Posted by stockmanmy > 2017-01-15 16:31 | Report Abuse

Now....this is an article from a value investor, I can totally agree with.

Dividend stock, like high NTA stock, margin of safety stock,

Beware of value traps.....

First, nothing beats experience

Next, learn about Dynamic Investing.

Can give scholarship to other people children.

Posted by stockmanmy > 2017-01-15 16:40 | Report Abuse

first ...all in one stock

even if 75% chance of success

There is a 25% you are the unlucky one and gets a lemon.


3 out 4 guys who uses same strategy can send their children overseas and got balance.

But , his karma is that he becomes the 1 in 4 who gets nothing for children education.

Posted by stockmanmy > 2017-01-15 16:48 | Report Abuse

Teach him about Dynamic Investing
Its business sense, then people, then numbers.
3 steps vetting process.

BToto good business but Vincent Tan.

Avoid and no problem falls on you.

Posted by stockmanmy > 2017-01-15 16:50 | Report Abuse

Its business sense,

JCY hard disk drive

avoid and no problem falls on you.

I told you, investing is easy.

Posted by Flintstones > 2017-01-15 18:16 | Report Abuse

I am never a fan of dividend investing. Whatever dividend the company declare, the share price is always going to correct after the ex date. Dividend investing is for the real corporate investor who wants to extract cash out from the entity to pay their dues. Dividend income for a retail investor like you or me, is not the most efficient way of investing. Because the reinvested dividend is going to incur some transactional costs. Having said that, there are of course successful dividend income stories on the bourse, namely; Nestle, BKAWAN, GAB etc. For small cap companies which has a high cash hoard, it is best for them to declare dividend, if not the cash is going to sit there doing nothing till one day the management decides to to do a buy out.

Posted by SALAM > 2017-01-15 18:27 | Report Abuse

Well said Flintstones, in Bursa, only Mat Salleh funded and managed companies are worth the dividends investment philosophy. Companies such as Carlberg, GA, Dlady,Nestle,UP etc...For Malaysian run companies, generally, you can forget about it...As you said, they rather keep the cash and later buy out for their grandchildren..eg Deloyd, may be KS etc...

Posted by 3iii > 2017-01-15 19:00 | Report Abuse

Warren Buffett often looks at the stock he buys as equivalent to a bond. The cost price for the stock is the 'equivalent' to the price paid for a bond. The earning yield of the stock is the 'equivalent' to the coupon rate of a bond.

He likened his stock as equity bond. Unlike a bond that pays a fixed coupon rate for its lifespan and repayment of the initial invested capital, an equity bond (stock) if chosen well, can deliver increasing earnings (and dividends) over many years. Its share price likewise will appreciate with its increasing earnings.

The trick in dividend yield investing is still to focus on the earnings and earnings growth potential of the company. All these are embodied in a simple phrase, that is, choose and only invest in good high quality companies bought at bargain or fair prices.

Posted by 3iii > 2017-01-15 19:02 | Report Abuse

Dividend Yield Investing - Stock Selection is still the Key.

Posted by stockmanmy > 2017-01-15 19:59 | Report Abuse

Is Dividend Investing Strategy a Myth?

yes, a myth.

Posted by stockmanmy > 2017-01-15 20:03 | Report Abuse

buy low sell high is also a myth

low goes lower high goes higher is more than 50/50.

Posted by stockmanmy > 2017-01-15 20:05 | Report Abuse

a good business run by good honest people

if you buy low volume and sell high volume

you have a 90% chance of success.

Posted by Alphabeta > 2017-01-15 20:15 | Report Abuse

Sustainable growth rate (SGR) = ROE x (1 – dividend payout ratio)

It is a measurement of how much a company can grow using internal generated funds. That’s why positive free cash flow (FCF) concept is vital, the ideal case is when FCF (operating cash flow minus capex) is sufficient to pay dividend. Else it needs to monetize asset, secure more commercial borrowing or raise fund through right issue to facilitate growth. Net profit must be based on core business earning less one-off and unrealised fair value gain or loss.

In order to improve ROE, business needs at least one of the followings:
ROE = Net profit/Revenue x Revenue/Total Assets x Total Assets/Equity
1. Increase assets turnover ratio by generating more revenue with optimum assets employed. In other words, managing of working capital such as inventory, receivables and payables to lower the cash conversion cycle. Ensure optimum utilisation of PPE capacity.

2. Source for cheaper leverage and match loan tenure with investment gestation period. If possible, loan drawdown according to requirement.

3. Lower income taxes by reducing lumpy non-deductible expenses, take advantage of tax incentives etc.

4. Improve operating margin through tighter cost control.

5. Sustainable free cash flow to support dividend payment.

Trend analyses of the above factors are important to understand what make the business tick.

