That is why it is called magic, to trick you.
Like AirAsia and AmReit's dividend

AirAsia dividends were different. They were special dividend which raised from their disposal of planes which came about during its sale and leaseback.  Such dividends were clearly not sustainable.

Well yes.

Your profit = Cost of sale of share - cost of purchase.

So a simple question. Can a dividend paying stock of over 6% causes an investor to lose money in a 5 year span?

This one...

Sometimes talk is cheap! LOL! It's harsh talk but that's the fact of life. Instead of talking so much, this was a realtime example done last year on a high yielding REIT stock, AMfirst, which was paying a yield of more than 6% during that time of writing in 2019.

post #4619
So if one bought in 2012, at a price of 1.05 the so called dividend collected was 37.1 sen. Good dividend yield rightr

However, unfortunately price for Amfirst reit in Sep 2019 was only 51 sen! Basically one got an insane dividend yield but with the cost of Amfirst plunging to a mere 51 sen, this investment is yielding losses for a holding period of 7 years!!!!

And Amfirst today is trading at only 42 sen !!!

A clear cut example that shows that there exist stocks where can lose money despite getting great dividends. Now if this is the case, how could one mislead others by declaring that dividends is magic?

Exactly, that is why buying AA stock for their dividend is not a good advice.
It is like selling our property and then lease it back to sublet it.
Eventually, we'll run out of property to sell.

Let's say if today Tony Fernandes is not the biggest shareholders i guess the share still got chance to rebound since he will not be the biggest winner??
furthermore, currently AA focus on logistics and bigpay this will change their company profit profile right?

I did not buy AA stock just a thought of mind

If DPS>EPS, this means dividend is unsustainable and they are paying out from reserves. Share price will eventually fall. Avoid at all costs

Errr yes & no.

The ability for a stock to pay consistent dividends is to have strong free cash flow.

Sometime the EPS can hit by high depreciation, but the cash flow still remain strong, hence they are still able to pay dividend even they have this DPS > EPS situation.

P&L can be financially engineered, but cash flow statement is hard to fake.

No. You cannot pay out dividends if you have no profit.
Dividends can only be paid out if the company is making losses by paying from their distributable reserves.

Profits increase distributable reserves not EBITDA.

If a company has EBITDA of RM100k but net profit of RM0, it still cannot pay a dividend (again unless they pay from the distributable reserve).

Hence, EPS is more important before cash flows. Even if you have "good" cash flow but unprofitable (this alone is highly unlikely because unprofitable companies tend to have bad cash flows), the company by law is not allowed to pay dividends except from retained earnings.

If you don't believe me, you can see for yourself the share price of companies that pay out DPS>EPS.

If you don't believe me, you can see for yourself the share price of companies that pay out DPS>EPS.

I found 1 company that pays out DPS > EPS. But the share price is still quite high. 



I'm not a finance graduates, I just know for a company to be able to pay sustainable dividend, you need strong free cash flow.

Cash flow statement stated the actual inflow / outflow of business activities. Profit number alone is not representing the actual cash that you have got at the end of the quarter. 

Hence you can see there will be some adjustment for depreciation, amortisation,impairment of goodwill, changes in fair values of properties etc.

Profit on the other hand, is a product of accounting rules. And accounting profit is based on accrual concept, and not cash concept. I think this you are more well-versed than me.

Look at a few companies before arriving to conclusion.
HEIM's EPS>DPS. DPS is usually calculated last year while EPS is calculated this year.



From your screenshot, the DPS in my picture is summation of 54 sens and 40 sens.
Hence, HEIM's EPS>DPS.

The moment a stocks EPS falls below last year's DPS, shareholders know that the company will likely cut dividends.
This is why share price falls.

Chasing dividends is only good if you pick the right stocks.

AA is not a dividend stocks imo. Never buy a stocks that have fluctuations in dividends rate throughout the years.

No. You cannot pay out dividends if you have no profit.
Dividends can only be paid out if the company is making losses by paying from their distributable reserves.

Profits increase distributable reserves not EBITDA.

If a company has EBITDA of RM100k but net profit of RM0, it still cannot pay a dividend (again unless they pay from the distributable reserve).

Hence, EPS is more important before cash flows. Even if you have "good" cash flow but unprofitable (this alone is highly unlikely because unprofitable companies tend to have bad cash flows), the company by law is not allowed to pay dividends except from retained earnings.

If you don't believe me, you can see for yourself the share price of companies that pay out DPS>EPS.

look at oriental and genting

they can pay out huge dividend even they are making loss

their cash in bank are sufficient to even easily declare 50% of their share price as dividend and that will not even hurt their operating expenses

 

I tend to disagree part of this point

If a company has set a dividend policy, i don't find it why the dividends will not fluctuate

I tend to disagree part of this point

If a company has set a dividend policy, i don't find it why the dividends will not fluctuate

Dividend policy is just a guide. Doesn't mean the management have to stick to it.
Dividend policy is meant for institutional investors or substantial shareholders who rely on dividends to finance their day-to-day activities.

Extract from BPLANT's 2017 financial statement:

Look at share price and dividends today.