# High dividend yield stocks



## visionincomoda

Hi,

I'm planning to start a high dividend portfolio. Where can I look for high dividend yield stocks?


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## So_Cynical

Some stocks in the property and utility sectors are offering the best yields at the moment IMO.

Have a look at 


HDF *
CWT
CDI
ALZ
ARJ *

Close to double digit yield on all of them and lowish risk on most.  disclosure i hold *


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## Julia

visionincomoda said:


> Hi,
> 
> I'm planning to start a high dividend portfolio. Where can I look for high dividend yield stocks?




In choosing high dividend stocks, what regard do you intend to give to what the share price is doing?  Any other considerations apart from the yield?


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## So_Cynical

Julia said:


> In choosing high dividend stocks, what regard do you intend to give to what the share price is doing?  Any other considerations apart from the yield?




Seriously who cares what the SP is doing when your getting a +double digit yield, using my situation how do you or anyone else justify selling down a stock yielding over 14% :dunno:


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## awg

visionincomoda said:


> Hi,
> 
> I'm planning to start a high dividend portfolio. Where can I look for high dividend yield stocks?




you can run a fundamental scan ranking ASX stocks on dividend yield (+ other variables) for free, using MSN money website or Comsec, and other broker websites, there is other free sites.


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## Julia

So_Cynical said:


> Seriously who cares what the SP is doing when your getting a +double digit yield, using my situation how do you or anyone else justify selling down a stock yielding over 14% :dunno:




Are you serious?   Say you have $50,000 in a stock yielding 14%.
That's $7000 p.a.
If the stock declined in its capital value by, say 10%, your effective total yield becomes just $2000.  And if the SP falls  say 20%, then you're in the red to the tune of $3000.

Sure, the 14% is good if your SP is rising or even static, but haven't we all seen many, many people just watch their capital diminish because "well, it has such a good dividend".

Makes no sense to me.


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## Wysiwyg

Julia said:


> Sure, the 14% is good if your SP is rising or even static, but haven't we all seen many, many people just watch their capital diminish because "well, it has such a good dividend".



Valid points Julia. Does the yield always decline with the share price?


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## roland

I used to chase dividends, good for a while, but just didn't seem to work out Seems that in the commercial world the cost of doing business along with competiveness tends to bring the high yielders into line with their peers eventually.


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## Wysiwyg

Real Estate Capital Unit (Yahoo = 40% gross) and Multiplex Acumen Unit (Yahoo = 16.1% gross) have declined and flatlined in price substantially over the years. 
But they are high dividend yielding.


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## So_Cynical

Julia said:


> Are you serious?   Say you have $50,000 in a stock yielding 14%.
> That's $7000 p.a.
> If the stock declined in its capital value by, say 10%, your effective total yield becomes just $2000.  And if the SP falls  say 20%, then you're in the red to the tune of $3000.




Perhaps im wrong but i classify yield as return on investment, if my 50K is still getting me (14%) 7K i cant see a problem...the SP is a side show after you enter, of course before entry the SP is all important because it determines yield, i entered all my high yielding stocks close to bottom or at close to intermediate bottoms, that's why there high yielding.

Over the last 14 months there are people that paid ridiculously low prices for all sorts of great dividend and distribution paying stocks...now pulling yields of over 30 and 35%...fortune does favour the brave.


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## Wysiwyg

Wysiwyg said:


> Real Estate Capital Unit (Yahoo = *40% gross*)
> But they are high dividend yielding.




Whoa, I delved a bit further into RCU and their distribution was just under 1cent ($0.0095 AND unfranked for 6.3% dividend at current market price) so Yahoo data again proves to be false and misleading. Apologies for incorrect data source.


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## skc

So_Cynical said:


> Perhaps im wrong but i classify yield as return on investment, if my 50K is still getting me (14%) 7K i cant see a problem...the SP is a side show after you enter, of course before entry the SP is all important because it determines yield, i entered all my high yielding stocks close to bottom or at close to intermediate bottoms, that's why there high yielding.
> 
> Over the last 14 months there are people that paid ridiculously low prices for all sorts of great dividend and distribution paying stocks...now pulling yields of over 30 and 35%...fortune does favour the brave.




The question must always be asked why does the market price the dividend so low? Are they expecting the dividend to be reduced in the future? Look at all the REITs in early 2009 and high yields were all over the shop for the first quarter / half. Then virtually all stoped paying dividend in the second half, and many are now trading at 5-8% yield on the reduced dividend.

Or look at Telstra and what a good yield story that was.


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## Wysiwyg

Wysiwyg said:


> Multiplex Acumen Unit (Yahoo = 16.1% gross) have declined and flatlined in price substantially over the years.



This mob stopped paying dividends over a year ago. Guess I should do my own research more thoroughly.


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## Wysiwyg

awg said:


> you can run a fundamental scan ranking ASX stocks on dividend yield (+ other variables) for free, using MSN money website or Comsec, and other broker websites, there is other free sites.



Add Morning Star dot com dot au in there too. Register at .............

Morning Star

Go to Tools and then go to StockScreener for fundamental stuff.


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## condog

ITs hard to say which is best....growth or yield...

I find you need different sotcks for different purposes.....

EG: to stop working and go holidaying you want great yeilds that you dont need to watch or sell down capital, the dividends keep rolling intot he account every half or quarter....

Where as when im chasing growth im usually I go looking in small to mid caps...with 0 yeild and often 0 earnings...

The old formula: each share has three main characteristics, they are; Yeild, growth and risk....

The market places prices accordingly and as a result share with high growth prospects and low risk usually have low yeild ....because everyone pay a premium price....
Similarly shares with high yeild and low risk usually dont grow because of size and becasue they are returning all or most capital via dividand
Shares with high risk, can have both high yeild and high growth, because everyone is scared to pay too much and half the investors are scared or smart enough to avoid...

You can have two most the time but its only occassionally you can get all three...

Anyway back to my points....If you want to stop work yeild certainly is important, especially if its 100% franked because its tax free income....
Selling down capital has a fair tax rate due to CGT, but franking credits can help keep that down....
So no one argument wins here ....this is really a case where each individuals goals and needs determines the best streategy....
And in the majority of cases they will find that a combination of some yeilders and some growth is warrented....especially where dividend income exceeds necesary income....then growth comes inot its own.....but below that point dividends with some growth usually seems better...


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## Krusty the Klown

The Financial Review has share tables updated daily with quite a bit of fundamental data. You'll find yields for all stocks in there

http://www2.afr.com/home/tables.aspx


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## bilo83

Before buying a stock based on dividend yield check that the yield is sustainable by looking at the operating cash flow generation of the company vs market capitalisation (same as CFO per share/share price). If the dividend yield is higher than the cash flow yield then I would think twice about investing as the company is likely paying dividends out of retained earnings/debt. Don't fall in the yield trap. Some of those high yielders could end up like ponzi schemes.


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## kenny

I agree with bilo.

The yield stated is usually the "historical yield". In situations where the SP has plummetted, the historical yield jumps as it is still using the previous dividend with the current SP. Knowing whether the divvy is sustainable in the future is the catch.

Of course, the divvy could be retained by borrowing to pay for them; like TLS. 

Cheers,

Kenny


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## Julia

bilo83 said:


> Before buying a stock based on dividend yield check that the yield is sustainable by looking at the operating cash flow generation of the company vs market capitalisation (same as CFO per share/share price). If the dividend yield is higher than the cash flow yield then I would think twice about investing as the company is likely paying dividends out of retained earnings/debt. Don't fall in the yield trap. Some of those high yielders could end up like ponzi schemes.






kenny said:


> I agree with bilo.
> 
> The yield stated is usually the "historical yield". In situations where the SP has plummetted, the historical yield jumps as it is still using the previous dividend with the current SP. Knowing whether the divvy is sustainable in the future is the catch.
> 
> Of course, the divvy could be retained by borrowing to pay for them; like TLS.
> 
> Cheers,
> 
> Kenny



Exactly.  The other consideration is whether you'd prefer to own a company which focuses on growing the business rather than paying profits out to shareholders.

I understand the appeal of that steady income stream, but *only if the underlying stock is strong*.

If you buy a stock which will give you, say, even just 40% growth on your capital investment, then imo that allows you to sell a few shares to provide income if you need it.  

Another factor is - if you can practicably do it - holding the stock in Super where the tax is minimal.



Wysiwyg said:


> Valid points Julia. Does the yield always decline with the share price?



The reverse, Wysiwyg.  Think about it in dollar terms.  If you buy a $1 share with a 10% dividend, you receive 10 cents per share.  The number of cents paid doesn't change with the alteration of the SP, as you know, so if that $1 share becomes worth $2, then the yield obviously reduces to 5%.

Likewise, if the SP falls, then obviously your percentage yield becomes higher.
Thus, the reason so many stocks that have fallen through the floor are quoting high yields.



So_Cynical said:


> Perhaps im wrong but i classify yield as return on investment, if my 50K is still getting me (14%) 7K i cant see a problem...the SP is a side show after you enter, of course before entry the SP is all important because it determines yield, i entered all my high yielding stocks close to bottom or at close to intermediate bottoms, that's why there high yielding.
> 
> Over the last 14 months there are people that paid ridiculously low prices for all sorts of great dividend and distribution paying stocks...now pulling yields of over 30 and 35%...fortune does favour the brave.



OK, but do you see the point I'm trying to make if the SP falls?


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## So_Cynical

Julia said:


> Think about it in dollar terms.  If you buy a $1 share with a 10% dividend, you receive 10 cents per share.  The number of cents paid doesn't change with the alteration of the SP, as you know, so if that $1 share becomes worth $2, then the yield obviously reduces to 5%.
> 
> Likewise, if the SP falls, then obviously your percentage yield becomes higher.
> Thus, the reason so many stocks that have fallen through the floor are quoting high yields.



No - I just don't see it that way, i have a dollar investment in XYZ and am getting a % return on that investment, the SP will do what ever it will.

Its a bit like a TD in a Aussie bank....do you have less invested if the AUD falls? do you run out and switch to a EURO deposit?



Julia said:


> OK, but do you see the point I'm trying to make if the SP falls?




Sure, but the SP is irrelevant if im not selling.


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## BradK

Yes, but if the share price of XYZ is $10 and its paying a 10% divvy. That is $1. 

If the share price falls to $8 - is it likely to STILL be paying $1 -or 10% - 80c? 

If the share price falls to $8 - is it likely to STILL be paying $ 1 - or 10% - 60c? 

Share price matters, does it not? 

Surely the game is to protect and grow the capital rather than achieve a divvy? 

Brad


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## akkopower

Julia said:


> The reverse, Wysiwyg.  Think about it in dollar terms.  If you buy a $1 share with a 10% dividend, you receive 10 cents per share.  The number of cents paid doesn't change with the alteration of the SP, as you know, so if that $1 share becomes worth $2, then the yield obviously reduces to 5%.
> 
> Likewise, if the SP falls, then obviously your percentage yield becomes higher.
> Thus, the reason so many stocks that have fallen through the floor are quoting high yields.




Is it really that simple. Why would the stockprice rise?
Higher than expected earnings, increased growth potential or maybe reduced risk. There is a good chance that the first two of these would result in a higher dividend. 

stock price may fall with the opposite of previously mentioned, resulting in lower dividend.


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## awg

OP hasnt said why he is especially seeking high div yield?

however, of the near 2000 ASX listed companies, approx 360 pay divs.

nothwithstanding that additional anaysis regarding yield sustainability, or other factors, would strike out many of those, it still does leave an investor some uesful guideline, in that they are investing in a company that is making a profit now.

Many other considerations are taken into account, and I certainly invest some in non-div payers for better growth prospects. Also prefer they retain fair chunk of earnings, but for the defensive investor, companies that pay dividends have much less risk & volatility imo.

apart from anything else, I rarely buy in a downtrend.


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## Wysiwyg

Bear with me; I'm not a rocket scientist.

With the example of RCU paying an unfranked interim dividend of $0.0095 recently.

The share price 52 week range is 9c to 22c so if for example 1 million shares are bought at 10 cents for 100k then ... 

1 million * $0.0095 = $9500 before tax on the interim distribution. Plus share value is now at 150k. Is this a common occurrence or is it too good to be true?



> Income stocks tend to come into fashion in a sideways and falling market.


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## condog

So_Cynical said:


> No - I just don't see it that way, i have a dollar investment in XYZ and am getting a % return on that investment, the SP will do what ever it will.
> 
> Its a bit like a TD in a Aussie bank....do you have less invested if the AUD falls? do you run out and switch to a EURO deposit?
> 
> Sure, but the SP is irrelevant if im not selling.