Price to book ratio is also vital to gauge whether the business is over or under value.

Assuming a stock with a book value of RM 1 per share and its share price is also RM 1 (Price to book value = 1.0). A 12% ROE will produce 12 cents per share return for the investor (P/E of 8.3). If the payout ratio is 50%, investor will get 6 cents/share as dividend and the remaining 6 cents will increase the book value of the business and should reflect in the market value of the business (technically speaking if the business can continuously achieve 12% SGR). In order words, the total shareholder return (TSR) will be 12% (6% dividend yield + 6% capital gain).

Alternatively, if the stock price is RM 1.50 per share (P/E of 12.5), the investor will still receive 6 cents per share as dividend. But in this case, the yield is only 4%. The book value of the business will similarly increase by 6 cents to RM 1.06 but the market value will increase by 6% to RM 1.59. TSR in this case will be 10%.

The situation will be reversed if the investor bought at a price below book value – said at RM 0.80 per share. The dividend yield will be 7.5%, plus a 6% in capital gain, the TSR is 13.5%.

Debt to equity ratio (=<50%) should read in conjunction with interest coverage ratio (>=2) and net debt position (ideally net cash).

If the business can consistently deliver superior ROE and support a decent dividend payout ratio, the factor that determines the future TSR is PBV or P/E ratio.

Posted by 3iii > 2017-01-15 20:16 | Report Abuse

Stockmanmy - stockman of my - stock man of Malaysia.

Can you elaborate your points more lucidly?

Not sure of what you are writing about.

So I can't comment intelligently on your posts here.

Posted by stockmanmy > 2017-01-15 20:46 | Report Abuse

simple

every stock market meme is a myth

all except one.

"a good business run by good honest people

if you buy low volume and sell high volume

you have a 90% chance of success."


think about it. Just makes sense.

But this kind of strategy.....you have to be accompanied by a portfolio with at least 20 stocks. Because, many of your stocks will just sleep and sleep and sleep. You will not lose money but you will lose time.

Occasionally, some in the portfolio will have good volume for two or three days. You should automatically sell it. You will get 5 - 10% gain this way. A 10% gain a portfolio of 20 stocks, the impact on the portfolio is 0.5%....you need 10 of that per year to show a 5% gain per year.

Its a slow grinding process. Probability of success very high but you will miss the big gainers.



a good business run by good honest people , if you buy when there is no volume, you are a contrarian. Buy when no one is interested. Then, complete the equation by selling when other people wants it.

safe slow grinding strategy....but you should have a portfolio with 20 stocks or more.

Posted by PlsGiveBonus > 2017-01-15 21:36 | Report Abuse

Warren Buffett also agree he could loss his pant in klse
:)

Posted by 3iii > 2017-01-15 21:40 | Report Abuse

>>>
2357 posts
Posted by PlsGiveBonus > Jan 15, 2017 09:36 PM | Report Abuse

Warren Buffett also agree he could loss his pant in klse
:) <<<



I think you are parroting a group of self interested people with stakes in this industry.

Let me put it better for you.


They often start their talk with: "Warren Buffett's method cannot work in our Malaysian stock market." :-)


Have a good laugh. You will feel better.

Posted by PlsGiveBonus > 2017-01-15 21:43 | Report Abuse

Of course it do not work,
don't undermine the finding result from TTB after years of investing into this industry with the so called value investor
:)

Posted by stockmanmy > 2017-01-15 22:40 | Report Abuse

alphabeta is of the school that says, if you can make it complicated enough, you will surely be rewarded for your hard work.

But reward is not from hard work alone but from fitting the methodology to the behavior.

Posted by Bruce88 > 2017-01-15 22:54 | Report Abuse

Quoting BJToto as a "Div investing" is totally wrong.
The important keyword is growth both in div and company profit.

Posted by gohkimhock > 2017-01-15 22:59 | Report Abuse

why not do a dividend investing on Hai-O?

Posted by 3iii > 2017-01-16 08:47 |

Post removed.Why?

Posted by 3iii > 2017-01-16 08:52 | Report Abuse

Revenue .....> earnings .....> .FCF .....> retained earning + dividends.

You can choose to invest in companies throwing growing dividends (dividend growth investing).

As I have posted earlier, stock selection is still the key.

Posted by Bruce88 > 2017-01-16 09:03 | Report Abuse

This article had given a very BAD impression of "Div investing"
KC should use his knowledge & experience to show readers what is a "Good div investing".

