First dividends today

[kloid]

Well today I got my first ever share dividends (from Babcock and Brown) What a great feeling this is, although it will barely pay for a 6 pack.

Anyone else remember the feeling of their first dividend? Was it as special for you as I think it is?

Kloid

 

[VViCKiD]

did u get it in ur bank account ?

 

[Bill M]

Hello kloid, finally something I can talk about. I can't remember my first dividend but by crikey I live off mine now and tomorrow I get a big drop from TAH. I love my dividends, that's what I invest in stockmarket for, a great income. Tax paid dividends are hard to beat, cheers mate and may you have many more sweet dividends to come.

 

[Julia]

Kloid, I can't remember the first one but, having cashed out about 80% of my p/f until confidence returns, I have to say that I'm missing those dividends.
Will miss the franking credits, too, when tax time comes again.
Enjoy the income, but don't lose sight of the need for capital gains as well.

 

[kloid]

did u get it in ur bank account ?

Yes, it's in my account.

 

[kloid]

Kloid, I can't remember the first one but, having cashed out about 80% of my p/f until confidence returns, I have to say that I'm missing those dividends.
Will miss the franking credits, too, when tax time comes again.
Enjoy the income, but don't lose sight of the need for capital gains as well.

Interesting. I've read a few posts where people have "cashed out" all or most of their portfolio. Do you think this strategy works? I'm still a relative newbie but every article and investment book I've read (particularly those by Benjamin Graham, Peter Lynch and Philip Fisher and one written about Warren Buffett) all recommend that you DON'T sell just because the market's down. I can think of a few reasons why I wouldn't sell - no dividends like you mentioned, brokerage costs and trying to time it to "get back in" without losing money seems too hard.

Interested in your (or anybody else's) thoughts on the subject.

Cheers
Kloid

 

[imajica]

my first dividend was with ZFX = 70c divvy

had about 800 shares at the time - $560 - fully franked - nice!

 

[Julia]

Interesting. I've read a few posts where people have "cashed out" all or most of their portfolio. Do you think this strategy works? I'm still a relative newbie but every article and investment book I've read (particularly those by Benjamin Graham, Peter Lynch and Philip Fisher and one written about Warren Buffett) all recommend that you DON'T sell just because the market's down. I can think of a few reasons why I wouldn't sell - no dividends like you mentioned, brokerage costs and trying to time it to "get back in" without losing money seems too hard.

Interested in your (or anybody else's) thoughts on the subject.

Cheers
Kloid

It's a broad subject, Kloid, and each individual will have their own reasons for doing what they do. e.g. someone close to retirement and intending to derive retirement income from their assets will need to preserve their capital.
Better to be getting over 8% on cash in this situation than watching said capital diminish every day, especially if most of it is in companies without a high yield.
Then there's the 'anxiety factor'. Some long term investors will be uncomfortable with the current global financial situation. We simply don't know how much more bad news is out there. Six months ago, would you have expected ABC Learning, Allco Finance, MFS et al to be the debacle they are today?

Depends also on the debt levels in various companies. Are they going to be able to refinance at a reasonable rate? How is this going to affect their profitability?

Elsewhere I will post a chart (source 'Money Morning' ) of the debt levels of some of our large companies. Have a look at this.

So, in short, I'd suggest it comes down to time frame and what you consider to be the intrinsic health of the companies.

 

[jersey10]

Hello kloid, finally something I can talk about. I can't remember my first dividend but by crikey I live off mine now and tomorrow I get a big drop from TAH. I love my dividends, that's what I invest in stockmarket for, a great income. Tax paid dividends are hard to beat, cheers mate and may you have many more sweet dividends to come.

Hi Bill,

If you were going to buy $50 000 worth of shares now for a long term investment (i.e. not planning on selling ever) to provide an income stream from dividends what do you think would be the best shares to buy and why?

I am not asking for investment advice (am asking for educational purposes) and have no intention of acting on anything anyone on here says before consulting my professionally qualified financial planner / accountant.

cheers,

Jersey10

 

[doogie_goes_off]

My first dividend came from AHS, I got out not long after on forecast concerns. I got a dividend from MCR the other day. I have many specs, so I typically rely on SP appreciation but yield is nice and safe!

 

[Bill M]

Hi Bill,

If you were going to buy $50 000 worth of shares now for a long term investment (i.e. not planning on selling ever) to provide an income stream from dividends what do you think would be the best shares to buy and why?

I am not asking for investment advice (am asking for educational purposes) and have no intention of acting on anything anyone on here says before consulting my professionally qualified financial planner / accountant.

cheers,

Jersey10

That very same question was asked not long ago in another thread so I will repeat it here.

For me my top 5 are:

CBA and NAB: I have held banks for many years, they always pay increasing dividends and regardless of their present slump on the market they will always stay in my portfolio. As opposed to many others on the forum I was buying the banks again in this current slump as they are always a good long term investments.

TAH: No matter how hard times get Australians always like to drink, gamble and eat out. Every casino I ever go to is always busy, restaurants full and many gamblers on the floor, I doubt they will never go broke. TAH has always paid good dividends, even with horse flu last year the dividends kept on coming.

