Dividend Payers

Discussion in 'Stocks & Derivatives' started by hiho, Nov 2, 2012.

  1. hiho

    hiho Active Member Silver Stacker

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    I've been considering a fore back into stocks now that the interest rate has been slashed again, with inflation eroding all of my after tax savings both in my SMSF and private account. The fear is that a market collapse or correction will see your capital effected which to me is worse than not earning enough interest. It seems easy to find the divi payers, get those defensive stocks like the banks, coles, woolies, cochlear etc etc and make your money through fully franked dividends.

    But in this climate I just not sure? What do you guys think?
     
  2. heyimderrick

    heyimderrick Active Member

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    I'm a a big fan of dividend stocks in retirement accounts. Dividends from healthy companies can definitely provide downside protection. What you need to watch out for is a dividend that is unsustainable based on free cash flow. You should also look at the historical PE of a stock before a buy. Many high-dividend payers are trading at very high PEs because investors are flocking to them because there is no yield to be had elsewhere. I'm speaking from a US perspective, but I imagine the case is similar around the world. Think about the economic and geopolitical environment we are in and base your hunt for safe divi-payers on the sectors you think will do well in the coming years. I am very diversified in my holdings, but I am most bullish on defense and energy right now. Sin stocks (tobacco, alcohol) generally hold up well because people always want their vices despite the costs it seems. I like the telecom sector as well for dividends.
     
  3. Stackman

    Stackman Member Silver Stacker

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    Foray ?

    I too have been vacillating on this. On balance I am holding as I think there are still plenty of downside risks: US fiscal cliff, Greece, Spain, Europe in general, Japan, Chinese economic output figures etc. I intend to move back into shares when either we see a significant market correction, we survive through the US fiscal cliff, and/or we start to see and feel inflation in a significant way. In the meantime I won't say no to a bargain stock if I see one.

    Agree with all Heyimderrick said. Franked dividends FTW, but look past the dividends to the earnings - you want shares that are steadily growing their earnings as well. Consider which industries will be survivors such as energy, commodities, food, health. And avoid individual stocks with too much debt.

    It goes without saying that you need to determine an appropriate allocation between shares, precious metal, property and cash. To cover the first two areas (with a bit of excitement as a bonus) you may also like to include a gold producer or two.
     
  4. Silverthorn

    Silverthorn Well-Known Member

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    I've been accumulating some woodside for a few years now for this sort of reason but don't like a lot of stuff. thinking about maybe things like ansell and coke a cola but missed the lows so am hesitant.
     
  5. REDBACK

    REDBACK Well-Known Member Silver Stacker

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    For you Hiho ;)
    Titled

    'Dividend Prayers'

    Now i lay me down to Sleep
    I pray the Shares won't crash down deep
    If my Share's die.before i wake
    I pray my wife,accepts my mistake!
    Amen
     
  6. hiho

    hiho Active Member Silver Stacker

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    :lol:
     
  7. nickybaby

    nickybaby Active Member Silver Stacker

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    I too have had a real think about this.

    CBA was about 8-9 % after tax and ff ect. That was a couple of months ago. But i just can't seem to pull the trigger. I just feel i missed the boat and am waiting for the other shoe to drop in terms of a market melt down.



    I have to admit I have been looking at woolworths a lot to. And they have been down 2-3 % in the last two days. I feel they are due for a nice short so am hoping to pick them up after another drop of 3-4 percent. I feel they will be good value about $25 so a fair way to go yet.

    I will deffinatly be picking up the divided payers if the market has a very big correction.


    But i will be honest what the hell do i know?

    and the answer will be not a lot.
     
  8. heyimderrick

    heyimderrick Active Member

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    Another thing to remember, if you plan on holding your dividend payers for a while, have the dividends automatically reinvested. Compounding dividends can certainly add up fast, and they help you dollar cost average your position.
     
  9. Silverthorn

    Silverthorn Well-Known Member

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    I like to take all my dividends and put it into whatever is taking my fancy at the time. Still gets reinvested but into whatever direction I think is the go.
     
  10. Clawhammer

    Clawhammer Well-Known Member Silver Stacker

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    ^^^
    What? :lol: that's so vague

    "yeah.. like, I'm toally going to to do some stuff with the things...or whatever" :)
     
  11. Silverthorn

    Silverthorn Well-Known Member

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    I was responding to the idea of going the dividend reinvestment route with your dividend paying stock. not trying to suggest where to put them but put all your collective dividends into one particular stock (or metal as done at times). Saves me having to think about my tax so much if I sell em too. :p

    edit

    see googled article.

    http://finance.ninemsn.com.au/pfsharemarketinvesting/performance/8124787/dividend-reinvestment-plans

     
  12. nickybaby

    nickybaby Active Member Silver Stacker

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    Just to throw a spanner in the works, i think you have to declare any re-invested monies to the tax man.

    also if you did this for any length of time and sold the lot you would have an awfully large capital gains tax form to fill out.

    but i in general like the idea of re-investing your monies into stocks.


    as an aside do you have a fix percentage of your savings in stocks, property, pm ect or do you do it as the mood takes?
     