I agree with you here, thats how i and so many others di so well during the GFC..... dividens fell a bit , but sp fell dramatically more, so the income stream of dividends during a downturn generally give you a powerful cash flow for buying....at the same time growth stocks where negative 50% or more...with no dividend.....

Having said that some companies slashed earnings to $0.00 and then diluted holdings thru capital raisings right at the bottom of the market....Thank **** i didnt own any of them......

70-90 % of my portfolio is invested in high quality 100% franked dividend paying stock....   My argument is not that yeild is not great, its that it comes at a price.....and its not suitable in all cases.....


Right now however growth stocks are gowing of in the small cap areas and no large / mid cap yeilders are getting anything like the returns....It wont last forever, but its been a very enjoyable ride on some...Ive made more on small holdings in small caps in the last two months then my 80% portfolio will make in the 6 months....and hence my argument....that theres no one single strategy thats best, for anyone , so keep open minds...

The flip side of that argument is if you go just chasing high yeilds you this week, because sp's are strong you will inevitiebl end up holding either a low growth or high risk portfolio .......

Id encourage you to name any company thats earning over 10% dividend that you think is both safe and high growth, and i bet 1 of 50 people in here can come back with  evidence that it is either high risk or low growth....

Some classsic examples right now ...TLS  high debt to equity plus got regulation risks, TAH loss of gaming licenses, banks ROE smashed by cap raisings and about to do a hell of a lot more, FWD nice but not diversified, etc etc etc.......

If we have a 30% correction then you could walk out and get low risk, high yield and good growth.....but until then dont kid yourself...


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## So_Cynical

condog said:


> Id encourage you to name any company thats earning over 10% dividend that you think is both safe and high growth, and i bet 1 of 50 people in here can come back with  evidence that it is either high risk or low growth....




OK here's one

HDF - HASTINGS DIVERSIFIED UTILITIES FUND has a Market Cap of 567 mill and has 2 revenue streams, HDF has a half share of South East Water (England and Wales) and wholly owns Epic energy which owns and operates gas pipelines in SA QLD and WA, both revenue streams are regulated and or under contract and go up with CPI.

http://www.hfm.com.au/funds/hduf/

HDF last traded at $1.16 and is forecast to pay quarterly distributions of 3 cents per share...so a little over 10%

http://www.asx.com.au/asxpdf/20091223/pdf/31mxb1sfbr4wc2.pdf


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## condog

So_Cynical said:


> OK here's one
> 
> HDF - HASTINGS DIVERSIFIED UTILITIES FUND has a Market Cap of 567 mill and has 2 revenue streams, HDF has a half share of South East Water (England and Wales) and wholly owns Epic energy which owns and operates gas pipelines in SA QLD and WA, both revenue streams are regulated and or under contract and go up with CPI.
> 
> http://www.hfm.com.au/funds/hduf/
> 
> HDF last traded at $1.16 and is forecast to pay quarterly distributions of 3 cents per share...so a little over 10%
> 
> http://www.asx.com.au/asxpdf/20091223/pdf/31mxb1sfbr4wc2.pdf




haaaaaahaaaaaaaaaaaaa

Too easy

Acoording to figurs on comsec

For starters it had declining EPS from 2008 to 2009, so its risk is that its affected by global sentiment or cyclical economic factrs significantrly...EPS was 11c in 2008, down to 7.0c in 2009 and only up to 7.5c in 2010 so its hardly a growth stock...dec;ining sales, flat cash flow , rediculously unsustainable payout ratios of up to 348% of earnings.... 

Now im no rockety scientist but i know how to analyse a stock and this one really worries me...

The only thing going for it at all is its flat revenue...(and thats a negative in my books)

It has a negative ROE, declining profit for several years....higher current liabilities then current assets....that in itself is reason not to invest in it...unless it can roll its debts over it will be forced to sell assets or default on loans.....  If the GFC taught all companies and investors one thing it was get your balnce sheets in order and keep them there....

Its a high risk low growth stock and hence its high yeild....come in spinners...

I would not invest in this with my money ever....declining in nearly all aspects and high to extremely high risk...no real obvious growth prospects showing in its figures .....

This stock highlights exactly what i said....If in todays market you get a high yeild you are getting either or both a high risk and low growth....and this is a classic example...and pardon the pun but Im being honest not cynical...


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## Aussiest

So_Cynical said:


> No - I just don't see it that way, i have a dollar investment in XYZ and am getting a % return on that investment, the SP will do what ever it will.
> 
> Its a bit like a TD in a Aussie bank....do you have less invested if the AUD falls? do you run out and switch to a EURO deposit?
> 
> 
> 
> Sure, but the SP is irrelevant if im not selling.




Unless it was Babcock & Brown or ABC Learning.


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## Julia

So_Cynical said:


> No - I just don't see it that way, i have a dollar investment in XYZ and am getting a % return on that investment, the SP will do what ever it will.
> 
> Its a bit like a TD in a Aussie bank....do you have less invested if the AUD falls? do you run out and switch to a EURO deposit?



I see the point you're making, but it's not a reasonable analogy.  If you have a term deposit in an Australian bank your capital is not at risk of being diminished.   The dollar will always fluctuate in value.  Your capital in the TD will always remain intact.  You cannot say the same for capital in a stock.



> Sure, but the SP is irrelevant if im not selling.



True.  And if you are happy to accept the risk of your capital diminishing if the SP continually falls, then that's your choice.  It ain't something I'd be happy with, other than say temporary dips in something like the big banks.
I simply can't see the point of accepting a high yield if your capital could be reducing by twice, e.g. what you are getting in that yield.




akkopower said:


> Is it really that simple. Why would the stockprice rise?
> Higher than expected earnings, increased growth potential or maybe reduced risk. There is a good chance that the first two of these would result in a higher dividend.
> 
> stock price may fall with the opposite of previously mentioned, resulting in lower dividend.



That's a reasonable comment.  What I'm concerned about is not that sort of reasonable ratio, but rather companies which continue to pay high dividends whilst carrying large debt, or borrowing to pay those dividends.  That's simply not good business, neither is it sustainable in the longer term.





awg said:


> OP hasnt said why he is especially seeking high div yield?



Yep.  Waiting to hear on this.



> however, of the near 2000 ASX listed companies, approx 360 pay divs.
> 
> nothwithstanding that additional anaysis regarding yield sustainability, or other factors, would strike out many of those, it still does leave an investor some uesful guideline, in that they are investing in a company that is making a profit now.



Mostly, but not necessarily, in that TLS would not be the only example of a company which has borrowed to pay dividends.



> Apart from anything else, I rarely buy in a downtrend.



Glad to hear it, awg.



condog said:


> haaaaaahaaaaaaaaaaaaa
> 
> Too easy
> 
> Acoording to figurs on comsec
> 
> For starters it had declining EPS from 2008 to 2009, so its risk is that its affected by global sentiment or cyclical economic factrs significantrly...EPS was 11c in 2008, down to 7.0c in 2009 and only up to 7.5c in 2010 so its hardly a growth stock...dec;ining sales, flat cash flow , rediculously unsustainable payout ratios of up to 348% of earnings....
> 
> Now im no rockety scientist but i know how to analyse a stock and this one really worries me...
> 
> The only thing going for it at all is its flat revenue...(and thats a negative in my books)
> 
> It has a negative ROE, declining profit for several years....higher current liabilities then current assets....that in itself is reason not to invest in it...unless it can roll its debts over it will be forced to sell assets or default on loans.....  If the GFC taught all companies and investors one thing it was get your balnce sheets in order and keep them there....
> 
> Its a high risk low growth stock and hence its high yeild....come in spinners...
> 
> I would not invest in this with my money ever....declining in nearly all aspects and high to extremely high risk...no real obvious growth prospects showing in its figures .....
> 
> This stock highlights exactly what i said....If in todays market you get a high yeild you are getting either or both a high risk and low growth....and this is a classic example...and pardon the pun but Im being honest not cynical...



Very good analysis, Condog, and it demonstrates the point I've been attempting to make.


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## Julia

Wysiwyg said:


> Bear with me; I'm not a rocket scientist.
> 
> With the example of RCU paying an unfranked interim dividend of $0.0095 recently.
> 
> The share price 52 week range is 9c to 22c so if for example 1 million shares are bought at 10 cents for 100k then ...
> 
> 1 million * $0.0095 = $9500 before tax on the interim distribution. Plus share value is now at 150k. Is this a common occurrence or is it too good to be true?



I'd never heard of this so have had a look at it.  Your figures seem correct.
That represents an unfranked yield of 9.5%.

The following is copied from the E-trade Company Profile page for RCU


> Type  	Cents per share  	Frnk %  	Ex Dividend Date  	Dividend Pay Date
> Interim 	0.95 	0 	23/12/2009 	15/1/2010



(Sorry:  the columns didn't line up when pasted, but it's clear what the figures are.)


The last sale was at 15 cents, and they are paying 95 cents per share?????

How??   Why??

Dividend yield is quoted at 40% and Forecast DPS is 6 cents.  
Sector is quoted as paying7.9% yield and the market at 4.3%.

I'm interested in anyone's comments on this.   Do you actually own this Wysiwyg?


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## So_Cynical

condog said:


> haaaaaahaaaaaaaaaaaaa
> 
> Too easy
> 
> Acoording to figurs on comsec
> 
> For starters it had declining EPS from 2008 to 2009, so its risk is that its affected by global sentiment or cyclical economic factrs significantrly...EPS was 11c in 2008, down to 7.0c in 2009 and only up to 7.5c in 2010 so its hardly a growth stock...decining sales, flat cash flow , ridiculously unsustainable payout ratios of up to 348% of earnings....
> 
> Now im no rockety scientist but i know how to analyse a stock and this one really worries me...
> 
> The only thing going for it at all is its flat revenue...(and thats a negative in my books)
> 
> It has a negative ROE, declining profit for several years....higher current liabilities then current assets....that in itself is reason not to invest in it...unless it can roll its debts over it will be forced to sell assets or default on loans.....  If the GFC taught all companies and investors one thing it was get your balnce sheets in order and keep them there....
> 
> Its a high risk low growth stock and hence its high yeild....come in spinners...
> 
> I would not invest in this with my money ever....declining in nearly all aspects and high to extremely high risk...no real obvious growth prospects showing in its figures .....
> 
> This stock highlights exactly what i said....If in todays market you get a high yeild you are getting either or both a high risk and low growth....and this is a classic example...and pardon the pun but Im being honest not cynical...




Jezz condog you disappoint me...Commsecs numbers are a joke, ill selectively quote what ORBIS/SM AUSTRALIA funds thinks of HDF from a Sept 09 publication....just because u seemed to have missed some fundamental key points.



			
				Orbis funds said:
			
		

> HDF has some long-term contracts with large gas producers to transport their gas from the production centres down to the South Australian markets. These contracts typically require the producers to pay a fixed amount for the use of the pipeline (even if they do not need it) which escalates by the Consumer Price Index (CPI) every year.






			
				Orbis funds said:
			
		

> The cash flows which HDF generates from its pipelines are sustainable, require no financial engineering and will grow with CPI given the nature of its contracts.






			
				Orbis Funds said:
			
		

> HDF’s equity stake in the UK water utility. This utility is highly regulated and has very high levels of debt which makes forecasting difficult. But the investment has paid HDF $0.02 per share annually and there is no reason to believe that this will not be maintained. Also, HDF does not guarantee any of the water company’s debt and so HDF’s downside is limited.






			
				Orbis funds said:
			
		

> HDF yields 10% per annum which is very secure and likely to grow by at least CPI plus another 2% per annum which is likely to continue. In addition, HDF has spare capacity in its pipelines and, together with new pipelines being considered, should also benefit from growth in gas volumes. Growth may well exceed inflation over the next decade. In this market, we believe HDF offers excellent value with far below average risk.




http://www.orbisfunds.com.au/reports/SMEF-QuarterlyReport2009Q3.pdf

condog you certainly are no rockety scientist and that goes for me too...i could care less about outdated EPS figures and cyclical economic factors, lol HDF owns pipelines where there are no other pipelines, they have a monopoly (in some areas) moving an essential, growth commodity....with CPI linked contracts and spare capacity, with new capacity coming with the (now fully funded) South West Queensland Pipeline Stage 3 expansion. 

Ill save this thread in my favourites so i can remind you about it in 12 or so months when HDF is $2 a share.