WES: As long as the world needs coal, locals go to Bunnings and we all need groceries WES will always be around. A well managed company and again very good fully franked dividends.

WDC: A top well managed Property Trust. Frank Lowey is the 2nd richest person in Australia, came to Australia with nothing and now has set up a multi billion $$ property Portfolio. Every Westfield store I go into is choc a block, there is a queue to lease a bit of area in those stores. With his assets around the globe and hardly any available leasing left this company is doing very well. Dividends are unfranked but this is one company I will never sell.

I go overseas sometimes for 6 Months at a time, with the above stocks I hardly ever need to look at them. If I do and the share prices are ridiculously low then I buy more providing everything is in order. Since owning them not once has any of the above companies ever defaulted on a dividend payment, hope that helps.

 

[korrupt_1]

Dividends are basically profits generated by companies. The more profits the company makes, the more you'll get in dividend payouts.

Look for companies with good "dividend yield" percentages...

From Comsec website:

Dividend Yield

The average of the actual dividend over the last 12 months, and the consensus projected dividend for the next 12 months, all divided by the current price. The dividend yield calculation excludes special dividends

I find that banks are the best at generating pure cash profits over the long term.

 

[Julia]

Dividends are basically profits generated by companies. The more profits the company makes, the more you'll get in dividend payouts.

This is a bit simplistic. Making a good profit does not necessarily imply a high dividend. Many companies prefer to plough profit back into growing the company. Would you rather have a company with dividends and little growth, or lower dividends and considerable appreciation of your investment?

 

[So_Cynical]

My first divi was STO Santos...about 3 years ago, $280 i think FF, id only
held the shares about 6 weeks and sold about 10 weeks after the dividend.

First ever share holding too.

 

[brettc4]

My first dividend was from Telstra in the first installment. My first exposure to the market. Did me well, I actually sold at close to $8.00 so I could pay off a cat loan to help buy a house.

I love my dividends know, and AMP has been one of my better ones over the last couple of years with a number of special dividends paid onto of the regular dividends.

Brett

 

[Bill M]

Would you rather have a company with dividends and little growth, or lower dividends and considerable appreciation of your investment?

This is a good point Julia and you are correct. In my case I prefer the dividends with little growth and my 5 choices are just like that. On the other hand I remember looking at WPL some years ago when they were around $13. I didn't buy it because the dividend was so low around 2% or something. Today as you know WPL is around $56. That did a quite bit better than my choices. There is a lot of merit to that argument and now that I have a reasonable income from my dividends I should be looking at more growth orientated stocks.

I am faced with the same situation as I was years ago, would you buy WPL ($56) or BHP ($42) at their high prices today? I myself wouldn't but I could be very wrong.

 

[Julia]

This is a good point Julia and you are correct. In my case I prefer the dividends with little growth and my 5 choices are just like that. On the other hand I remember looking at WPL some years ago when they were around $13. I didn't buy it because the dividend was so low around 2% or something. Today as you know WPL is around $56. That did a quite bit better than my choices. There is a lot of merit to that argument and now that I have a reasonable income from my dividends I should be looking at more growth orientated stocks.

I am faced with the same situation as I was years ago, would you buy WPL ($56) or BHP ($42) at their high prices today? I myself wouldn't but I could be very wrong.

Bill, I think perhaps it's a 'security' thing, particularly amongst those who need to pull an income from their p/f to live on. There's something reassuring about those nice dividends that come in twice a year. But so easy to ignore a falling SP. I've done it. Watched the SP steadily falling, or at least trading sideways, and saying, "ah, but it has such a good yield". In the end, you have lost far more money in capital than you will have made in dividends and franking.

I rarely look for dividends now. If a company looks like a growth prospect and it has a healthy dividend attached, then that's very nice. But something like WPL or BHP as you have mentioned is clearly the better investment.
And would I buy either/both at present? Yes, absolutely.

 

[dalek]

Dividends to me are a very nice bonus (approx 5.5% on my SMSF portfolio last year) but my financial objective, after capital preservation is SP growth.

I suggest that you would need a pretty sizeable portfolio (or an equally modest lifestyle) to achieve sufficient income from dividend alone and with that size holding you would need to at least start to consider a no/low risk fixed deposit outside a volatile share market.
Of course this depends on personal attitudes to money
My own is just to ensure personal expiry arrives before financial expiry.

 

[Julia]

Dividends to me are a very nice bonus (approx 5.5% on my SMSF portfolio last year) but my financial objective, after capital preservation is SP growth.

I suggest that you would need a pretty sizeable portfolio (or an equally modest lifestyle) to achieve sufficient income from dividend alone and with that size holding you would need to at least start to consider a no/low risk fixed deposit outside a volatile share market.
Of course this depends on personal attitudes to money
My own is just to ensure personal expiry arrives before financial expiry.

Agreed. I would always have at least two years' living expenses in cash, regardless of what the market was doing.

 

[JellySausage]

I don't understand dividends yet.

The yearly payout seems to hover around 5% of your investment.

Seems strange to go for a 5% dividend over an 8% term dep.

So the advantages of a dividend producing share are:

- Mostly already taxed
- Possible share growth

Am I missing anything? And do these two advantages make it worthwhile really?