Spur 6 August 2021 at 15:27:00 GMT+8
Good timing Uncle8888!
Those batch of investors who all-in during 2008/2009 will also be talking about 20+% yields in 2030 LOL.
For now though, most are still into capital gains. They've been spoilt by US stocks & cryptos in the last 2 years!
Logically though, we should focus on total returns. Although I get why many people prefer the psychological comfort of dividend distributions, rather than having to sell portions of their stocks. :P
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Collecting accumulated dividends always goes UP as time passes! LOL!
Selling and buying back is harder than we thought!
For examples:
Sold but it kept going up to ATH @ $31.17!
Read? DBS : Round 24 - 1 : Sold @ $24.89
Read? Stop Loss, Cut Loss and Trailing Stop
Read? SGX : Sold @ $11.28 as Round 10; but it went up all the way up to 13 yrs high @ $12.13
Bought but it goes down!
Sigh!
Read? SGX : Bought Back @ $11.22 for Round 11
Read? Kep Corp : Bought @ $5.64 for Round 98
Read? Venture Corp : Bought @ $19.88 for Round 5
Posts
CW,
ReplyDeleteDon't short change dividend investors.
Even though I poke yield hogs a lot, they are still more "garang" than savers, comparatively speaking ;)
Dividends can increase - Ho say liao!
Dividends can get reduced - WTF?
Dividends can get suspended totally - KNN!!!
Yield hogs should know what fury awaits the share price when they are scorned...
Dividend investors and bond investors share one common pain - capital loss.
Savers?
Well, just as long interest rates don't get reduced... Look mom! Zero capital loss!
And big daddy's gilded cage got legislated FLOOR rates on the interest rates some more!
Its like taking the pill and using raincoat at the same time - double protection!!
What can go wrong? (God sniggers)
Alternatively, we can passively do monthly distribution into a few Robo advisors hold and forget to minimise heartaches
DeleteUncle8888,
ReplyDeleteLOL! It goes back to knowing yourself (1 of the 3 main Delphic maxims).
Your strengths & temperament, what you can wrap your head around, what you're good at, what you're comfortable with.
It's only a problem with those who think they're dividend investors but end up in sinking value traps.
It's also a problem with those who believe they can extract maximum growth but end up blowing up their portfolios.
As the ancient Greek poet said: The fox knows many things, but the hedgehog knows only one BIG thing.
Most people are not totally fox(y) or hedgehog, but somewhere in-between. They can be more to one side or another.
I think Uncle8888 is more of hedgehog :)
I used to think I'm a fox, but not so much now. I still don't do cryptos, seldom do individual stocks, and don't do bonds or forex.
Hi all,
ReplyDeleteDividend growth investment is better for one who can focus on doing the things of his/her own interest whilst the investment portfolio generates the dividends to cover the annual expenses on a continuous basis. It's simple to implement and spread the fund amongst many baskets. Any excess balance dividends can be channelled back to the investment portfolio which will be better equipped in generating more dividend.
It may not be your cup of tea. There are many roads to Rome. No right or wrong decision as long as it aligns with one's preference.
WTK
I am trying to do all three (now five?) because I am good at none. The 5 things are:
ReplyDelete1. Build up our CPF savings to an amount that currently generates an estimated $93,000 of interests for this year.
2. Build up a portfolio of stocks that generated $64,000 of dividends last year and $46,000 this year so far, Jan to Aug.
3. Bought an investment property to generate rental income of $35,000 to $36,000 a year
4. And 5 months ago, started dabbling in cryptos. Put in $20,000 to have a peek at what the hype is all about. Last three months, my cryptos holding were deep underwater and only last two to three days, the tide started to turn. Now my crypto values have turned from paper loss to paper gain of $700+. Where will it go from here? I have no clue. But I dont mind if it can bring in a million $.
5. Started to dabble in the US stock market, also 5 months ago. They say the US market is the world's market. So not to miss out, I opened account with Moomoo and put in $36,000 seed money. So far, investment in US stocks showing a paper gain of $2,450.
Both the crypto and US shares prices are very dynamic, changing constantly.
Many roads to Rome.
Size does matters. Once the desired "size" is attained (which means, for us, "secured" & "predictable" passive incomes from RSS/CPF O.A/bond funds to meet our retirement needs), may then venture confidently into any investments that one fancy to meet the higher tier of Maslow's hierarchy of needs (4th tier for our case, 5th tier for WB and other billionaire investors).