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## condog

*Hey cynical youve lost the plot, the argument was whether you could produce a company with 10%+ dive that is (not might be) high growth, and low risk....on that basis this is a resounding failure....*

For your sake I hope your right...and I will concede some companies occassioanlly look crap for ages then suddenly turn around because of a sudden development in thier circumstances....or because they suddenly acquire a super profitable asset.......but you cant go saying they are high growth, low risk and good dividend till they at least  have all 3 in place, or some type of history of all three....  Just becaus Orbis says they think its outlook is good, doesnt mean it is high growth, low risk and good dividend....

But on the face of thit this one looks terrible...

*Remember here though the argument is not can we find a company thats crap now and good in 12 months time.....its can we find a company with low risk, high growth and 10+% dividend in todays price.........*
*

On that basis you lose fair and square. In this case, as it is not high growth, (your assuming it might be because Orbis says so) . ITs 5 year and 3 year price graph shows its trending backwards so there is absolutely no evidence of positive growth let alone high growth........ 
Its certainly  not low risk, as its balance sheet and finacial statements  looks , very very ordinary and it has very  high risk short term debt, on top of that even the quote you provided says 1/3 of its EPS is derived from an investment they know little about, thats highly regulated and carries very high debt.....That is certainly not classified as low risk in any way shape or form.......t*


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## condog

To new investors reading this, even though I feel So-Cynical is completely wrong on this, it goes to highlight how two investors can  analyse the exact same company and come away with entirely different views and decisions......

Even in my own portfolio I have a split with 70-90% invested with safe fundamental paremeters and 10-30%ish invested for pure growth, some of that very speculatively...... my investment philosophy has to make a massive shift depending on which part of my portfolio I am operating in.......

But the key thing I want you to know that we have proved here is, when prices are fair to high, its very hard to find high yeild companies that are low risk and high growth.....The market  is so big it tends to iron out these characteristcs, and so if you buy a good growth stock with low risk you pay a higher premium and thus get a lower yeild......

The exception to this rule is during corrections and GFC's when the market loses all sorts of balance and provides remarkable buying opportunities in fantastic stocks.....but even then one could argue that the overall market risk is up, and hence the ability to get high growth and high yeild are available.......


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## condog

For beginners, as a learning experience go and look at the 5 year price charts and balance sheet summary for HDF and then compare it to JBH....very quickly you will see why JBH has a low dividend and why HDF has a high dividend... ..... if the balance sheet confuses you just look at the share price charts and you will see why one is classified as growth and the other is not.... 

To So Cynical



So_Cynical said:


> ...i could care less about outdated EPS figures and cyclical economic factors, lol HDF owns pipelines where there are no other pipelines, they have a monopoly (in some areas) moving an essential, growth commodity....with CPI linked contracts and spare capacity, with new capacity coming with the (now fully funded) South West Queensland Pipeline Stage 3 expansion.





Thats your perogative to ignore EPS and I hope your right.....but ,

FACT: there is no evidence its high growth, high yeild and low risk.........

Telsta is also a monoly and its also proof of how horribly wrong governement interfiernece can ruin the sp / prospects of a heavily regulated sector.....

CPI linke is a big minus to me....I try to look for comapanies that are going to exceed the CPI by a significnat margin



> Ill save this thread in my favourites so i can remind you about it in 12 or so months when HDF is $2 a share.



 Thats fine if you purchased it any time since the GFC....*but if you happened to purchase it in the June 09 mini sp spike your already 20% behind.....if you happened to purchase it two years ago at $3.20 then your only $2 behind or in other terms youve suffered a 70% loss of capital *(growth ????  seriously  cmon).....

So yes i hope it does go forward for you, but  I suggest you have a real look at it rather then relying on that Orbis funds report. Im not saying Orbis a wrong they are only speaking in a forward looking context and I dont know the timeframes they are using, but I am defineitley saying that this is not an example of a high dividned stock that has low risk and high growth,   in fact its almost a perfect stock to highlight what I was getting at................. best of luck to all....


----------



## So_Cynical

condog ive come to the inescapable conclusion that you and i have very different definitions of risk and growth, and certainty different levels of risk acceptance....do you consider your self to be a super conservative investor? 

The Orbis funds write up was a piece i found only a few weeks ago (well after i brought in) and was surprised because here's a major investment fund with pretty much exactly the same view on HDF as i have.

As you have pointed out there are no stocks that have


low risk  
high growth
and 10+% dividend in today's price

And yet there are people (like me) that have brought into stocks in the last 16 months that have grown in value by over 300% and that yield over 14%

I mean jezzz everything was considered risky back in the first 5 months of this year...and yet fortune favours the brave...as it always has and always will. Your risk aversion basically means you will miss all the really big movers/yielder's because they don't met your strict definition of a "good thing"

By the time XYZ has all its fundamentals in place, and 3 years of consistent growth behind it and a SP that's been trending up for 2 years...you have well and truly missed the boat.



condog said:


> *but if you happened to purchase it in the June 09 mini sp spike your already 20% behind.....if you happened to purchase it two years ago at $3.20 then your only $2 behind or in other terms youve suffered a 70% loss of capital *(growth ????  seriously  cmon).....




Ok so we are talking about right now, not when i brought in a few months back at 84 cents and not 2 years ago at 3.20 so lets keep it real...im a buy low kinda guy and im only interested in value buying (falling SP) and thats what caught my attention with HDF...personally i wouldn't be buying HDF at current levels because the value horse has bolted now, under 85 cents great buying now not so as the yield has fallen to almost 10%

As far as HDF goes there's only as few months out off the last 5 years when i would of been interested in buying...there's a time to buy, a time to hold, and a time to sell.
.


----------



## condog

Does that graph above actually look like a growth stock to anyone else other then So_Cynical????
It certainly does not to me....



So_Cynical said:


> condog ive come to the inescapable conclusion that you and i have very different definitions of risk and growth, and certainty different levels of risk acceptance....do you consider your self to be a super conservative investor?



Possibly...but i think youve completely forgotten what this debate was about.... It was whether you could find a high growth low risk stock with 10%+ dividend in todays market.....which i stated was extremely unlikely, if not impossible....as the market prices it in........

You came back sighting HDF as an example  ........ you where clearly wrong or misinterpreted my challenge...



So_Cynical said:


> As you have pointed out there are no stocks that have
> 
> 
> low risk
> high growth
> and 10+% dividend in today's price



100% Agreed - I thought thats what this whole debate was about and now your agreeing.........about time, you took the long convoluted route to agree with me though.....


So_Cynical said:


> And yet there are people (like me) that have brought into stocks in the last 16 months that have grown in value by over 300% and that yield over 14%



Agreed, I have too, ROL , TRF, MND, LYL, SMX, DTL etc some yeilding over 20%. But at the time i bought them the entire global financial market was a wash with incredible risk.......hell even some of my bluechips i bought put on 100-180%, I had the best financial year of my life, and the last 3 months is the icing on the cake.......but the irrescapable fact is this argument is about whether you can buy a high growth low rick 10%+ dividend stock today.....*and you absolutely cannot*.....



So_Cynical said:


> I mean jezzz everything was considered risky back in the first 5 months of this year...and yet fortune favours the brave...as it always has and always will. Your risk aversion basically means you will miss all the really big movers/yielder's because they don't met your strict definition of a "good thing"



Yes thatss what im saying when dividend and growth are assured, its becasue risk is elevated, irrespective of whether that risk is global, economic or stock specific......



So_Cynical said:


> By the time XYZ has all its fundamentals in place, and 3 years of consistent growth behind it and a SP that's been trending up for 2 years...you have well and truly missed the boat.



 No i wont, im not risk averse, i just stating what took you two days to see.......you cant have low risk, high div and high growth....all at once unless the overall market is down and thats usually due to hightened risk anyway......

Im not saying avoid risk......Im saying be aware of chasing high dividend stocks in todays market, as they likely have low growth or elevated risks....thats it in a nut shell..........

I dont think you know my investing style or risk tolerance.........this debate has nothing to do with risk tolerance or my risk tolerance.......and i think if you where to know a few speculativie plays i have at present and the size of them you would look extremely foolish making this wild claim............

I actually love risk and embrace it , because its provides a massive return in most cases, but it takes years of excperience to learn how to play the risk game........ and the beginners lounge is not the place to be doing it.....



So_Cynical said:


> Ok so we are talking about right now, not when i brought in a few months back at 84 cents and not 2 years ago at 3.20 so lets keep it real...im a buy low kinda guy and im only interested in value buying (falling SP) and thats what caught my attention with HDF...personally i wouldn't be buying HDF at current levels because the value horse has bolted now, under 85 cents great buying now not so as the yield has fallen to almost 10%



  No where not we never where.....The debate was can you name a growth stock that has 10%+ dividend and low risk....you came back with HDF and where very much wrong.... at least have the integrity to admit you misinterpreted it or got it wrong....



So_Cynical said:


> As far as HDF goes there's only as few months out off the last 5 years when i would of been interested in buying...there's a time to buy, a time to hold, and a time to sell.
> .



 This is irreleevant to the argument......you where asked to find a stock that was high growth with 10%+ dividend and low risk, not a stock that has gone up in the last few months of a GFC low with high dividend....


Perhaps and I hope for your sake you completely misinterpreted what I asked for....  but i rest my case..... at todays prices its extremely unlikely that the market will allow you to buy a 10%+ dividend stock that is low risk and high growth....

To the onlookers srrry for this, but hopefully it has hepled in someway....debate is healthy anyway....
If he wants to go round in circles thats fine....but i dont feel the need to say any more on it....

*Beginners just remember - the market is letting you have that high dividend because they regard the stock as either high risk or low growth......the only exception is when we have corrections.....*


----------



## So_Cynical

condog said:


> Does that graph above actually look like a growth stock to anyone else other then So_Cynical????
> It certainly does not to me....
> 
> 
> Possibly...but i think youve completely forgotten what this debate was about.... It was whether you could find a high growth low risk stock with 10%+ dividend in todays market.....which i stated was extremely unlikely, if not impossible....as the market prices it in........
> 
> You came back sighting HDF as an example  ........ you where clearly wrong or misinterpreted my challenge...




I agree that by your super conservative agenda HDF doesn't met your requirements of high growth low risk stock with 10%+ dividend in today's market....however you asked me (and i assume others involved with this thread) to identify a stock that i believe met that agenda and i did...if you or anyone else doesn't see HDF as i see it, well that's an issue with your perception and risk aversion.

The facts remain that HDF is paying 10%+ has funding in place for a major capacity expansion (Growth) and is in a low risk business with very stable and predictable, CPI linked revenues.

You are right on one front...high growth low risk stocks with 10%+ dividend in today's market don't last long, the market eventually prices down that dividend as it has been doing for the last 5 months with HFD...within the next couple of weeks HDF will in all likelihood be trading above $1.20 and the opportunity for punters to get a double digit return will be gone...at least on this stock.

HDF revenue growth forecast below....Good luck with your risk averse investing condog.
.


----------



## condog

So_Cynical said:


> Good luck with your risk averse investing condog.
> .




Why thank you....if you had any idea and followed any of the stock i invest in on this forum you know that I have a massive risk tolerance .....but i have no tolerance for this garbage.....

If you lack the integrity to admit you got it wrong and that HDF is clearly not a growth stock, so be it.....

Thats another lesson for beginners, be sure to cross check the infiormation your getting , it could be from some one who thinks HDF is a growth stock...

Beginners go to your charts and look at the growth charts for JBH and HDF....you will soon see the difference why one pays 10%+ and the other pays 1.6%.... the market has priced in that JBH has significant growth prospects, so investors pay a premium and as a result the dividend is limited.....on the other hand HDF has a history of low to stagnant or negative growth and wise investors have seen this and priced it in, unwilling to pay a premium price.....hence the high dividend.....

Signing off from this garbage....goodbye...


----------



## akkopower

So_Cynical said:


> low risk
> high growth
> and 10+% dividend in today's price




does tls come close to this


----------



## condog

akkopower said:


> does tls come close to this




Sorry but its not low risk due to govt threats of splittting Telstra, govt price restrictions, govt mandates on service levels for unprofitable areas of the business and govt sponsored competitors.......our mate senator conroy can make any crazy decision for any crazy reason and whamo TLS cops it.....so its not low risk.......and its main risk is 128% debt to equity ratio...(which is rediculoualy high for a compoany so big that generates so much free cash flow). Its in most cases an acceptable risk,  but not low risk....

Disclaimer-  i held this stock til very recently, as thats a calculated risk at its Conroy affected price that i was willing to fully buy into, but Im out now as it issued a 12 month flat earnings forcast and thats a huge sell trigger for me...

