherwise?
IBM is like SPH today. How the former greats have become mediocre...
A good reminder long term investing is HARD!
You think why I'm a trader?
If I can't see beyond 6 months, what edge do I have when it comes to 30 years and beyond?
LOL!
Cyclic stocks can be alternating between dividend-growth and dividend-reduction over economic cycles.
ReplyDeleteCW,
DeleteYou have answered yourself.
No one should practice Buy and Hold when it comes to CYCLICAL stocks ;)
Shhh....
REITs and dividend stocks can crash 50% within a few months. 2008 financial crisis and 2020 Covid crash demonstrated that years of dividend income can be lost within a few months.
ReplyDeleteDividends as panadols is not effective when investment portfolio is savaged by a violent bear. If peace of mind matters a lot to the investor, then don't be too reliant on dividends and REIT income.