Posted by datuk > 2017-01-16 09:11 | Report Abuse

The only permanent in universe is impermanent. There is no exception in the world of investment!

The underlying fundamental in business keep changing in tandem with changing conditions in the marketplace; thus affecting the earning pillar of company.

You got to know that investing in dividend stock is you accepting the fact there is a limitation in earning growth potential in that company. You got to accept the fact that the risk inherited in the dividend stock begins to emerge when the earning stability is disappearing.

You can uncover the myth of dividend stock If you command the comprehensive knowledge in the industry. This will allow you to align your investment strategy in line with the competitive condition in that company.

Ultimately, you never do nothing with dividend stock when the underlying earning is threaten.

When there is no constant earning, there will be no constant dividend !

Posted by datuk > 2017-01-16 09:29 | Report Abuse

The fact that the constant changing in the marketplace make investment an exciting game.....dividend stock can turn into growth stock...



KC, I think it might be more beneficial here if you focus your write up on:

why investing in dividend stock a failure strategy ? or

The fundamental dividend investing strategy - uncover the myth.

Posted by kcchongnz > 2017-01-16 09:31 | Report Abuse

Posted by Bruce88 > Jan 16, 2017 09:03 AM | Report Abuse
This article had given a very BAD impression of "Div investing"
KC should use his knowledge & experience to show readers what is a "Good div investing".


This article reminds one not to blindly invest using any strategy, including dividend investing. The underlying message is in the last part of the article,


" Does it mean that investing in high dividend stock is a myth? Not at all. On the contrary, I found it is one of the best investing strategies to obtain consistent long-term return with less risk.

This is provided investors have a check list of how and what to look for to separate the chaff from the wheat. That will be the next topic of discussions."

Posted by kcchongnz > 2017-01-16 09:57 | Report Abuse

Posted by R3D3 > Jan 16, 2017 09:36 AM | Report Abuse
Chong: It would have been much better if you had focus on the risk of dividend investing.

ME: DIVIDEND INVESTING IS ACTUALLY A LOW RISK STRATEGY COMPARED TO OTHER STRATEGY, ESPECIALLY APA ITU DYNAMIC INVESTING, "PIVOTAL MOMENT CONCEPT" AND ALL THAT JEST.

Dividends, are largely determined by the company board of directors and is influenced by the company profitability. No money, no honey. Hence, dividends is not a constant factor.

ME:NOTHING IS CONSTANT IN INVESTING. BUT IT IS MORE PREDICTABLE FOR SOME COMPANIES, THEN OTHER PREDICTIONS.

* eg. how many people make many assumptions that their dividends is cast in stone?

ME: THAT IS WRONG. NOTHING IS CAST IN STONE, FOR ANYTHING IN INVESTING, NOT ONLY DIVIDEND.

The dividend yield is determined by two variables which are not constant. The price of the stock is not constant and neither is the dividend.

ME: DIVIDEND IS A LITTLE MORE PREDICTABLE FOR COMPANIES WITH CONSISTENT EARNINGS AND CASH FLOWS. THERE ARE SOME STOCKS HAVING THAT CHARACTERISTICS.

PRICE IS OF COURSE NOT CONSTANT. IN FACT, IT CHANGES EVERY MINUTE.

HOWEVER, WE HAVE TO MAKE A DECISION ON WHAT IS THE DIVIDEND YIELD AT A POINT OF TIME WHEN WE ARE CONSIDERING TO INVEST WITH DIVIDEND INVESTING STRATEGY; I.E. AT THE TIME OF A CERTAIN PRICE, AND HENCE THE DIVIDEND YIELD. IF THAT PRICE GIVES A HIGH DIVIDEND YIELD, MAY BE GOOD TO INVEST, AND VICE VERSA.

Posted by ckkhen > 2017-01-16 10:04 | Report Abuse

Old world stocks like Dlady, HEIM, Carlsbg, Panamy, Uplant, Pbank, BAT, Nestle are good dividend stocks. If they are bought 10 or more years ago, they would ahve made you very rich, not only in terms of dividends but capital appreciation. Increasing Dividends = increasing share prices (Dr Neoh Soon Kean).

Question now is: can we unearth potential stocks to follow above examples. Padini? HaiO? Scientx? Magni? Ptaras? Kmloong? ...?

Or wait for opportunities in the old world stocks?

Over to you , KC.

Posted by kcchongnz > 2017-01-16 10:30 | Report Abuse

Posted by R3D3 > Jan 16, 2017 10:07 AM | Report Abuse
Chong: Needless to say, I wasn't focusing on you or your abilities. That was a general comment on personal observation.
Have you not seen someone buying a stock, assuming that the xxx dividend a stock gave last year, would be repeated the following year? And based on the xxx dividend, they formulate their yield and declare their stock is a great investment? How many times have you seen such investment crash and burned? I have seen far too many examples of 'Berjaya Toto' type of 'dividend investments' fail.
Also, I do have to say, the reply in CAPS is not pleasant reading.