TLS certainly has some good cash flows but its definitely not high growth, infact its a long term negative growth stock, which hopefully for it may be turning the corner....there are some signs it may have stopped the rot.......but  even TLS itslef has annnounced they expect a flat 12 months (that wil relieve some investors that have had 5+ years of declining sp).....TLS is down from highs of around $10 to a sp of $3.27, its clearly not a growth stock and its the perfect example of why some high dividend paying stocks can erode your capital...... there are many many retirees and investors that blindly bought or held telstra when it was clearly paying dividends above its earnings from borrowed money , they bought and held on because the 14% dividend was irreistable....look where it got them..........

In fact this case study is what this whole thread / debate is about.......

TLS is a Perfect example of why dividend is just one factor.....and why you need to ask yourself why is the market allowing me to buy this company that has such a high dividend.......theres usually a very good reason.....

Always remember....a high dividend in a normal market is usually a sign of elevated risk or lower grwoth.....
Im not saying to avoid them as, I own many, but dont be fooled that your getting all three parameters....


----------



## So_Cynical

akkopower said:


> does tls come close to this




The big problem IMO with Telstra is that management has spent most of the last decade defending its monopoly instead of embracing the inevitable and trying to grow the business. 

To there credit they have the best mobile network in the country and its the mobile part of the business that's proped up the rest of the company. I would call TLS a low risk company but certainly not high growth...low risk as in there not going to fall over any time soon, have the cash flow and deep pockets to keep the dividend high and will almost certainly be a major player in the NBN.

Don't be fooled....the market isn't as smart as some people think it is.


----------



## skc

So_Cynical and Condog... great debate in a mostly gentlemanly manner. Well done.

My  on HDF

High yield - yes. Can't argue with the numbers.
Low risk - yes. On the P&L as the income are regulated, and hopefully costs will rise only in line with CPI. On the Balance sheet side the debt is high but serviceable, and re-financing risks are decreasing as overall market sentiment improves - but still there nonetheless.
High growth - Debatable. The existing revenue, being regulated, has little growth (growing with CPI means you are only breaking even). Any new revenue from capacity expansion will also likely earn a regulated ROA. So not exactly growth in the ROE sense.

There is probably one question missing. How sustainable is the current dividend payout? 

There are many scenarios where the payout will need to be reduced... if banks get nervous again and like to see gearing reduced, dividends will be cut in no time and directed towards repaying debt. Another clear risk to payout is rising interest rates... NPAT comes after interest payments.

Before the GFC utilities were yielding 6-8%, with 6% being in bubble territory. With a new age of financial conservatism preaching lower leverage, my guess is the current 10% yield makes the stock a little bit on the cheap side, but not by much.

Other utilities on the same boat include TSI (12% yield), ENV (10.3%), APA (13.2%), SKI (11.2%), DUE (10.8%). All of them haven't implode as bad as HDF. The sector as a whole has plenty of coverage so they can't be all sure bets that people have neglected.


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## So_Cynical

Thanks for your input skc...well summarised as usual, and would have to agree that if anything went wrong and the banks got nervous the dividend would be first to go closely followed by the SP.

The new debt for the pipeline expansion (from memory) around 700 mill was all fixed interest 3, 4 and 5 years with only a small part of it as a line of credit, at lest that's how i read it...there an ann about it for anyone interested.

I mite have to revise down my $2 target.:shake:


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## condog

So_Cynical said:


> I would call TLS a low risk company but certainly not high growth...low risk as in there not going to fall over any time soon, have the cash flow and deep pockets to keep the dividend high and will almost certainly be a major player in the NBN.
> 
> Don't be fooled....the market isn't as smart as some people think it is.




See thats where you and I differ so much....risk perception / risk assessment
.... you seem to classify a stock as low risk if you think its not going to fall over any time soon....

Where as when i wiegh up whether its low or high risk...I look at 
Firstly its debt to equity....and personally TLS debt to equity is getting up amongst many companies that have already failed.....
Secondly thier current assets to current liabilities
Their ROE projections and ROE history and ROE growth
Risk of dilution of share holders equity to institutions...
If that all check out plus a few other minors I then look at political risk, partigularly regulatory ones....risk of new competitors and barieres to entry or market share....
Risk to price control

On nearly all these fronts TLS rates fairly high risk....
You say TLS wont fall over any time soon.....I dont think it will either but a 128% debt to equity ratio is tremendessly high.....its unsustainable if free cash flow falls too much and only the govt would be stupid enough to refinance them.....

As you pointed out yesterday you have only been in this game just over three years, and there is still a lot to learn.... Ive been doing it since roughly very early 1990's and im still learning everyday......

You accuse me of being risk averse....however i am not....i invest in many stock that i highlight as being high risk, and my argument is not to avoid risk....

My argument is that there are many factors associated with risk other then an inexperienced assessment of whether the company will iminently collapse....and that this risk is nearly always reflected in the risk/yeild/ growth price characteristics of the stock......

An example im in right now with rediculous positive and negative risk is VIL....its a tiny oil miner with potential for massive upside in an area very possibly likely to yeild a oil and gas strike....but the risks are massive...and thats priced in....there is no yeild, the price is extremely cheap compared to if its result are positive, but the risk and possible reward is massive...hence why im in it.....

I weighed up all thos risks, claculated the likilihood of a find, its probabilities, discounted them, came out with worst, best and most likely prices and chose to go in with a lot of money as an acceptable risk....right now im up more then 
$40,000 in just a few weeks.....My point is the risk was huge and it was priced in.......and learning how to calculate it and assess it from many dimensions is very important...and when you start to get better at it , it aslo becomes not only a capital preservation issue, but a way oif generating huge profits.....

Another  example of this is MMS. MacMillan Shakespeare....they have excellent ROE and financials in most but not all regards...on corrections they often offer quite good yeilds.....they where hurt by the GFC but are now recovering.....

From time to time MMS throws up rediculous yeilds, but generally its when the govt looks like making a big chnage that will affect them for the worse...or when an announcment is due...

But in investing in them they always have a huge risk....looking at thier financials they have little risk of falling over as you put it...with 0% debt to equity , rising sales, no capital raising, stable operating margins, growing NPAT, Good ROE, and ROC, sensible payout ratio...current assets double current liabilities...

I do own them,,but the risk they carry is a significant legislative one and its important when investing to know your risks so you can react if they change for the positive or negative...the huge risk with MMS is that the Henry review may lead to a reduction in salary sacrifice benefits.....  MMS primary business is govt employee salary sacrifice.....

Now this risk may be both positive and negative...if the govt makes minor changes thats a huge positive as all govt employees will want their SS arrangments altered....if however SS is eliminated or reduced significantly, initially MMS may benefit, but as people drop out of SS , MMS would suffer a massive earnings and sp hit.......

So in light of an imminent Henry response from the govt, I didnt sell MMS, but i assessed the risk as extremeley high and have sold half of my holdings to reduce exposure.....

So my point here is , risk is not necesarily all bad, but it exists in many ways , and it pays to know your risks on your stocks, know how its priced in and then make decisions and act accordingly...... 

This is all opinion, no reccomendation of stocks is suggested or implied....Always DYOR and seek expert advice....


----------



## So_Cynical

condog said:


> See thats where you and I differ so much....risk perception / risk assessment
> .... you seem to classify a stock as low risk if you think its not going to fall over any time soon....
> 
> Where as when i wiegh up whether its low or high risk...I look at
> Firstly its debt to equity....and personally TLS debt to equity is getting up amongst many companies that have already failed.....
> Secondly thier current assets to current liabilities
> Their ROE projections and ROE history and ROE growth
> Risk of dilution of share holders equity to institutions...
> If that all check out plus a few other minors I then look at political risk, partigularly regulatory ones....risk of new competitors and barieres to entry or market share....
> Risk to price control






condog said:


> An example im in right now with rediculous positive and negative risk is VIL....its a tiny oil miner with potential for massive upside in an area very possibly likely to yeild a oil and gas strike....but the risks are massive...and thats priced in....there is no yeild, the price is extremely cheap compared to if its result are positive, but the risk and possible reward is massive...hence why im in it.....




I've been reading over the TON and VIL threads and will concede that you are not risk adverse at all...in fact i totally miss read you, in fact im at the point where im bamboozled.

On the one hand your bagging a good stock like HDF based on fundamentals and financial's...and then your Ramping a new speckie explorer with basically nothing, and ramping VIL which is a 20 year old investment company with a market cap of around 28.5 mill. 

When i examine a stock the first thing im looking at is..will they still be here next week, month, year etc, and i cant stress how important this is to all new investors and any ultra small cap investors, ask anyone who held stock in the little explorers and producers (Gold etc) that fell over in the last 2 years....just of few of the ones i remember


VRE - View Resources (Gold)
GDR - Goldstar Resources (Gold)
TMR - Tamaya Resources 

Risk comes in 3 basic flavours...lose a little bit, lose alot, lose everything.

One thing to avoid is company's that don't make any money and basically own nothing that has any realistic hope of making money, VIL is an almost perfect example of this..having a look at there annual report relieved a direction-less company with a 20+ year history of near total failure.

Have a look at there revenues over the last 5 years...keeping in mind the Bull market and the easy money to be had....and this is an investment company! VIL are bleeding money, a 1 for 1 rights issue last year  followed a few months later with a placement.

And now there in the oil business  to me there standing at a roulette table and putting all there money on an exotic, not even smart enough to go for an even money win.

I really don't know what to make of you condog...and i call myself a punter lol, anyway good luck.

http://www.asx.com.au/asxpdf/20090930/pdf/31l20yc674pmr3.pdf
.


----------



## Liar's Poker

I'll probably regret using my first post on ASF to enter into a heated debate, nonetheless hopefully this adds to the thread or at least to the OP.

Yield in many cases should be used as an indicator of risk, or the markets perceived risk (risk = return, greater the return, the greater the risk... etc, etc). Generally a higher than normal, or even lower than normal yield has me researching for days more trying to justify the difference. 

For example, in May 2009 Spark Infrastructure (SKI) was around $1.02. At the time, it had a yield of approximately 17%. I had followed SKI for some time and was reasonably comfortable with it as a long term investment and as a company in general. Yet a yield that high must prompt further research.

After reading through recent announcements, the high gearing, debt refinancing, and potential changes to government regulations facing ETSA Utilities, of which SKI had a 49% interest seemed to be enough for the market to be preempting the next dividend amount (a reduction) and in turn, the adjusted yield.   

Over the coming 6 months, announcements were made that were in favor of SKI. As the market gained confidence, the share price increased to almost bring the yield on par with the sector.

The investors whom bought at around $1.00 took a risk, whether they knew it or not I don't know, but in this case it paid off in the order of 30-40%. It could have easily resulted in a relatively stagnant, average yielding stock. A burden on the portfolio. 

In my opinion, there is nothing wrong with chasing the odd yield. You just have to be much more diligent and willing to loose more than you may have with the more average yielding stocks. 

Note: Currently holding SKI.

Hopefully the above conforms with the rules and regulations of the site - I did read the posting guidelines prior.

-end-


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## So_Cynical

That's a great first post, you sure you haven't done this before.

Welcome to the forum.


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## condog

I disagree with the incorrect insulting and defamtory remarks or accusations of ramping...if you need to resort to such trash talk I do not engage in such rabble...

I aim to engage with people who do not follow me into other threads making defamatory remarks and looking for cheap throw away lines aimed at nothing more then to attempt to discredit...

Begginners good luck , and hope you can learn form others...


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## squeegee

Im with Cynical on this one, big time. I have a portfolio based in shares I trade, and shares I hold for yield AND SP growth. I try and balance. "Dont turn an investment into a trade, and dont turn a trade into an investment" (just a quote from a wiser guy than me)

However, yield is invariably linked to purchase price, and earlier this year, the ASX100 was a smorgasboard of low risk stocks with high yields due to the meltdown..... IMO, many of the ASX100 stocks have now bolted, and their yields are now more normalised in comparison to their current SP v Yield (eg banks 6% to 7%, but still fully franked...so plus another 30%). Im happy with the blend I picked of risk (for future) and stablility (for now). Yes, I picked a couple that have switched off the dividend tap....but thats ok, they have all had SP growth, and when that tap gets turned on again.....happy days!!

In the future many you will see many of these same stocks increase in SP, as their yield increases.....as many people are buying them for this reason. So long as course they arent paying from retained earnings. ie payout ratios are important to consider. I try and stick around 75% EPS/DPS

Stocks dont increase, and then the company goes "oh wow, look our SP has gone up, well pay a higher dividend now".....its the opposite to this. Dividend goes up, SP goes up. (for dividend paying stocks that is)

Why have JUST SP growth when if you bought and held at the bottom of the market you could have had BOTH yield AND SP growth!!

Dont forget those other fantastic words "fully franked"...


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## So_Cynical

Hey squeegee...while on the subject of investing and dividends.

