I am not talking about REITs or Business Trust or even Blue Chips. I am talking about finding the pennies that can give you hopefully at least 5% of dividend yield every year.
1. A company that constantly gives out 5% of dividend yield, most probably have a price to book ratio of more than 1. A stock that has a price to book ratio of less than 1 and also have a dividend yield of more than 5% per year, MAYBE lacking in other parts of its financials. More due diligence is required.
2. SOME stocks uses leverage to support their high dividend yield. Their debt to equity can be more than 100%. But how long can they continue to do this? The research indicates that some of the highly leverage Stocks, that gave high dividend, eventually encounter other issues.
3. Net Profit is REQUIRED constantly, even when the Stock continuously have negative net cash from operating activities. This meant that there will be a lot of non-cash items that are added to these company's net profit. These companies also seems to run into other issues later on.
4. SGX requirement/Singapore Regulation requirement state that a company REQUIRED to have retain earning to give out dividend. A company that constantly made losses are not allowed to give dividend.
5. It is VERY HARD to find a stock that constantly produce 5% of dividend yield and expects it to be constantly fundamentally strong IF it is not a Blue Chip. You will need to give up on some fundamental beliefs if you expect a penny to provide 5% dividend yield constantly.
6. Management or a subsidiary of another listed firm or a family-ran firm are BONUS contributing factors to providing a high dividend yield.
7. Do note that due to the lack of fundamental checks, any CHANGE in Dividend or Net Profit will result in a great change in the share price. Sometimes it is better to "park and hide" - Treat it like a fixed deposit.
Thus, that is all I have found out about dividend stocks for now. I have yet to know what I will do after finding out the criteria in the search for Dividend Stock. Nevertheless, I may reveal more to the attendees of the next Sharing Session with T.U.B in September 2016. Wait for the announcement!
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