ReplyDeleteWe were very lucky to attain our desired "size" some years back (pure luck, bet big on our first property at the right time). With our basic needs secured, we ventured into investment instruments other than equity and property (for diversification), including the use of leverage to create wealth out of nothing - over the past 12 years, corporate bond investing through equity loan has given us ~$300,000 with zero capital sank in (warning: may lose $250,000 if the issuer defaults, must know the risk before dealing with corporate bond)
https://createwealth8888.blogspot.com/2021/08/why-many-people-prefer-psychological.html?showComment=1628308129084
ReplyDelete"Why many people prefer the psychological comfort of dividend distributions, rather than having to sell portions of their stocks?"
ReplyDeleteFor income investors, if they sell their dividend stocks, they lose the dividend income. This defeats the purpose of income investing.
Quote "For income investors, if they sell their dividend stocks, they lose the dividend income. This defeats the purpose of income investing."
DeleteIf after selling that portion of dividend stocks and our forward dividend income level dropped below the desired level and that will force us to search for replacement dividend stocks. Some of us may be more comfortable with endowment bias (Boring birds on hand worth more than new and sexy birds in the forest) :-)
One method by focusing on TSR including illusionary paper gains over longer period and dividend yield on cost and dividend payout ratio 60% or less i.e. pick dividend-growth instead of dividend income stock
DeleteI am a dividend + buy/hold/monitor investor since the early 1980s. Seldom sell, with many decade-old stocks in my portfolio - to cite a few, OCBC/DBS/Haw Par (>30 years, since mid 1980s), SGX/SATS/Ascendas/Mapletree Logistics (~20 years, since IPO), Parkway Life/Keppel DC/Mapletree Industrial (>10 years, since IPO). Actually accumulate more wherever they dipped below the long term trend for whatever reasons (market as a whole, or a bad quarter or two because of temporary setbacks etc).
ReplyDeleteReasons for holding - (a) business models remains relevant, profitable and growing (though not turbocharged like some new tech companies or companies with innovative models that allow them to capture new markets), (b) with years of holdings, became more familiar with the "businesses" (am a conservative, why venture into unknown when the current ones are working?) (c) the financials (revenue, EPS, gearing etc.) remain healthy & no risk of inability to maintain dividend (not worrying pay-out ratio (wrt EPS & operating cash flow) etc. (d) in those years, direct more energy & attention to property (but since has withdrawn from new ventures in property, the last property investment being a student accomodation in the U.K after the GFC).
Stocks I sold after decades of holding because the business landscapes have irreversibly changed for the worse - SPH, Keppel, Sembcorp (bought back after their re-structuring), Starhub etc.
WB, far far away lah!
ReplyDeleteJust kiasi & contented to have ~5% return over the long term - a result of the initial years of painful experience with the stock market. Started stock "investing" journey almost exclusively on Malaysian stocks such as Renong, Multi-Purpose, Berjaya, D&C bank, Perlis Plantation, Rothmans, Sime Darby etc (this was even before Mahatir removed Malaysian companies from Singapore to give a boost to the KL exchange & the start of Clob by Richard Hu), all speculative trades with no good idea of the companies businesses & fundamentals, acted entirely on "tips" from brokers (no internet then, no blogging & no "financial advisors" etc), did a lot of contra trades (sometimes intra-day, legal those days). Exciting to watch stocks moved like a roller coaster daily, constantly on the phone with brokers, but paid a handsome sum for the excitement & lessons... Became kiasi after that, started to read books on "value investing", became a convert & believer that only companies with strong backers (especially Temasek) are "safe"
Overall, result is far, far away from the like of WB but satisfactory, with quite a few "multi-baggers" * "free-holders". Best is OCBC in absolute term (our biggest holding, wife was given OCBC staff options when she was with GE Life), but best return in % term is SGX, started with a tikam 4,000 IPO shares @ $1,1, subscribed on the simple idea it is Singapore only exchange, a monopoly & so "can't fail". Bought more over last 20 the years on dips (last purchase at $8.12 in 2020, current average cost is slightly over $3), Kudos to SGX management since listing, almost continually looking to expand its range of products & business, starting with the acquisition of SIMEX. Have confidence with Loh Boon Chye, will accumulate more if price dips further because of the recent "bad" quarter ....
Whoa ... I think some have misread my original premise LOL.
ReplyDeleteIf anyone has to sell dividend stocks in order to generate needed income ... that just strikes me as something has gone really wrong somewhere. :P
It's more a question of whether people are comfortable with generating income from stocks that have high growth & high capital gains, but low or even no dividends?
E.g. Microsoft & Apple has less than 0.8% dividend yield (even lower than my rotting cash). Amazon, Google, Facebook have never paid a dividend. And Berkshire (even though a low-growth stock now) hasn't paid one in 54 years.
I guess the simple answer is: Don't buy them! :P
The only way to generate meaningful income from them is to sell bits of stocks, or sell covered calls.
;)
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