I hold a few MRE shares and had a look at there quarterly last nite and was a little surprised to see them sitting on 240 odd million in cash and making 3 to 4 mill a week....this got me thinking that a dividend mite not be to far away for MRE as they were good divi payers back at the top of the mining boom.

So i figure that maybe there's a few more company's like MRE that stopped paying divis in the last 18 months and are now doing ok again, and getting to that stage where a dividend becomes almost inevitable...and i bet a lot of these types of company's are way under valued....flying under the radar.


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## So_Cynical

condog said:


> To new investors reading this, even though I feel So-Cynical is completely wrong on this, it goes to highlight how two investors can  analyse the exact same company and come away with entirely different views and decisions.







condog said:


> For beginners, as a learning experience go and look at the 5 year price charts and balance sheet summary for* HDF* and then compare it to *JBH*....very quickly you will see why JBH has a low dividend and why HDF has a high dividend... ..... if the balance sheet confuses you just look at the share price charts and you will see why one is classified as growth and the other is not.




I though it would be interesting to revisit this thread and see how condogs JBH and my HDF have performed over the last 2 months....since both have reported half year results.


JBH gross yield approx 4%
JBH share price -10%
HDF share price +6%
HDF gross yield approx 10%
 
~


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## So_Cynical

So_Cynical said:


> I though it would be interesting to revisit this thread and see how condogs JBH and my HDF have performed over the last 2 months....since both have reported half year results.




Three months on from my last post and i thought it would be interesting to see how HDF and JBH are travelling as high growth stocks....in general over the last 5 months the sell off in JBH has continued while HDF has continued to rally, with the divided return situation only slightly different.

Even with the latest market pullback HDF has continued to shine with only a small adjustment to its share price...while the now 6 month downtrend for JBH continues....if nothing else i hope some new comers here as ASF mite be able to take something away from this thread RE timing and stock selection. 


JBH gross yield approx 4.4%
JBH share price -20%
HDF share price +19%
HDF gross yield approx 9.8%
 
~


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## Julia

HDF has done well.   I guess we'd expect retail stocks to underperform following the discontinuation of cash handouts.
Wonder if more might follow Clive Peeters.


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## akkopower

HDF has done very well as of late, share purchases fro APA have helped this one out. Just waiting to crack the $1.40 resistance. Comparing HDF to similar stocks like APA and ENV gives


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## akkopower

hmmmmmm, another attempt at a chart may be helpful.
maybe its time for me to go read the upload chart thread


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## cocojambo

Here are the top yielding utility dividend plays

Symbol Company Name Current Dividend Yield % 
NGG National Grid PLC 9.2 
APU Amerigas Partners, L.P. 6.7 
CPL CPFL Energy SA 6.7 
EDE Empire District Electric 6.7 
UIL UIL Holdings Corporation 6.7 
UTL Unitil Corporation 6.7 
POM Pepco Holdings, Inc. 6.5 
BIP Brookfield Infrastructure 6.4 
PGN Progress Energy, Incorporated 6.1 
AEE Ameren Corporation 6 
NI NiSource, Inc. 5.9 

Source: http://www.best-dividend-paying-stocks.com/

DUK Duke Energy Corporation 5.8 
TEG Integrys Energy Group, Inc. 5.8 
OTTR Otter Tail Corporation 5.8 
FE FirstEnergy Corporation 5.7 
CNP CenterPoint Energy, Inc. 5.6 
PNW Pinnacle West Capital Corporation 5.6 
VVC Vectren Corporation 5.6 
PPL PPL Corporation 5.4 
WR Westar Energy, Inc. 5.4 
CHG CH Energy Group Incorporated 5.3 
ED Consolidated Edison Company 5.3 
HE Hawaiian Electric Industries, Inc. 5.3 
POR Portland General Electric Company 5.3 
SO The Southern Company 5.3 
TAC TransAlta Corporation 5.2 
EXC Exelon Corporation 5.1 
SCG SCANA Corporation 5.1 
TE Teco Energy, Inc. 5.1


----------



## pixel

I keep a watchlist of "Yielders" in the Market Analyser, which I use to either check whether a stock that "pops up" for some reason pays good dividend, or sort by yield if I feel I need to top up my portfolio of income producers.

One thing to remember with yields: The figures are always retrospective, based on the last dividend paid. The company may, for all it's worth, have paid a 5% dividend at the time, before their sp hit a snag, dropping close to zero. With that in mind, have a look at 



In addition, I maintain a spreadsheet of companies' upcoming and last paid dividends., which can be customised to any watchlist (ASX stocks only) and updated at any time:
http://rettmer.com.au/TrinityHome/Services/index.htm#_Prev6


----------



## earlyretirement

Hi

I am the editor of a recently launched website covering higher yielding FTSE100 shares. Over time the site will include information on a number of high yield companies, including write-ups on their dividend histories and prospects. Currently, we have published several write-ups.


----------



## noie

earlyretirement said:


> Hi
> 
> I am the editor of a recently launched website covering higher yielding FTSE100 shares. Over time the site will include information on a number of high yield companies, including write-ups on their dividend histories and prospects. Currently, we have published several write-ups.




Awesomely helpful to this AUSSIE-STOCK forum..
thank-you!, good luck with YOUR early retirement.


----------



## earlyretirement

Cheers Noie

W're aiming to publish one new write-up every ten days or so, depending whether we believe they fit our mid-term criteria.

Be Happy: Retire Earlier and Richer!


----------



## robusta

Just a thought is it a little dangerous focusing on dividends.
If you can find a great company earning a high ROE and reinvesting the profits and earning a high ROE on those profits shouldnt that company be worth more. Look at JBH over it's major growth spurt in recent years.
A company like this is a little like a compounding machine that grows much faster and eventually the dividend will follow.
If you need income you could sell some of your holdings and with the 50% capital gains discount for long term shareholders the sp increase from a good growth stock should mere than compensate for a lower dividend yield.
Having said that who doesnt love dividends? I know I do


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## So_Cynical

My FY 10/11 dividend stream is starting to look like delivering a return on my whole portfolio of close to 7% gross....already 4 of my stocks have increased there final divi by 25% to 100%  my FY10/11 dividend stream will almost double year on year, and that was after it more than doubled from last year.

I'm starting to think i should do more holding and less buying and selling...but i know its that bottom buying, churning over my money and anticipation of good divis that got me into this good situation.


----------



## choice1

Very interesting thread. I'm mostly a forex trader but have been quietly researching investing to make better use of my excess capital.

Just a point I'd like to make with yield. Given that yield is the dividend / share price and as earnings increases from year to year the dividend and share price also increase. This means that the yield (say 5%) is likely to be relatively constant from year to year (aside from corrections in the market) while the dividend continues to increase. This ends up being a big trap for yield chasing investors as you miss out on all the long term dividend growth.

eg. 30 June 200x
Woolworths. 2005: $16 , dps 51 cents, 3.125% yield. 
Woolworths. 2009: $26, dps 104 cents, 4% yield.

Relatively constant yield as the share price has increased with the earnings/dividend per share. Keep in mind the dividend is double what it was back in 2005.

Today I could go find a term deposit for 6% and have a higher yield then buying WOW shares but guess what's going to be the better option in the long run... Property trusts tend to have the same appeal about them but lack the growth that industrials tend to have.

Again it is probably pointing out the obvious to most of you guys but just thought I'd chime in here since there has been a whole lot of yield talk. 

Obviously when buying in to a company you want to get it at the lowest price/highest yield but other then that it can really trap some people and spoil long term growth.


----------



## So_Cynical

choice1 said:


> Obviously when buying in to a company you want to get it at the lowest price/highest yield but other then that it can really trap some people and spoil long term growth.




Agree...what your talking about is straight buy and hold for yield, and as you have pointed out its not a big money spinner...my strategy is buy low and establish free carry, sell to get the bulk of my capital back leaving the profit in, wait for the re-trace and buy again, establish free carry, sell to get the bulk of my capital back leaving the profit in, wait for the re-trace and buy again and establish free carry, sell to get the bulk of my capital back leaving the profit in, wait for the re-trace and buy again and establish free carry etc. 


Easy to see how its reasonably easy to go in and out of a property stock 3 or 4 times over 12 or 18 months and triple your dividend stream simply re-cycling the same 5 or 10 grand and leaving the profit in...ive been doing this for 18 months and its working pretty well for me.


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## KurwaJegoMac

By free carry do you mean waiting for the value of your stock to increase by 100% so that you can withdraw your initial capital investment value yet keep a holding in that stock worth the initial capital investment?


----------



## So_Cynical

KurwaJegoMac said:


> By free carry do you mean waiting for the value of your stock to increase by 100% so that you can withdraw your initial capital investment value yet keep a holding in that stock worth the initial capital investment?




I call free carry any profit left in, considering the sideways market we are in i find a profit range of 10 to 18% reasonably easy to achieve given a reasonably open ended time frame...of course not every entry goes according to plan.


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## robusta

Sorry meant to post in Is now the time to buy thread


----------



## KurwaJegoMac

So_Cynical said:


> I call free carry any profit left in, considering the sideways market we are in i find a profit range of 10 to 18% reasonably easy to achieve given a reasonably open ended time frame...of course not every entry goes according to plan.




Thanks for the clarification  interesting system, makes sense considering the sideways market and the number of dips we've been experiencing. 

That being said, say the market becomes bullish a d continues to rise past the 10-18% profit target you've set, and doesnt come back to the current sideways action. Aren't you concerned you may miss out on having a good dividend yield by accumulating and holding at very cheap prices?


----------



## So_Cynical

KurwaJegoMac said:


> Thanks for the clarification  interesting system, makes sense considering the sideways market and the number of dips we've been experiencing.
> 
> That being said, say the market becomes bullish a d continues to rise past the 10-18% profit target you've set, and doesn't come back to the current sideways action. Aren't you concerned you may miss out on having a good dividend yield by accumulating and holding at very cheap prices?




My current portfolio consists of 19 stocks, some stocks give me regular re-entry opportunity's some don't...VRL for example just kept going up and i never got a chance to re-enter so had to settle for a 190+% gain over the 15 months i held for.

Some of my other stocks like ILU, PFL and ALZ have offered regular re-entry opportunity's while still maintaining a steady overall upward trend, with the bonus of increased dividends for ALZ and PFL and the expectation of a return to dividends for ILU. 

CPU was another one of my stocks i though mite ever give me a re-entry opportunity, then one bad announcement the other week and down she came right back to where i want to be buying....and then there's a few stocks im still waiting on to 'come good'


----------



## So_Cynical

condog and i had the following exchange (text in quotes below) in this thread back in mid January 2010..now 8 months later i feel its interesting to look back with hindsight and learn a little about perception, timing and risk/reward. 



condog said:


> Id encourage you to name any company thats earning over 10% dividend that you think is both safe and high growth, and i bet 1 of 50 people in here can come back with  evidence that it is either high risk or low growth....






So_Cynical said:


> OK here's one
> 
> HDF - HASTINGS DIVERSIFIED UTILITIES FUND has a Market Cap of 567 mill
> 
> HDF last traded at $1.16 and is forecast to pay quarterly distributions of 3 cents per share...so a little over 10%







condog said:


> haaaaaahaaaaaaaaaaaaa
> 
> Too easy
> 
> Now im no rockety scientist but i know how to analyse a stock and this one really worries me...
> 
> Its a high risk low growth stock and hence its high yeild....come in spinners...
> *
> I would not invest in this with my money ever*....declining in nearly all aspects and high to extremely high risk...no real obvious growth prospects showing in its figures .....
> 
> This stock highlights exactly what i said....If in todays market you get a high yeild you are getting either or both a high risk and low growth....and this is a classic example...and pardon the pun but Im being honest not cynical...






So_Cynical said:


> Jezz condog you disappoint me..
> 
> condog you certainly are no rockety scientist and that goes for me too...i could care less about outdated EPS figures and cyclical economic factors, lol HDF owns pipelines where there are no other pipelines, they have a monopoly (in some areas) moving an essential, growth commodity....with CPI linked contracts and spare capacity, with new capacity coming with the (now fully funded) South West Queensland Pipeline Stage 3 expansion.
> 
> *Ill save this thread in my favourites so i can remind you about it in 12 or so months when HDF is $2 a share.*






condog said:


> *Hey cynical youve lost the plot, the argument was whether you could produce a company with 10%+ dive that is (not might be) high growth, and low risk....on that basis this is a resounding failure....*
> 
> For your sake I hope your right...and I will concede some companies occassioanlly look crap for ages then suddenly turn around because of a sudden development in thier circumstances....or because they suddenly acquire a super profitable asset.......but you cant go saying they are high growth, low risk and good dividend till they at least  have all 3 in place, or some type of history of all three....  Just becaus Orbis says they think its outlook is good, doesnt mean it is high growth, low risk and good dividend....
> 
> But on the face of thit this one looks terrible...
> 
> *Remember here though the argument is not can we find a company thats crap now and good in 12 months time.....its can we find a company with low risk, high growth and 10+% dividend in todays price.........*
> *
> 
> On that basis you lose fair and square. In this case, as it is not high growth, *



*



condog said:



			For beginners, as a learning experience go and look at the 5 year price charts and balance sheet summary for HDF and then compare it to JBH....very quickly you will see why JBH has a low dividend and why HDF has a high dividend... ..... if the balance sheet confuses you just look at the share price charts and you will see why one is classified as growth and the other is not....
		