The capital letters were used to differentiate your comments and my reply. Since you didn't like them (I can't control what you think), I will suit you and use small letters.

I would like to see your examples of bad dividend stocks you were talking to add to my list.

As I have said, you have to use a price at the point of time when using investing in dividend strategy, to make a decision on if the dividend yield at that price is good to invest or not.

If not, how else do you make decision?

Posted by kcchongnz > 2017-01-16 10:54 | Report Abuse

Posted by ckkhen > Jan 16, 2017 10:04 AM | Report Abuse
Old world stocks like Dlady, HEIM, Carlsbg, Panamy, Uplant, Pbank, BAT, Nestle are good dividend stocks. If they are bought 10 or more years ago, they would ahve made you very rich, not only in terms of dividends but capital appreciation. Increasing Dividends = increasing share prices (Dr Neoh Soon Kean).
Question now is: can we unearth potential stocks to follow above examples. Padini? HaiO? Scientx? Magni? Ptaras? Kmloong? ...?
Or wait for opportunities in the old world stocks?
Over to you , KC.

ckkhen,
For the old world stocks, values are presented normally during market down turn. It is hard to find good dividend stocks during normal time for high extra-ordinary return. But during bad time, buy as much as possible when their stock prices are beaten down.

In normal time, I tend to focus on the later category. You can still find many good buys there. If you check back the list of dividends stocks I have given you every month, you should see they provide you with very good return so far.

My opinion is, stay invested. The market is not at euphoria, and we can miss good opportunity by waiting.

"80 percent of success is just showing up?" Woody Allen

Posted by ckkhen > 2017-01-16 11:15 | Report Abuse

KC,
Thanks for the reply and reminder. Keep writing!

Posted by Jay > 2017-01-16 11:17 | Report Abuse

high dividend yield stocks are often generalised with stable ones when in reality it may not be. especially some stocks which only pay 1 or 2 years of high dividend/dividend is expected to fall in line with earnings

dividend depends on that year's earnings and cashflow while price movement depends on market expectations on the company. good companies' price will rebound at least to the level before adjusted for dividend after ex while others the market will just let it slide, then at most will be like taking money from your left pocket to put into the right pocket

Posted by kcchongnz > 2017-01-16 11:28 | Report Abuse

Posted by R3D3 > Jan 16, 2017 11:08 AM | Report Abuse
Chong: I can tell story of this girlfriend who has been doing Amway for 10 years. She worked hard, made good money. Not too long ago, she invested her hard earn money in the stock. Not exactly sure if it was 2013 or 2014. Last year, she exprsessed her disappointment with her decision to invest in Amway and regretted listening to her peers that Amway was paying good dividends and that whatever dividends she has received, could not cover her losses in her investment.


Excellent example. Thank you.

Posted by kcchongnz > 2017-01-16 11:30 | Report Abuse

Posted by Jay > Jan 16, 2017 11:17 AM | Report Abuse
high dividend yield stocks are often generalised with stable ones when in reality it may not be. especially some stocks which only pay 1 or 2 years of high dividend/dividend is expected to fall in line with earnings
dividend depends on that year's earnings and cashflow while price movement depends on market expectations on the company. good companies' price will rebound at least to the level before adjusted for dividend after ex while others the market will just let it slide, then at most will be like taking money from your left pocket to put into the right pocket

Excellent comment. Thanks jay.

Posted by ckkhen > 2017-01-16 11:31 | Report Abuse

Posted by R3D3 > Jan 16, 2017 11:08 AM | Report Abuse

Chong: I can tell story of this girlfriend who has been doing Amway for 10 years. She worked hard, made good money. Not too long ago, she invested her hard earn money in the stock. Not exactly sure if it was 2013 or 2014. Last year, she exprsessed her disappointment with her decision to invest in Amway and regretted listening to her peers that Amway was paying good dividends and that whatever dividends she has received, could not cover her losses in her investment.

It is just like a long time PBank or F&N employee decide to buy these shares at 20.00 or 23.00 respectively now bcos they have been giving good dividends. A case of buying wonderful companies at lousy prices. Nothing wrong with dividend approach if they have bought these shares at good valuation prices. Mistake is they bought at the wrong time. That is why dividend knowledge/FVI comes in to save the day.

