atans1

Focus on dividend growth, not yield

In Financial competency, Reits on 11/03/2014 at 4:25 am

Here’s some gd advice from the FT when buying dividend stocks:

However, experts warn investors should not be lured by high dividend payouts from individual companies, as this can entail risk. Instead, they note that dividend growth can result in much higher returns.

“Chasing a high dividend is a risky strategy; the yield might look attractive, but the risk is the dividend gets cut and the share price falls further,” said Adrian Lowcock, senior investment manager at Hargreaves Lansdown.

“The share price may have already fallen to reflect expectations the dividend will be cut – meaning the yield would then have risen,” he added. “We saw this in 2008/09 when the banks all had high yields but were not going to be paying dividends for many years.”

Investors should instead look for growing income, as these companies are likely to be financially more robust, growing their capital base.

So maybe time to think about SMRT https://atans1.wordpress.com/2014/03/04/smrt-only-now-meh/?

And here’s a gd BT article on evaluating Reits: http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={651562920-19895-7719950079} High yields do not mean a Reit is an attractive buy, however. Yields are related to risk and growth potential, as investor Bobby Jayaraman pointed out in his 2012 book on Reit investing, Building Wealth Through Reits. The safer the Reit and the higher its growth potential, the lower its yields will be. This is because high demand from investors for these assets pushes up their price, thus lowering yields.

If you want to know more about the Reit structure http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={651939829-19894-8559931515}

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  1. Agreed!

    Go for growth-dividend strategy when we don’t need that cash flow from dividends to put food on the table.

  2. No worries man. For average know-nothing sinkie, move 90% of your wealth now into cash, money market funds and short-dated (<3 yrs) investment-grade bonds. Use the remaining 10% for so-called "investing" or gambling — buy/sell stocks, Reits, Toto, 4D, whatever. Do not touch the 90%.

    The next major financial crash & prolonged recession will occur within next 3 years. When parliament starts debating about bankruptcies and suicides, use your 90% to buy into Dividend Aristocrats & Dividend Achievers funds/ETFs. Re-invest their dividends back into the funds/ETFs. Set aside 30% of your take-home pay to invest regularly into these funds/ETFs.

    Be prepared to retire or semi-retire after 10-20 years.

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