Hi, what I mean is, these "high dividend yield" stocks usually promise a good % of yield every year, but their capital value are probably dropping year-on-year if their growth is not sustainable (note that, a higher dividend payout would mean lesser reinvestment into the company for business expansion and growth).
So, Net Annualized return for you and me as an investor (i.e. your Return on Investment), is
Net annualized return = Dividend Yield + Capital gain/losses
In this context, I believe the capital losses of the companies in the list outshadows the dividend yield, which is why 1 of the forumer here mentioned: beware of "dividend trap".
Lets take BAT(4162) for example, over the course of 1 year, their share price slide from RM 22.50/share to RM10.40/share.
in terms of capital loss, thats about -53% in terms of capital value lost.
If my memory serves me, they have been pretty consistent in providing high dividend yield to their shareholders (around 9-10%++?).
So the annualized net return in this case, should you have invested in BAT 1 year ago from today, is approx. -40% ish.
Of course, taking BAT as an extreme example wouldn't be fair for other dividend stocks (there are good dividend stocks with sustainable growth), but this is just to illustrate what i've meant.
I hope this clarifies.
Cheers
It make sense for your illustration.
Do you agree that when covid-19 getting better (hopeful somewhere around next year), those capital loss company will be able to resume as normal in the past?
Nowsaday, my portfolio is red making me contradict whether should invest in long term dividend stock like Maybank or follow the market trend like glove stock, tech stock, etc.