Posted by 10bagger10 > 2017-01-16 11:35 | Report Abuse

Dear master kcchongnz,

need your advice, i had bought a lot of complet (Complete logistic berhad), but share price hardly move @ pe around 5.5. can give me some advise?

Posted by kcchongnz > 2017-01-16 20:06 | Report Abuse

Posted by 10bagger10 > Jan 16, 2017 11:35 AM | Report Abuse
Dear master kcchongnz,
need your advice, i had bought a lot of complet (Complete logistic berhad), but share price hardly move @ pe around 5.5. can give me some advise?

Don't know much about Complete. May be because it hardly gives any dividend. Without dividend, how do investors know the company really makes money?

Or maybe the earnings are very erratic and volatile.

Posted by stockraider > 2017-01-16 20:54 | Report Abuse

Raider like to sum up loh...a dividend stock paying is of course better than div paying stock loh...!!

If u focus on dividend paying stock, u must look into dividend sustainability, cashflow, earnings loh....!!
Do not focus on just div loh....!! Look at the past yrs of div paying track record loh...!!

If got growth and even margin of safety , even better loh.....!!

Never...never ...never sailing on 1 single stock, preferably portfolio 8 to 10 stocks of reasonable proportion loh....!!

Also use your head...do not overpay loh....!! Like Pet dag PE 25x...getting div yield of 3% pa high risk loh....!!

Alternative Nestle Rm 78.00 giving PE 25x with div yield of 2.5% pa high risk loh...!!

Always have an understanding of FD rates and Dividend yield loh...!!
They are related...a high FD rates means u need to get div yield and vice versa mah....!!

Posted by 3iii > 2017-01-16 23:09 | Report Abuse

KYY i have to agree with your comments on raider.

Posted by Yippy68 > 2017-01-17 04:07 | Report Abuse

i am a dividend lover. i started to invest in reits 8 years back when no one seem to look at it..after collecting 8 years of steady dividend and with price appreciated some more than 70%, i made huge huge profit by 7 figures after selling off last year when all reits were at peak. a man meat is another man poison .do not conclude when you are not in it, only gainer will smile all the times. I am so lucky to be on of them.

Posted by Yippy68 > 2017-01-17 04:08 | Report Abuse

one of them

Posted by Yippy68 > 2017-01-17 04:35 | Report Abuse

Bplant another example, two years dividend added up 25 sen , price once dropped to 1.17 , ipo at 1.60, land bank value in billions, many people missed when price dropped to dirt cheap, now at 1.67, if you accumulate a million share, you will be making six figures in two years.

Posted by Yippy68 > 2017-01-17 06:03 | Report Abuse

of course you will not talk about FGV right, you lose you pant if you go in, because you believe some sifus shouting buy buy buy.

Posted by 3iii > 2017-01-17 07:17 |

Post removed.Why?

Posted by Angielim9955 > 2017-01-17 15:03 | Report Abuse

Yippy68 friends I am also like dividend, however I bot Magnum when 2.50 now at 2.09.
can you advise me should hold or can advise magnum still worth to hold
because many people ask me to cut because magnum is a sunset biz like Parkson
Parkson drop from 9.00 until 0.60
Now I very scare and worry about magnumI also got media but Media got GLC protect so Media I no worry at all even I enter at high price.
Just this Magnum I really worry will nofollow Parkson Parkson drop until no underwear as we know
So if Yippy68 free please advise on magnum.
And why many people like TOTO than magnum TOTO still trade around 3.00 but Magnum near 2.00
LAst time magnum and toto every q also same give 5sen dividend now toto give 4 magnum give 3 and magnum so stupid , latest qr profit jump 44% but give 3sen only ,Be fair must give 4sen as publice expecetd

Posted by 10bagger10 > 2017-01-17 15:06 | Report Abuse

Angielim9955,

compare roe, fcf, fundamental ...
have u done ur homework b4 u buy?

Posted by stockraider > 2017-01-17 15:09 | Report Abuse

Magnum ....raider remember split into 2 different co mah....!!
Have u factor this is to ur investment return leh ?

Posted by datuk > 2017-01-17 15:32 | Report Abuse

I think two criteria need to be met before could qualify as dividend stock:

a) The annual dividend yield must more than the current fix deposit rate.
b) The dividend yield on (a)must be maintained for 5 years.

perhaps, with this definition, your investment mind won't be confused and you will think rationally.

kikikiki

Posted by datuk > 2017-01-17 15:36 | Report Abuse

You might want add following criteria for tracking:

c)The earning consistency.


kikiki

Posted by 10bagger10 > 2017-01-17 16:43 | Report Abuse

Dear master kcchongnz,

TQVM for your enlightenment.