Wednesday, October 8, 2008

Dividends- End of Trading Day 7 Sept 2008




As can be seen, dividend yields are at a very high level during this crisis period, ranging from 4% to 22%!

In very simplified terms, if you invest now, assuming a consistent yearly dividend yield of 22%, it means that, your investment will double in 72 divided by 22 = 3.3 years. ( That's assuming you are able to reinvest your dividends at the same current market price like now and that is unlikely.)

Before you start loading up on dividend yielding stocks, take note..
Dividends might not be consistent as they are paid out from profits. Some companies might also have a mandate to pay out a fixed dividend a year but then again, mandates can be changed during AGMs.

Investing Idea: Load up on REITS as rental prices are normally locked in for some years. Do check on the property leases owned by the REITS to make sure. Also, check the level of their borrowings to make sure they can repay their loans in this liquidity crisis environment!



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