Click to expand...




condog said:



			If you lack the integrity to admit you got it wrong and that HDF is clearly not a growth stock, so be it.....

Thats another lesson for beginners, be sure to cross check the infiormation your getting , it could be from some one who thinks HDF is a growth stock...

Beginners go to your charts and look at the growth charts for JBH and HDF....you will soon see the difference why one pays 10%+ and the other pays 1.6%.... the market has priced in that JBH has significant growth prospects, so investors pay a premium and as a result the dividend is limited.....on the other hand HDF has a history of low to stagnant or negative growth and wise investors have seen this and priced it in, unwilling to pay a premium price.....hence the high dividend.....

Signing off from this garbage....goodbye...
		
Click to expand...



Alot of what condog was going on about was true, especially the last bit ive bolded, the market was pricing in more of the same for JBH and more of the same for HDF...8 months later turns out the market was wrong, hence the subsequent re-pricing of both , HDF up 25% and JBH down 5%

So this begs the question 'is JBH still a growth stock'? or is/has the market been pricing in flat growth for JBH? does the market actually have a clue or are they all just stumbling around in the dark? 

HDF hit a new 14 month high on Friday breaking thru resistance at $1.39 to hit a high of $1.48...what's the market pricing in now? :dunno: take over, dividend increase, perhaps JBH was a bargain a couple of months or so ago at its last significant low?

All i know is that so far condog and the market got it wrong with JHB and little old contrarian me got it right.  this and other results ive had, gives me confidence in my stock picking ability's going forward and going against the market.

According to the recent HDF half yearly report, revenue was up 8.4% EBITDA was up 9.1% and profit before tax was up 23.8% does this now mean that the  market thinks HDF is a growth stock?
~*


----------



## skc

So_Cynical said:


> condog and i had the following exchange (text in quotes below) in this thread back in mid January 2010..now 8 months later i feel its interesting to look back with hindsight and learn a little about perception, timing and risk/reward.
> 
> Alot of what condog was going on about was true, especially the last bit ive bolded, the market was pricing in more of the same for JBH and more of the same for HDF...8 months later turns out the market was wrong, hence the subsequent re-pricing of both , HDF up 25% and JBH down 5%
> 
> So this begs the question 'is JBH still a growth stock'? or is/has the market been pricing in flat growth for JBH? does the market actually have a clue or are they all just stumbling around in the dark?
> 
> HDF hit a new 14 month high on Friday breaking thru resistance at $1.39 to hit a high of $1.48...what's the market pricing in now? :dunno: take over, dividend increase, perhaps JBH was a bargain a couple of months or so ago at its last significant low?
> 
> All i know is that so far condog and the market got it wrong with JHB and little old contrarian me got it right.  this and other results ive had, gives me confidence in my stock picking ability's going forward and going against the market.
> 
> According to the recent HDF half yearly report, revenue was up 8.4% EBITDA was up 9.1% and profit before tax was up 23.8% does this now mean that the  market thinks HDF is a growth stock?
> ~




Nice one So_C. Great summary.


----------



## awg

Yes thanks So_C for the well thought out posts, I enjoy them and thanks for outlining in detail your investment style.

As for safe high yield stocks that offer some growth ( not spectacular).

I can mention APA, 8.6% yield, 99.8% div stability, ignored it for a while but at $3.20 was paying over 10% div.

It does have debt and capital matters that should be considered and some would say it is fairly fully priced at the moment.

However if gas and electricity consumption continue to rise, this company will grow.

I am of the opinion it will continue to ROI 10-15% pa

Also should make mention of various preference shares paying 10-15% div with likelyhood of cap gain on redemption


----------



## So_Cynical

For anyone interested in yield.

IMF will be listing a new issue of convertible notes at $1.65 per note to raise around 40 million to fund growth, The terms of the notes will be four years, and *interest will be paid at a fixed rate of 10.25%*, initially the notes will be issued to IMF share holders (like me) via a rights issue 1 for 10 and via a placement. 

The company can elect to redeem the notes at face value after two years on paying an early redemption fee of 2% per annum for the remaining period of the notes, notes are convertible at quarterly intervals at $1.65 each.

The only catch i can find is that IMF can stop paying interest on these notes if there cash at bank drops below 40 million...the notes will be ASX listed so there's some chance of getting a few cheap if IMF look like they may stop paying interest or have a bad case outcome or 2 and also capital upside if IMF do exceptionally well over the next few years.

Notes should be trading on the ASX after 14th December.

http://www.asx.com.au/asxpdf/20101029/pdf/31tj22cb0czrjw.pdf


----------



## Tysonboss1

So_Cynical said:


> For anyone interested in yield.
> 
> IMF will be listing a new issue of convertible notes at $1.65 per note to raise around 40 million to fund growth, The terms of the notes will be four years, and *interest will be paid at a fixed rate of 10.25%*, initially the notes will be issued to IMF share holders (like me) via a rights issue 1 for 10 and via a placement.
> 
> The company can elect to redeem the notes at face value after two years on paying an early redemption fee of 2% per annum for the remaining period of the notes, notes are convertible at quarterly intervals at $1.65 each.
> 
> The only catch i can find is that IMF can stop paying interest on these notes if there cash at bank drops below 40 million...the notes will be ASX listed so there's some chance of getting a few cheap if IMF look like they may stop paying interest or have a bad case outcome or 2 and also capital upside if IMF do exceptionally well over the next few years.
> 
> Notes should be trading on the ASX after 14th December.
> 
> http://www.asx.com.au/asxpdf/20101029/pdf/31tj22cb0czrjw.pdf




is the interest cumulative if the interest is suspended


----------



## So_Cynical

Tysonboss1 said:


> is the interest cumulative if the interest is suspended




Good question

Page 53: 2.1.d. Interest on the convertible notes not paid when due shall compound.

I think i may have misunderstood the dividend stopper bit on page 13..as the interest on the note probably isn't actually a dividend. :dunno: im thinking the dividend stopper and the 40 million thing perhaps is only applicable to actual IMF shares and not the notes. :dunno: but then why have it in the prospectus at all?

Clearly im not a sophisticated investor. :homer:


----------



## nulla nulla

So_Cynical said:


> Agree...what your talking about is straight buy and hold for yield, and as you have pointed out its not a big money spinner...my strategy is buy low and establish free carry, sell to get the bulk of my capital back leaving the profit in, wait for the re-trace and buy again, establish free carry, sell to get the bulk of my capital back leaving the profit in, wait for the re-trace and buy again and establish free carry, sell to get the bulk of my capital back leaving the profit in, wait for the re-trace and buy again and establish free carry etc.
> 
> 
> Easy to see how its reasonably easy to go in and out of a property stock 3 or 4 times over 12 or 18 months and triple your dividend stream simply re-cycling the same 5 or 10 grand and leaving the profit in...ive been doing this for 18 months and its working pretty well for me.





When I first looked at this thread I took it to mean a passive investment in a share that paid a good dividend that represented a high yield on the investment. Something like a low entry on Telstra at present levels of $2.65 ish with a annual dividend (at present) of $0.28 representing  a yield of over 10% (fully franked makes it an even higher yield).

Then I read So_Cynicals post above and recognised that rolling over the trade profits into the same share achieved the same outcome (whether or not you held for dividends).

Since the global financial crisis bottomed we have taken this approach accross the board. Going in on the lows and out on the highs, then re-entering when/if it comes back down. If you limit your targets to those shares in the top 200 that have recurring highs and lows with good liquidity (daily turnover volumes) you can build on your portfolio fairly reliably.

Since July this year we have built our holding in some stocks up by over 20% simply by going in low and out higher and churning any gains on divs/trades back into the same stock. 20% gain in 4 months is nothing to sneeze at.


----------



## Tysonboss1

condog said:


> See thats where you and I differ so much....risk perception / risk assessment
> .... you seem to classify a stock as low risk if you think its not going to fall over any time soon....
> 
> Where as when i wiegh up whether its low or high risk...I look at
> Firstly its debt to equity....and personally TLS debt to equity is getting up amongst many companies that have already failed.....




I have been reading through this thread and tend to aggree with So_c more than you condog.

The Stocks that So_C as been describing,( eg. Safe companies with strong cashflow that due to unfair market setiment have had there share prices Bashed which has resulted in strong sustainable yields). do make fantastic investments that are very low risk.

You see as a share price of a solid company falls the stock is getting safer and safer because like a coke can the further a share price is crushed the more it resists further crushing. And on the other hand a company that has seen signifcant gains is likely to have a speculative frothyness to it's share price and it's risk is high.

So if you find a solid company that has seen share price falls to the point it's dividend is yield is over 10%, you are much more likely to see a share price recovery that brings it's yield back to 8% than further falls that make it's yield 20%.

Buying such a share will give you a steady high return and also staying power to wait for the large capital gain.


----------



## Tysonboss1

Tysonboss1 said:


> I have been reading through this thread and tend to aggree with So_c more than you condog.
> 
> The Stocks that So_C as been describing,( eg. Safe companies with strong cashflow that due to unfair market setiment have had there share prices Bashed which has resulted in strong sustainable yields). do make fantastic investments that are very low risk.
> 
> You see as a share price of a solid company falls the stock is getting safer and safer because like a coke can the further a share price is crushed the more it resists further crushing. And on the other hand a company that has seen signifcant gains is likely to have a speculative frothyness to it's share price and it's risk is high.
> 
> So if you find a solid company that has seen share price falls to the point it's dividend is yield is over 10%, you are much more likely to see a share price recovery that brings it's yield back to 8% than further falls that make it's yield 20%.
> 
> Buying such a share will give you a steady high return and also staying power to wait for the large capital gain.




some example that I personally profited from.

APA @ $2.70 - 11.7% yield , Share price has since recovered to $4.19 bringing a 55% capital gain on top of an 11.7% cashflow.

MCW@ $0.20 - 40% yeild, share price recovered to 60c bringing a 300% capital gain on top of the 40% cashflow.

AHE@ $0.55 - 29% yield, share price has recovered to $2.39 bringing more than 400% capital gain on top of the 29% cashflow yield.

and there are more examples, each of these companies were sound companies whose share prices saw large falls, I good see nothing but value and safty at the yields and prices, others fell into the trap of seeing falls as a sign of further falls and happily sold to me making me very rich.

The posts I made on these stocks where laughed at, at the time. But I guess I had the last laugh as I was banking profits that = many years of my wages.


----------



## Tysonboss1

Tysonboss1 said:


> some example that I personally profited from.
> 
> APA @ $2.70 - 11.7% yield , Share price has since recovered to $4.19 bringing a 55% capital gain on top of an 11.7% cashflow.
> 
> MCW@ $0.20 - 40% yeild, share price recovered to 60c bringing a 300% capital gain on top of the 40% cashflow.
> 
> AHE@ $0.55 - 29% yield, share price has recovered to $2.39 bringing more than 400% capital gain on top of the 29% cashflow yield.




To give an example that most people are familar with that is available now, I give TLS ( telstra ).

It currently has a yield of over 10%.

Now people (i'm looking at you julia), will jump in and say "if you bought for yield back in 2000 you would have lost 70% of your capital" and they are right. But I am not talking  about buying back then, When it was considered a growth stock by the way.

I am talking about it as it stands today. A company that is trading at >10% yield where the yield is covered by free cashflow, and management have stated they are comitted to maintain this yield, which alone should support it's share price at current yields.

Not to mention that telstra is showing signs of a turn around which when it catches on should see the price rise back to a level where the yield is about 8% which could see it's share price recover back to $3.36.

So if an investor bought in around current levels or on a dip he should see a yield of >10% which gives him a good return and staying power waiting for a 25% cap gain.

P.S I currently don't hold but have sold several puts @ $2.60 which will give me a tidy profit if the shares price stays above that level and if the shares are put to me it will make my entry level circa $2.50 giving me a 11.4% yield and an almost garanteed capgain on recovery of over 30%.


