Dividends, growth or both?

[Brengun]

Hi all,
I haven't even bought my first share yet but I am doing lots of research.
I am interested in your views. Do you go for mostly a dividend income and a modest growth, or ignore modest dividends and go for a spectacular growth?
I am currently looking for quite a good steady dividend and modest growth. Is this acceptable, or am I not shooting high enough?

 

[marklar]

I've picked a mix, some LPTs, funds and the like for (hopefully) a sensible dividend and some stocks for short-medium term growth.

Like all things, I value diversity!

m.

 

[theasxgorilla]

Hi all,
I haven't even bought my first share yet but I am doing lots of research.
I am interested in your views. Do you go for mostly a dividend income and a modest growth, or ignore modest dividends and go for a spectacular growth?
I am currently looking for quite a good steady dividend and modest growth. Is this acceptable, or am I not shooting high enough?

Personally, I'll take spectacular growth over dividends any day. The current average dividend yield for the All Ordinaries is 3.8%. It would take just under 19 years to double your money with this rate of return!

 

[Smurf1976]

Find some under valued, good dividend paying stocks and you ought to end up with both income and growth in due course.

The hard bit is finding such stocks since you do need to work out why they are cheap. Is it a genuine opportunity that others have missed? Or does the market know something about that company that you don't and it's cheap for a good reason?

If you're going to invest for the long term then it helps if you know something about the underlying fundamentals of various industries. For example, if you know about the fundamentals of the oil market then you'll be able to decide whether or not oil stocks are likely to be a good longer term investment or not. If you expect the oil price to hit $500 a barrel then you would logically be a lot more interested in oil stocks than if you expected the price to crash to $10 a barrel.

Same with any other industry although commodity prices tend to shift a lot more dramatically than, say, the retail or media industries.

Obviously this doesn't apply if you're going to trade in and out of positions based on technical analysis or some other system which doesn't involve holding for the long term.

 

[Julia]

Good post, Smurf.

I think choice of stocks is also related to one's aims and stage in life.
I no longer have the tolerance for very volatile and risky stocks, so have happily swapped the idea of greater gains for less anxiety!

I'd be interested to know which stocks members have in their longer term portfolios. Mine are as follows at present:

ABS ABC Learning
AFG Allco Finance Group
ALZ Australand Property
ANZ
BBI Babcock and Brown Infrastructure
BHP
CBA
CPB Campbell Bros
FKP FKP Property
GCL Gloucester Coal
MBL Maquarie Bank
MIG Maquarie Infrastructure
MND Monadelphous Group
WBB Wide Bay Australia
WOW Woolworths
ZFX Zinifex


Julia

 

[Deadcat]

I personally go for a bit of balance. Good dividend blue chip stocks for hold and riskier stocks for trade.

 

[michael_selway]

Good post, Smurf.

I think choice of stocks is also related to one's aims and stage in life.
I no longer have the tolerance for very volatile and risky stocks, so have happily swapped the idea of greater gains for less anxiety!

I'd be interested to know which stocks members have in their longer term portfolios. Mine are as follows at present:

ABS ABC Learning
AFG Allco Finance Group
ALZ Australand Property
ANZ
BBI Babcock and Brown Infrastructure
BHP
CBA
CPB Campbell Bros
FKP FKP Property
GCL Gloucester Coal
MBL Maquarie Bank
MIG Maquarie Infrastructure
MND Monadelphous Group
WBB Wide Bay Australia
WOW Woolworths
ZFX Zinifex


Julia

ABS, AFG, MND, ZFX

I liek those ones, potential growth and dividends very likely

thx

MS

 

[marklar]

I'd be interested to know which stocks members have in their longer term portfolios

MCW - Macquarie CountryWide Trust
DRT - DB RREEF Trust
GOLD
BHP
IAG
INL - Intec
AGF - AMP Capital China Growth Fund

m.

 

[Ken]

long term
BHP - GROWTH
T3 - INCOME
RIO - GROWTH
RRT - INCOME
MAH- Growth
RMD - Growth

AXT -GROWTH
RCO - GROWTH/POSSIBLE INCOME
COE - GROWTH
BTC - GROWTH

I'm 22 years old. It's a portfolio I have built since about August 2006, and I am up over 10% mainly due to RMD T3 and AXT floats.

Its not a balanced portfolio, and I have missed out on a lot of growth, but I am still new at 22 years of age.

I like resources a lot, but am keen to get a few banks in there for the dividend factor. My plan is if i can get one speculative to really boom, the others can stay steady and I will do well.

I have $40,000 of my own money invested and around $35,000 borrowed through margin loan.

 

[carmo]

My first mistake was to under estimate VOLUME, keep it in mind!

 

[Ken]

CIY has an 10% plus dividend trading on a sub 10 PE ratio compared to sector of 16.

Closed at 4.47 today...

Its a diversified financial that looks cheap.

Question would be why?

 

[marc1]

Brengun re thread dividends or growth, why not settle for both,your questions were very similar to mine when i became interested in the market.
just for the exercise and to outline the power of compounding fully franked dividends,the firist stock i put my hard earned to was woolworths on float,( yes i am that old).
purchase price in 1994/ was $2.45per share
over subscribed float 800 shares per punter.
total cost $1,960.00.
closing price today $24.00
800 X $24.00 = $19,200 roughly 10 times your money.
add the drp into the equation
your holding has increased to 1307 x $24.00 = $31,368.00. 16 times your investment , plus 30% franking credits all the way through.
And you didnt have to lift a finger.
NEVER UNDER ESTIMATE THE POWER OF COMPOUNDING DIVIDENDS.
You never mentioned your age on your post, im assuming time is on your side
so if you buy quality blue chips some already mentioned on this thread, time can make you some very good profits.
Hope this is of some assistance,good luck with the journey.
cheers time for another red.

 

[Brengun]

You never mentioned your age on your post, im assuming time is on your side
so if you buy quality blue chips some already mentioned on this thread, time can make you some very good profits.
Hope this is of some assistance,good luck with the journey.
cheers time for another red.

I am 44yrs old and am retired. I have done well with real estate and have a net passive income of $30k absolute net after maintainance from that. It is almost debt free.
I will have almost $400k cash to invest in 2007 and thought I'd go for dividend shares to create further passive income. If they also achieve some moderate growth, then I wouldn't have to sell in the future to fund further investment into property pre next boom. I could keep the shares and borrow and gear back into more realestate.

 

[money tree]

The Australian Tax system encourages income, and penalises capital growth. Regardless, 99% of market participants ignore this and chase capital growth anyway.

 

[nizar]

In reply to the thread title, growth all the way. In my opinion. Well at least until you are 40-45 then maybe move into some income.

 

[Brengun]

The Australian Tax system encourages income, and penalises capital growth. Regardless, 99% of market participants ignore this and chase capital growth anyway.

I want to be in that 1% area but I don't want to work for the income.

 

[jet328]

The Australian Tax system encourages income, and penalises capital growth. Regardless, 99% of market participants ignore this and chase capital growth anyway.

Could you explain this?
I thought you got a 50% discount on capital gains

Cheers

 

[money tree]

the 50% discount only applies if you:

- arent classed as a trader
- hold the asset for 12 months or more
- trade as an individual (not company or trust)

Which is better:

a) $1,000,000 capital gain made in 6 months or

b) $1,000,000 dividend income over 10 years

???

work it out for yourselves

(assume dividend growth and inflation cancel out)