Question about dividends

[wayneL]

Perhaps earnings are a better vector to study than dividends?

 

[So_Cynical]

A graphical portrayal of dividend yield.

The chart on top is of one of my current holdings IDL. It went ex dividend today and has an annual dividend yield of approx 2.8% for the last year.

The chart below that is a weekly chart of a stock (which I don't hold) that has a dividend yield > 10%.

Which stock would you rather have ?

At the current share prices TLS no doubt about it, IDL looking very toppy.

I think its horses for courses.

Dividends can be a great income source if you buy for a solid company not purely for the dividend. I am currently getting >7% on CAB and >8% on FLT based on my buy price on those 2 co's. Many other co's whose yield is now low, but if you bought when their shares got sold off your return is much better than the current stated yield.

Onviously capital appreciation is also a big factor, but not the only one imo.

I'm getting approximately 9 to 11% dividend returns on 4 stocks (based on my buy price) and 3 others about 7 to 8% divi returns and capital growth on all of em.....buying quality stocks at the bottom of there range is very rewarding.

On target this FY for a gross dividend return on my whole portfolio of around 4.8%

 

[nioka]

Perhaps earnings are a better vector to study than dividends?

I am currently getting >7% on CAB and >8% on FLT based on my buy price on those 2 co's.

I can quote several stocks that I hold or have held that are returning or have returned over 100% PA without the thought of a dividend.

 

[prawn_86]

I can quote several stocks that I hold or have held that are returning or have returned over 100% PA without the thought of a dividend.

Same goes for FLT. A strong company may or may not pay a dividend. I dont buy for yeild, but it has its place in a balanced portfolio (providing the companies reasoning for that yield is sound)

 

[Julia]

On target this FY for a gross dividend return on my whole portfolio of around 4.8%

Well, I hope you're achieving very substantial capital growth because you'd derive a better yield than that from bank interest if you'd got in at the right time. Hope too that they're fully franked unless you're on a low tax rate.

I can quote several stocks that I hold or have held that are returning or have returned over 100% PA without the thought of a dividend.

Don't doubt it for a minute, Nioka. I'll just never understand why people chase yield instead of capital growth.
When the GFC took hold and so many bemoaned the losses in their asset base, they repeatedly said, ah but I'm still getting the dividends.
Fantastic! Your capital base is eroded by around 50% but you're just hunky dory with that because you're still getting 5% yield and some franking credits!

 

[So_Cynical]

Well, I hope you're achieving very substantial capital growth because you'd derive a better yield than that from bank interest if you'd got in at the right time. Hope too that they're fully franked unless you're on a low tax rate.

Capital growth year on year, Oct 09 to Oct 2010 of around 35% .. im on a low tax rate so works out about right having approximately half my dividends un-franked.

I'm looking to take early retirement in about 6 / 8 years and intend to spend the first decade of that retirement living on my dividends, so busy building a portfolio to do that...capital growth, dividends and a low risk, free carry establishment trading plan is what's going to get me there.