----------



## Julia

Tysonboss1 said:


> To give an example that most people are familar with that is available now, I give TLS ( telstra ).
> 
> It currently has a yield of over 10%.
> 
> Now people (i'm looking at you julia), will jump in and say "if you bought for yield back in 2000 you would have lost 70% of your capital" and they are right. But I am not talking  about buying back then, When it was considered a growth stock by the way.



How nice that you remembered what I'd said, Tyson.
Let's just remember that plenty of people did buy TLS back then, or alternatively they have ridden the rise all the way to the top, but failed to exit on the way down, when they could have taken their profits, gone to cash, and bought back in if they were so inclined when it is at its present level.

But imo it's still a risky stock, especially in view of the whole NBN mess.

My point has always been less about TLS or any other stock that has fallen massively in value, than it has been about the fact that there are other very good, well managed companies which have managed to grow their SP and still provide decent dividends.

Hell, I don't care, Tyson.  You've been around long enough to know what you're doing.
I've only ever made the points I have with the thought that new investors can so easily be sucked into high dividend stocks without quite appreciating that the high dividend equates a fallen SP, and therefore loss in their capital.

I'm constantly amazed at the number of people who simply don't understand this.

Just consider the recent AGM where the reporters referred to "long suffering TLS shareholders".  They simply don't seem to realise there is a choice, other than buy, hold and pray.


----------



## asxiq

FYI - TEN & BTT have about 5.43 % and 4.69 % div yield which are going ex-dividend this month


----------



## Ves

nulla nulla said:


> When I first looked at this thread I took it to mean a passive investment in a share that paid a good dividend that represented a high yield on the investment. Something like a low entry on Telstra at present levels of $2.65 ish with a annual dividend (at present) of $0.28 representing  a yield of over 10% (fully franked makes it an even higher yield).
> 
> Then I read So_Cynicals post above and recognised that rolling over the trade profits into the same share achieved the same outcome (whether or not you held for dividends).
> 
> Since the global financial crisis bottomed we have taken this approach accross the board. Going in on the lows and out on the highs, then re-entering when/if it comes back down. If you limit your targets to those shares in the top 200 that have recurring highs and lows with good liquidity (daily turnover volumes) you can build on your portfolio fairly reliably.
> 
> Since July this year we have built our holding in some stocks up by over 20% simply by going in low and out higher and churning any gains on divs/trades back into the same stock. 20% gain in 4 months is nothing to sneeze at.



I realise that this thread is older, but a lot has happened in the last year.

How did the "flash crash" of the last few months affect your thoughts on this strategy? Did it, in fact, make it more profitable?

Do you only churn profits in shares that you would be willing to hold onto in the long term? ie buy-in at a reasonable price and ride out any market fluctuations against you if need be and only sell when it starts showing a profit again. A good example of what I mean by holding through the lower periods would have been buying Westpac around $21 in June or July anticipating a bounce. However, as you know it went under $18 before it got back to the mid $23 range. Would you have held without a stop?

Brokerage is obviously significant on smaller parcels, therefore I assume that you are putting at least $5k into each buy. Do you have a minimum profit target of 5-10%?

Do you plan to continue this strategy or is it a bridge to growing the base for a long-term portfolio?


----------



## So_Cynical

Ves said:


> I realise that this thread is older, but a lot has happened in the last year.
> 
> How did the "flash crash" of the last few months affect your thoughts on this strategy? Did it, in fact, make it more profitable?
> 
> Do you only churn profits in shares that you would be willing to hold onto in the long term? ie buy-in at a reasonable price and ride out any market fluctuations against you if need be and only sell when it starts showing a profit again. *A good example of what I mean by holding through the lower periods would have been buying Westpac around $21 in June or July anticipating a bounce. However, as you know it went under $18 before it got back to the mid $23 range.* Would you have held without a stop?
> 
> Brokerage is obviously significant on smaller parcels, therefore I assume that you are putting at least $5k into each buy. Do you have a minimum profit target of 5-10%?
> 
> Do you plan to continue this strategy or is it a bridge to growing the base for a long-term portfolio?




I got caught buying into the early fall, CPU for example was a stock that unfortunately i didn't get to buy at the bottom but i did buy 2 parcels on the way to the bottom, $9 something and 8.36...so there i was sitting on a rather large paper loss and now with yesterdays run up in CPU my 8.40 parcel is back to break even and my whole CPU position is only 11% or so in the red.

CPU is a good stock, ill hold till my $9> parcel is in profit (5%) and then ill sell the whole parcel leaving my cheaper 8.40 shares as a hold...i did manage to get some stocks at the bottom (new positions) IIN and SGH and small parcels of CLV, APN and ABC,  still overall i know i missed some great buys and that annoys me.

But im just a low cost averager, doing the best i can in an imperfect world with my limited funds...big picture all i need to stay on target is to sell just 4 positions for a profit of at-least 15% over the next 8 months...this will achieve overall dividend growth of 20%+ YOY and portfolio growth of 12%+ YOY.

I don't use stops, never have and still don't see the need for them....time is my greatest asset, and that's pretty much to opposite of the average stop user who sees time as the enemy.


----------



## Julia

So_Cynical said:


> i did manage to get some stocks at the bottom (new positions) IIN and SGH and small parcels of CLV, APN and ABC,



How do you you bought at the bottom?  If the gathering storm in Europe is any indication (and obviously it has to be) we will be in for further very significant falls.


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## So_Cynical

Julia said:


> How do you you bought at the bottom?  If the gathering storm in Europe is any indication (and obviously it has to be) we will be in for further very significant falls.




Bottom so far since we only have 3 or 4 months of hindsight available so far...the Euro storm is pretty much over as far as i can see, everything is a known unknown.

One of my stocks released a quarterly report today, it contains an interesting over view of the Euro and Greek situation... apparently Greece has defaulted 5 times in its long history.

Here's a snippet that puts things in perspective.

http://www.asx.com.au/asxpdf/20111108/pdf/422cy3cz844y3v.pdf
~


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## Julia

So_Cynical said:


> the Euro storm is pretty much over as far as i can see,



Good luck if you actually believe this.


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## snsdmonkey

So_Cynical said:


> Bottom so far since we only have 3 or 4 months of hindsight available so far...the Euro storm is pretty much over as far as i can see, everything is a known unknown.




No concern for Italy?


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## McCoy Pauley

snsdmonkey said:


> No concern for Italy?




Bunga bunga parties for all!

Silvio going will buy Italy some breathing space, but the bond markets reckon Italy is cactus and they have been a leading indicator of disaster on a sovereign level for two years, so I'm concerned.


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## odds-on

So_Cynical said:


> Bottom so far since we only have 3 or 4 months of hindsight available so far...the Euro storm is pretty much over as far as i can see, everything is a known unknown.
> 
> One of my stocks released a quarterly report today, it contains an interesting over view of the Euro and Greek situation... apparently Greece has defaulted 5 times in its long history.
> 
> Here's a snippet that puts things in perspective.
> 
> http://www.asx.com.au/asxpdf/20111108/pdf/422cy3cz844y3v.pdf
> ~




So_Cynical,

From your posts on this thread I have to say I like your investment style. After reading many investment books and doing an unhealthy amount of online research, I have over the last couple of years worked out an investment style that suits me. I have read books by Benjamin Graham, John Train, Mohnish Pabrai, Roger Montgomery and so on but the book that was the best was called Free Capital by Guy Thomas (see link below). It was very interesting to see what had worked for 12 UK investors over the years. I would be interested to know if there are  investors with similar success here on Aussiestockforums. 

http://www.amazon.co.uk/Free-Capital-investors-millions-ebook/dp/B004TLNNL4

Anyway, back to the high dividend yield shares, I use this as part of my strategy. If I can pick up shares in a business (reasonable ROE, low debt, significant management ownership, long operating history, revenue growth etc etc) that in my view will still be in business in 3 years time for a dividend yield a few percent  greater than a 5 year term deposit at the bank, then the odds are going to be in my favour of a nice return in the next few years. It is a no brainer punt. I do not bother looking for extraordinary businesses with competitive advantages anymore as my initials are not WB, CM or RM ;-). 

Interesting quotes about dividends from the book:-

“proprietorial” companies – those controlled by a family or families, who emphasise preserving the business rather than taking major risks, and where the presence of non-working family members who live on the income from their shareholding ensures a heavy emphasis on maintaining and increasing dividends.  
Highlighted by 10 Kindle users

This is the sole reason behind my “Skin in the game” post. I need to increase my watchlist of “proprietorial” companies. COU was definitely one.

Best of luck.

Cheers

Oddson


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## So_Cynical

Julia said:


> Good luck if you actually believe this.




You doubt i believe this?, think im just some nut that's having a 4 year lucky streak. 



snsdmonkey said:


> No concern for Italy?




Ok so Italy was a basket case 15 years ago, a basket case a decade ago and a basket case 5 years ago, its now a basket case will be a basket case in 5 years time and 10 and 15 years time from now.

So when should my concern for the Italian situation stop my investment activities.?


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## So_Cynical

Now back to the subject at hand...High dividend yield stocks.

I own a few CTN shares and know they are currently taking over another stock (CCQ) that gets a management fee from CTN and has a small portfolio of stocks.

Now CTN paid out 9.36 CPS gross over the last 12 months in FF dividends and CCQ paid out 7.15 CPS gross...so combined a return of 16.5 CPS.

CTN is currently trading at around the 0.95 CPS level so if the combined divi is maintained going forward a gross return of about 17.3% would be possible.


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## Julia

> the Euro storm is pretty much over as far as i can see,






Julia said:


> Good luck if you actually believe this.






So_Cynical said:


> You doubt i believe this?, think im just some nut that's having a 4 year lucky streak.



I have no idea whether you're lucky or not.  To be honest, can't find it in me to care.
My comment above was clearly in response to your suggesting "the Euro storm is pretty much over", a remark of quite unbelievable naivete.


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## richardgary

I would like to say that high dividend stocks can help slow down the eroding effects of inflation. Lower returns are expected from the stock market as the global economy slowly recovers at a modest pace. As a result, more investors are taking a medium to long term view towards their investments and dividend stocks is one avenue through which they can grow their wealth slowly but steadily.


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## seanious

richardgary said:


> I would like to say that high dividend stocks can help slow down the eroding effects of inflation. Lower returns are expected from the stock market as the global economy slowly recovers at a modest pace. As a result, more investors are taking a medium to long term view towards their investments and dividend stocks is one avenue through which they can grow their wealth slowly but steadily.




Thanks for bumping this been a great read. 

Also HDF closed at $2.54 today while JBH closed at $8.84. I like your investment style so cynical and hope to learn more from people like you on this forum


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## So_Cynical

seanious said:


> Thanks for bumping this been a great read.
> 
> Also HDF closed at $2.54 today while JBH closed at $8.84. I like your investment style so cynical and hope to learn more from people like you on this forum




Thanks Sean, im glad you got something out of this thread...always interesting to look back.

---------------------------------

I noticed this little exchange between Julia and i back in late 2011 when the market was just starting to pull out of that awful patch.



So_Cynical said:


> (8th Nov 2011) *i did manage to get some stocks at the bottom* (new positions) IIN and SGH and small parcels of CLV, APN and ABC,  still overall i know i missed some great buys and that annoys me.






Julia said:


> *How do you you bought at the bottom? * If the gathering storm in Europe is any indication (and obviously it has to be) we will be in for *further very significant falls.*




While there were significant falls to come, most of the stocks i brought in mid 2011 didn't fall...other stocks did like miners and mining services stocks, anyway i though id bang up a chart of those 5 stocks of mine i quoted and see how things turned out for me.

I still Hold shares in all 5 stocks but have taken profits from stocks marked *() with open (trade/parcel) profit in Blue and losses in red.


IIN * (14.0%) +45.6%
SGH * (9.6%)  +25.5%
CLV * (21.8%) +31%
APN               -31%
ABC * (0.6%) +43.5%

So did i buy bottom? 4 out of 5 anit bad.  and the dividends keep rolling in.

YTD (not 100% accurate to entry) comparison chart below.
~


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## shenemet

So_Cynical said:


> IIN * (14.0%) +45.6%
> SGH * (9.6%)  +25.5%
> CLV * (21.8%) +31%
> APN               -31%
> ABC * (0.6%) +43.5%
> ~




That's pretty impressive.  I had actually thought of doing the same thing but I'm just a beginner and didn't really have that faith in myself.

