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 Invest in dividend stocks, dividend don lie

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TSlowyeap
post Jan 5 2017, 09:24 PM, updated 9y ago

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Hi guys, I have been investing for more than 1 year since i graduated, I've been trying few methods and strategies to earn from stock market. I try traded daily, speculate and some portion of money invest for dividend. After one year, I finally think that I should stop speculating and invest based on fundamental and value like Warren did. So, I've been thinking hard lately should I buy solely dividend stocks? Let's say if I have RM100k in my portfolio with average dividend yield of 6%, I'll get RM6k annual which is RM500 monthly, quite decent thou. But, at the same time, dividend stocks are usually blue chip which have stable growth, in other words, less capital appreciation. I need opinions from you all please since u all are much more experience than I am? thanks guys rclxms.gif
TSlowyeap
post Jan 5 2017, 09:42 PM

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magnum, maybank, and most reit pay dividend above 6%
TSlowyeap
post Jun 24 2017, 02:05 PM

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QUOTE(wengherng @ Jan 9 2017, 01:00 AM)
That really depends on what is your investment strategy, your risk appetite and your investment horizon, among other things.
Value investing is fundamentally different from trading, so the switch can be psychologically difficult for many people.
You have to really be committed to investing for the long term (think more than 5 years; in fact 10 years is the norm; and Warren Buffet himself has stated that his favourite holding period for a stock is forever).
Which also means disassociating yourself from all the short term negative news and possible volatility, and basically close your eyes and ears, to the point where you can forget about the stock for several years and it wouldn't bother you.
As you said yourself, dividend stocks are generally stable companies which have less capital appreciation (though actually stable dividend stocks are not necessarily blue chips) so they tend to be very boring stocks, which may not suit everyone's taste.
Personally, I avoid all companies which are highly linked to Malaysian politics, and all commodities, and most technology companies.
But that's just me, a novice.  sweat.gif
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Thanks for all the replies, especially wengherng. Ever since the, i have been continue to invest, with both income investing and value investing strategies. Income investing is bored but it is definitely viable. I allocated most of my money for dividend stocks. While i also invest in potential smaller companies and it pay off so far. My return on investment is currently at 18%, 20% inclusive of dividends received. Now, Im thinking to register for a share margin financing of a RM50k with Maybank as standby tool to grab any future opportunities. I know it's double edges. So, I set a principle that I only invest in those financial sounds company, such as high cash, profitable for years and so on. What's u all opinions?

TSlowyeap
post Jun 24 2017, 04:49 PM

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QUOTE(wengherng @ Jun 24 2017, 04:13 PM)
18% is a very respectable number, keep it up!
But personally, I'd keep away from margin financing, no matter how lucrative the investment might be.
Even financially sound companies can go bust anytime, and even if they don't, there are bound to be sudden spikes and dips along the way, especially looking at the global financial situation right now, I do not think Malaysia is in a particularly strong position.
Never ever ever invest using money that is not yours.
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Yeah, just a plain thought. The fallback of it is great, if anything goes south, can set me back for few years.
TSlowyeap
post Jul 17 2017, 03:03 PM

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QUOTE(dreamxite @ Jul 8 2017, 08:00 AM)
Ultimately, you have to decide your own investment strategy. But from my point of view, since you just graduated, meaning you still have 30-40 years in front of you before you retire, focusing too much on dividend might not be the right thing for you. I say 'might' because I have no idea what's your personal situation.

However, if you plan is to maximize future wealth, focusing too much on dividend can do more harm than good to your long term return. Since your focus is to generate a long term CAGR, focus on return on capital and the quality of the business. ROC is the ultimate long term key driver that decides your long term return not dividend. Dividend is just a byproduct of a management decision.

Not to mention, yes dividend is great, but you have to take into account that those dividend that you receive needs to be invested back into the market, so you have to think about reinvestment opportunity - is there always another good opportunity waiting for you? You have to think about time, how much time you have to spend researching to find the right opportunity, and lastly, the probability of making mistakes because of decision fatigue. These are all opportunity cost.
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Thanks for the advice, which I think it's true and I've been focusing more on capital appreciation these days instead of dividend. I study growth company, look at their profit margin, ROE, ROA, leverage ratio all those things. I'm not a risk adverse person, I'm willing to take certain risk and mentally prepared to see my portfolio goes down in bad time. Nevertheless, the end goal is to achieve cagr of 10% in time horizon of 10years.


 

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