I think this desire for dividend income is always there. The idea of passive income is always alluring. And why not? What’s wrong with investing for the sake of having passive income? Why invest in something that doesn’t produce much dividend (with no income – it is not even an asset).
My approach to stocks emphasized more on the growth and balance sheet of the companies. Perhaps the idea of peace of mind is more important to me.
However, like I said earlier, I do like to expand my portfolio to include higher dividend yield stocks. Nowadays, with rising interest rates and a slowing world economy, we don’t get many high yielding stocks. In the past, a decent yield would be in the range of 3% to 4%. Nowadays, 2% to 3% yield are considered good.
The markets have been buoyant, with markets around the world reaching new highs. The STI is no exception. I guess it is due to the expectation that the US President Trump will lower corporate tax from 35% to 15%.
Trump’s Promises to Corporate Leaders: Lower Taxes and Fewer Regulations (read here)
Well, I am not a ‘top-down’ investor, but I do from time to time take a cue from the global market trends esp. when the Dow Jones industrial average recently reach the highest level since 2009 (just can’t ignore).
I have been using this period to sell off some stocks and I do intend to sell off more in the coming weeks. For these stocks, I believe the upside is limited (again I could be wrong). The markets could be in for higher high in the future, especially if what President Trump promised materialized. I have no doubt about it. I would still be in stock (just not as much as in the past).
I do know of people who have been totally in cash since 2015, expecting a big crash to happen in 2016 or 2017… Well, I probably would never be totally in cash. I still like many of my stocks such as Riverstone, Colex, ISOTeam, Vicom etc… and intend on collecting more of them in the future.
In the meantime, I have been reading up on a no. of ‘high dividend’ stocks. This is a bit different from how I normally approach stocks. In this instance, I place more importance on dividend yield. For instance, I would select these stocks because of their dividend yield first, then I would look at their balance sheet, fundamentals, and possible growth story (ROE).
By ‘dividend yield’, like I said earlier, it is not easy to find really high yield stocks these days with ok fundamentals. I consider a min 3% yield as acceptable. Well, the key is to ensure that the dividend is sustainable or growing.
Having said all these, I do not foresee myself buying a lot of stocks in the near term (unless there are some sudden crashes or opportunities). I always keep these stocks in my mind, and a ready war chest, to capitalize on possible opportunities in the future.
There are some fundamentally strong stocks which I have disregarded due to the possible disruptions in their growth story. For instance, Straco has always been a fundamentally strong stock (ROE: 20.32%, in net cash), and it has a dividend yield of 3.29% in 2016. However, with the opening of the future Haichang Polar Ocean Park, a marine-themed park developed by Haichang Holdings Ltd, in Shanghai. This might impact the revenue of Straco’s Shanghai Ocean Aquarium.
Did a table of these ‘dividend’ stocks for my own record. See below.