I was wondering if you have a methodology or if you can recommend a good place to start for someone interested in learning about investing?  I'm just starting out and am studying technical analysis but I'd also like to learn fundamental analysis for the longer term.  It's very easy to get overwhelmed when researching these things on google or amazon and I think it's also important to be careful who you learn from.

Thanks in any case this thread has been a nice read.

PS.  I tried to send you a msg but your inbox is full, just curious if that's on purpose, perhaps to protect yourself from questions like these? =)


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## ROE

snsdmonkey said:


> No concern for Italy?




if you dig enough you already know the outcome for euro
basicly Italy will be save at the cost of other countries

German and France has a lot to lose if Italy go so they will Do deal with Italy
everyone else has no bargaining power, Italy hold the trump card if you know enough about Italian industries
and their finance....


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## So_Cynical

shenemet said:


> I was wondering if you have a methodology or if you can recommend a good place to start for someone interested in learning about investing?




I call the methodology i use, Low Cost Entry And Averaging (LCEAA) Low cost entry because im looking to enter at a low cost, a low point in the life of the Share Price...and Low cost Averaging is a variant of Zero cost averaging.

Zero cost averaging explained here http://www.thepatternsite.com/ZeroCostAverage.html



shenemet said:


> I'm just starting out and am studying technical analysis but I'd also like to learn fundamental analysis for the longer term.  It's very easy to get overwhelmed when researching these things.




TA and FA for me are 2 very different beasts, some ASFer's claim to be comfortable doing both, good luck to em...i cant, i would think everyone would tend to be better and more comfortable with one or the other...find out what suits you and go forward with that.

Research? TA is a discipline that can be learned so requires no research just education...strict FA requires lots of research as does value investing...i find TA somewhat interesting but don't use it, FA is also interesting but has its limitations, VA is just rear view mirror analysis.

I like to take a more holistic approach, i buy into stocks/businesses that i like and make sense to me, buy them at a low point in there price cycle...and then manage the position often by doing nothing for very long lengths of time. 



shenemet said:


> PS.  I tried to send you a msg but your inbox is full, just curious if that's on purpose, perhaps to protect yourself from questions like these? =)




Didn't know it was full..thanks for letting me know.


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## Muschu

A friend mentioned RHG to me - A stock I do not hold and have never bothered considering.  Commsec states it offers a 28% yield.  If this is so then why so?
Any thoughts?  I don't the company or its history, debt level or prospects.
Any thoughts on this from anyone?
Regards
Rick


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## Ves

Muschu said:


> A friend mentioned RHG to me - A stock I do not hold and have never bothered considering.  Commsec states it offers a 28% yield.  If this is so then why so?
> Any thoughts?  I don't the company or its history, debt level or prospects.
> Any thoughts on this from anyone?
> Regards
> Rick



I believe they liquidated some really big loan books and returned a lot of capital to shareholders all at once as a fully-franked dividend.  In fact they may have done this twice in two years, but I believe this is done and dusted. Yield obviously not maintainable for that reason.   Lots of clever money could be made at the time, especially for SMSF holders, as I don't think the market completely understood the deal.


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## Muschu

Ves said:


> I believe they liquidated some really big loan books and returned a lot of capital to shareholders all at once as a fully-franked dividend.  In fact they may have done this twice in two years, but I believe this is done and dusted. Yield obviously not maintainable for that reason.   Lots of clever money could be made at the time, especially for SMSF holders, as I don't think the market completely understood the deal.




Thx Ves.. The yield is pretty much ridiculous so there must be other issues.  I am in a SMSF but can imagine the current SP getting smashed once it goes XD. Seems very risky to me.

Appreciate your comments.


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## Ves

Muschu said:


> Thx Ves.. The yield is pretty much ridiculous so there must be other issues.  I am in a SMSF but can imagine the current SP getting smashed once it goes XD. Seems very risky to me.
> 
> Appreciate your comments.



Have a quick flick through the 2012 Annual Report, they flag big declines in revenue / profit and obviously dividends will be affected.  It's the old Rams Home Loans mortgage book from memory.


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## Muschu

I think that's right but haven't they already announced a FF dividend of 10c to be paid next month?  Something has to give surely - and what else other than the SP?


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## Ves

Muschu said:


> I think that's right but haven't they already announced a FF dividend of 10c to be paid next month?  Something has to give surely - and what else other than the SP?




Yes - theoretically the share price will reduce by 10c per share plus franking credits.


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## McLovin

Ves said:


> Have a quick flick through the 2012 Annual Report, they flag big declines in revenue / profit and obviously dividends will be affected.  It's the old Rams Home Loans mortgage book from memory.




Yeah, worst timed float of the century according to the WSJ. They basically floated the business in 2007 and then within a few months had been shut out of lending markets because of the GFC so had no continuing business. RAMS was sold to Westpac so RHG is just the remaining loan book which is in run-off. They tried to sell the book but failed. I made a nice little profit on this.


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## ROE

Ves said:


> Yes - theoretically the share price will reduce by 10c per share plus franking credits.




That the theory in reality if you know enough about certain stock you can play dividend 
stripping game and profit handsomely.

RCG and RFG both went ex-div this week both stock price barely change in price.
RFG actually went up during the ex-div day but close 0.69% down...

I predict CAB will be going through the same thing depend when you buy the stock under 5.50 I reckon
it barely change if it goes ex-div


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## Ves

ROE said:


> RCG and RFG both went ex-div this week both stock price barely change in price.
> RFG actually went up during the ex-div day but close 0.69% down...



I hold RFG too, I noticed that.  It all comes back to supply and demand, especially in stocks with lower trading volumes like RFG. Share price has done really well since they announced the Crust acquisition and 2012 results.  

Definitely a good dividend yield too, so people interested in the subject of this thread may find it an interesting stock to research.


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## ROE

Ves said:


> I hold RFG too, I noticed that.  It all comes back to supply and demand, especially in stocks with lower trading volumes like RFG. Share price has done really well since they announced the Crust acquisition and 2012 results.
> 
> Definitely a good dividend yield too, so people interested in the subject of this thread may find it an interesting stock to research.




Another stock went ex div today 5.5c and it stock jump 2.5% CDA.
I have CDA
CDA could be classified as a high yield stock depend when you bought it, under the radar for a while
it should get more attention in the next 2 years when it show you the money


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## Ves

ROE said:


> Another stock went ex div today 5.5c and it stock jump 2.5% CDA.
> I have CDA
> CDA could be classified as a high yield stock depend when you bought it, under the radar for a while
> it should get more attention in the next 2 years when it show you the money



I actually looked at CDA last year when it was at a similar price.  I don't know much about metal detectors and radio communications and the people who buy them, so I didn't go too much further.  But I remember the financials being pretty clean.


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## Huskar

Muschu said:


> Thx Ves.. The yield is pretty much ridiculous so there must be other issues.  I am in a SMSF but can imagine the current SP getting smashed once it goes XD. Seems very risky to me.
> 
> Appreciate your comments.




RHG was one of the worst IPOs of the century. Floated at $2.50 or so then promptly went to 5c. It was a mortgage broker and servicer with a loan book of generally low to middle-income residential housing - all dirty words in the GFC fallout. 

The reason RHG traded so low was that there was a fear about the quality of its loan portfolio. Westpac obviously saw some value in the business because it bought RHG's business in 2008 however the mortgage book was left in the listed RHG and from then has been in "run-off". So buying RHG has meant betting that the loans it originated  would be paid out. The difficulty in trying to figure this out has not only been RHG's generally low-doc mortgage book but the obstinance of management who have been famously anti-shareholder. 

I was lucky enough to come across RHG when it was ~40c in 2009 and figured that paying ~$100m for a $2bn mortgage book was a pretty good deal (easy to say in hindsight of course). John Kinghorn, who had spectacularly sold out when the company listed, had done much better and rebought many of his shares at 10c! He then lodged a takeover of the company at ~80c. Some fundies who had positions got together and blocked the takeover pointing to the value still left in the company, whereupon Kinghorn promptly said the company would pay out all remaining cash flows as dividends, starting with 80c (ie pretty much what he offered for the whole company) and he sold out at $1.20. Talk about taking the punters for a ride! Sell out, wait for bargain prices, then sell out again..

Everyone thought the story ended there but after that initial big dividend after which the SP dropped to ~40c, RHG has continued paying out dividends at differing but very high rates (10c, 15c) every half while the SP has remained steady. Commsec's figure is probably understating the yield. Of course the question is when will the music stop because there is by definition no growth in this company - it is in fact very much like a bond because all you have is a defined number of future cash flows (mortgage repayments). But unlike a bond there is no payment of principal at the end - there is only cash flows. In other words it is not much good getting a 20% yield if you lose all your capital at the end of the year..

ps There may well be value left in RHG but I have not found enough information - or am too lazy - to try and work that out. I no longer hold but was there for quite a ride!


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## skc

Huskar said:


> RHG was one of the worst IPOs of the century. Floated at $2.50 or so then promptly went to 5c. It was a mortgage broker and servicer with a loan book of generally low to middle-income residential housing - all dirty words in the GFC fallout.
> 
> The reason RHG traded so low was that there was a fear about the quality of its loan portfolio. Westpac obviously saw some value in the business because it bought RHG's business in 2008 however the mortgage book was left in the listed RHG and from then has been in "run-off". So buying RHG has meant betting that the loans it originated  would be paid out. The difficulty in trying to figure this out has not only been RHG's generally low-doc mortgage book but the obstinance of management who have been famously anti-shareholder.




Great summary. I looked at RHG in great detail and worked out a value for the run-off scenario which was much higher than the share price at the time. However, the biggest problem was not only the quality of the loan, but also whether the two loan warehousing facilities they had would be extended. They were due in 6 months and if those facilities didn't get extended, RHG would lose the loan book to the facility provider - and shareholders would get none of the cashflows.

It was a risk that I just couldn't take, or even if I did it would have been a small position that assumed 100% loss.


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## tinhat

ROE said:


> Another stock went ex div today 5.5c and it stock jump 2.5% CDA.
> I have CDA
> CDA could be classified as a high yield stock depend when you bought it, under the radar for a while
> it should get more attention in the next 2 years when it show you the money




CDA was on my watch list a while ago - perhaps in 2010 - and looking back over its fundamentals I can see why - it had a stellar EPS growth rate there coming out of the GFC. Haven't looked at if for a long time and I see that its going sideways and I also see that consensus forecasts are for no growth in earnings over the next couple of years. Not knowing anything about this company - what is it up to that is going to be showing money in a couple of years?

At first glance it looks like a bit of a yield trap - and I've got enough of those in the SMSF at the moment - a lot of good divi payers with no earnings growth. Sign of the times?


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## systematic

I don't usually look at dividends at all, but had just been doing some work on them this morning. Came across this thread, so I thought I'd post for interest.  

I looked at:
Forward dividend yield estimate of 5%+ (that was arbitrary) and not less than previous yield.
Growing sales and earnings per share.
Reasonable debt levels and a good score on general financial criteria.
I also looked for reasonable value - no sense paying too much.  Momentum column  was simply added for interest.

Might be some ideas for someone's research (invest at your own risk!).  Bold are simply those in the ASX300.


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## scarlettsmith694

In a country like Australia, where interest rates are very low, high yield dividend stocks are one of the most popular investment opportunities available to the investors. Investments to look at some high yield dividend stocks asx have the potential to provide regular cash streams to investors.


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## Boggo

Worthwhile ensuring that you understand how dividend yield is calculated and also whether you would rather have a 3% yield from a $50 stock or a 6% yield from a $10 stock.

I had a (significant !) discussion with a financial planner at an event about 9 or 10 years ago when TLS was falling off it's high and he was using it as an example of high yield. He was right, the yield was high but the price was collapsing.


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## sptrawler

scarlettsmith694 said:


> In a country like Australia, where interest rates are very low, high yield dividend stocks are one of the most popular investment opportunities available to the investors. Investments to look at some high yield dividend stocks asx have the potential to provide regular cash streams to investors.



AS Boggo said, picking high dividend stocks ATM isn't as easy as it seems, which companies are going to make money in a recession? The Banks have no margin on interest rates, discretionary spending is already shot, competition is squeezing supermarkets. Interesting times.


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## So_Cynical

HBRD - BetaShares Active Australian Hybrids Fund 

Its an ETF made up of hybrids, pays a monthly distribution about 3.9% PA, has a certain type of idiot proofing about it as long as all you want is yield and low risk.


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## Smurf1976

sptrawler said:


> AS Boggo said, picking high dividend stocks ATM isn't as easy as it seems




Agreed. In my case I'm not necessarily after high dividends but I do have a preference for stocks which pay at something. It's imperfect as a filter but if they're paying a dividend then that's _usually_ and indication that they do at least have a viable business.


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