  13. Spode

    Spode Member

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    Yes you do. Dividend Re-investment gets reported as income, as if it was a paid out dividend.
     
  14. AgH20

    AgH20 New Member

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    So, has anyone considered the Vanguard Index Funds, specifically the Aust High Yield Index Fund?

    The logic being rather than pick stocks with growth, earnings, dividends for each and every company/business, go the route of just re investing earnings back into this Index fund. The fees are pretty low compared to other managed funds.
     
  15. Naphthalene Man

    Naphthalene Man Active Member Silver Stacker

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    Rio Tinto has an employee share plan in which they invest your money that you nominate for 3 months at the end of which they buy you shares at the prevailing price. They match the number of shares that you bought dollar for dollar but you only get the matched shares if you have been in the scheme for 3 years.
    If you:
    leave before 3 years you only get the purchased shares,
    get the sack then you get purchased plus matched.

    At the end of the three years you can then sell all, move them or go round again.
    All dividends are automatically reinvested.

    So in effect you get them for half price if you stay for 3 years. Here's hoping they don't crash and burn in that time.

    I don't know if it is a good deal but i'm not playing with that much anyway. Unfortunately the money is taken from the net pay not the gross pay.
     
  16. finicky

    finicky Well-Known Member Silver Stacker

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    I've wanted to add to this thread but am riddled with doubt myself. And isn't that the crux of the matter in this time? ... pause for rhetorical effect ....
    ..... If someone with the experience and intellectual fire-power of Marc Faber has said he can't be sure which way it will go, and as a result he's putting irons in a few fires, who are we to know better? If you haven't got any shares, get some, no real estate get some, no precious metals, no cash, no Edwardian chairs, Matisses, or brothels, get some - diversify.

    You've heard the term 'financial repression'? Jim Puplava was the first I heard using it. Meaning the government and reserve bank is going to make it unpalatable, to say the least, for you to remain in cash.

    Faber is saying the US Indices will drop a minimum of 20% from the recent highs in the next 6-9 months. That will obviously have its reflection here.

    But I'm still nibbling away. Do you think the coal industry is finished? Not me - so yesterday I added a few more shares of a coal mining services company. This company is slated to pay a minimum 8% fully franked dividend in FY13. It has far more cash than debt - in fact a rough calc yesterday told me its cash, net of debt, is worth +30% of its asx market capitalisation. In the Montgomery Skaffold system it has never ranked lower than a B1 for quality and performance in the last 10 years, and for 7 of those 10 years it ranked as A1 or A2. I mean ffs, how risky is that? Unless coal is finished.
     
  17. heyimderrick

    heyimderrick Active Member

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    If your investment horizon is still far out, a 20% correct here and there will simply be a buying opportunity. One reason I advocate reinvesting dividends automatically is because it helps smooth out market swings. Diversify, reinvest, keep some powder dry for the big dips and stay vigilant, friends.
     
  18. Stackman

    Stackman Member Silver Stacker

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    A timely blog...
    http://kingworldnews.com/kingworldn...cks_Today,_Apple,_Gold,_Silver_&_the_VIX.html
     
  19. finicky

    finicky Well-Known Member Silver Stacker

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    Here's one I'm eyeing off - Fleetwood Corp Ltd (FWD)
    Not in yet and am hoping for cheaper. Slated to pay a 7.6% fully franked dividend FY13, which is almost 11% grossed up, if you want to compare it to a bank account. This stock crashed in price during the GFC while its earnings and dividends stayed rock solid. Within two years of its crash in price FWD was at its highest price ever. Cheap mining accomodation, retirement and traveller accomodation, recreational vehicle products. Chart is ambiguous, stock suffers from its inclusion in out of favour mining services sector. Company expects a relatively poor performance in this Half or next (not sure which)

    No net debt, holding $16m net cash

    Decade performance:

    Earnings (cents) 28.5, 43.9, 39.1, 43.7, 53.4, 67.8, 68.5, 71.5, 88.6, 89.2

    Book Value ($) 1.80, 2.12, 2.27, 2.29, 2.39, 2.56, 2.69, 2.91, 3.56, 3.90

    Return on Equity (%) 14.0, 21.0, 17.2, 18.7, 22.2, 26.1, 25.1, 24.6, 24.8, 23.0
     
  20. RetardedMonkey

    RetardedMonkey Active Member Silver Stacker

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    $10.00 close today.

    I've been looking a bit into dividend paying companies also.

    Nice thread :)
     

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