Dividend growth investing
- Thread starter Mr.G
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I ment purist growth orientation, who believe in growth at any price. Yes my buys do infact increase in capital appreciation BUT my main focus both in valuation and investment has been to see CONSISTENT and not fast growing earnings. As my entry criteria is value oriented.
After a crash a stock worth 100rs giving 5% dividend crashes to 50rs and is giving 10% dividend now,
My focus is that it's earnings should be consistent enough that it keeps giving me 10% for a very long while. I couldn't care less if it even moved over 50rs in that while.
As my main focus is to build a consistent dividend stream. It's just icing on the cake that it rises over rs.100, that is just a good for me moment.
I am not a big fan of diversification and i do bottom up analysis. So I dont care if I have 2 companies in one sector. As long as I am not over-invested in them. I never invest in commodity based companies BUT I do invest in OIL ( just a personal bias) I do have ongc in my portfolio.
I had posted my portfolio a few pages back, You can check my holdings from there. Frankly I don't care about capital appreciation if my buy is dividend oriented. But if I buy something based on value orientation. I want a quick capital appreciation back to its intrinsic value.
I dont track OIL, Can I revert to you as I can then compare them over the weekend and give you a thorough answer?
If you have a doubt in anything Il be happy to explain more. At Least there is some life on this thread. I can explain more, why I dont like growth stocks and why I prefer value buys and all that if you guys want.
After a crash a stock worth 100rs giving 5% dividend crashes to 50rs and is giving 10% dividend now,
My focus is that it's earnings should be consistent enough that it keeps giving me 10% for a very long while. I couldn't care less if it even moved over 50rs in that while.
As my main focus is to build a consistent dividend stream. It's just icing on the cake that it rises over rs.100, that is just a good for me moment.
I am not a big fan of diversification and i do bottom up analysis. So I dont care if I have 2 companies in one sector. As long as I am not over-invested in them. I never invest in commodity based companies BUT I do invest in OIL ( just a personal bias) I do have ongc in my portfolio.
I had posted my portfolio a few pages back, You can check my holdings from there. Frankly I don't care about capital appreciation if my buy is dividend oriented. But if I buy something based on value orientation. I want a quick capital appreciation back to its intrinsic value.
I dont track OIL, Can I revert to you as I can then compare them over the weekend and give you a thorough answer?
If you have a doubt in anything Il be happy to explain more. At Least there is some life on this thread. I can explain more, why I dont like growth stocks and why I prefer value buys and all that if you guys want.
G, Identify some stock like Page Industires. I was advised to invest upto 20% of my portfolio in this stock in 2009 at ~700, then advised to add more at around 1200 in 2010 and more in 2011 at >1700 , in July 2012 again advised to add or enter fresh at 2912 , in Nov 2012 added more at 3340 , in Feb 2013 at 3370 and very recently on 10th August 2013 advised to add more at 4290!
Just look at the consistency of Dividend payout also !
Another Company I hold on the same analysts advise for a looooong time is Hawkins, HDFC and HDFC Bank and a few more. The latest being Repco home finance , he advised to Buy it on Listing !
Look forward to such finds from you too !!! All the best ! And dont think of Posting a name tomorrow...take your time !!!
All the best. Can try to locate and email you the detailed analysis of the Gentleman about Page Industries if it can Guide you a little in your FA !
Yeah do that please. I would like to see how he has analyzed the stock. If you are impressed by him then surely he might be a good analyst. I am happy with value buy situations rather than stocks that are growing. Save a few stocks it is not im am not that good YET. I will learn to do that with time as I get more experienced. Thanx for regularly following up on me. :thumb:
Your CA is not an Investment advisor!
I have seen and experienced that people in India give their CAs god like status concerning ALL financial matters. This is highly due to the lack of financial literacy in India and the advent of qualified investment advisors. This advisory role has largely been taken up by CAs even though they are in no way qualified for the role. CA is just an accountant and is not an asset manager on in any position to give good financial advice.
Different Roles of professionals in Finance:
Chartered Accountant are the elite accountants that have gained a charter in their practice. They are experts in auditing, taxation and financial management. They attain their charter through rigorous practice in auditing and giving three exams which are said to be the second most difficult after the CFA exams.
Chartered Financial Analyst are the gold standard of the asset management community. They engage in fund management and managing large assets of HNIs in foreign countries. (As CFA is not yet popular in India), they are highly sought after and highly respect professionals, with a much focused study solely based on asset valuation and management.
Certified Financial Planner is a certification that is bestowed by the FPSB, they deal in a broad range of financial issues ranging from financial goal planning to retirement planning. They give advice on insurance, estate and investment advisory.
Financial Advisor, the word is very liberally abused in India. Everyone ranging from a stock broker’s relationship manager to an insurance salesman is termed a financial advisor. This watering down of the word has led to a skepticism concerning their advice. I rather not write further on the topic.
To simplify the explanation we can assume that, both CA and CFA are engineers. One is a mechanical engineer and the other is an software engineer. Now if we want to build a car we go to the mechanical engineer and if we need a software we go to the software engineer. We cannot ask the mechanical engineer to develop a software for us and neither can we ask the software engineer to build a car for us! In the same way the CA cannot give investment advice and neither can the CFA audit accounts.
Please understand the following points before you start to refer your Chartered Accountant for investment advice:
CA is qualified and taught accounting and tax. They are not taught anything remotely related to investment or financial planning. They are not qualified for research decisions or track economic factors. There is no item in the syllabus for CA qualification that prepares him for a role in investment advisory. He can only give an advice as any other layman.
Your CA’s role is limited to calculating tax and auditing accounts. Matters on investments to save tax should come under the role of your CPF, as they are qualified to do so.
CA has no qualification in financial planning. The CA is not taught on risk assessment and is also not an expert in asset management. They are in no way equipped to handle any assessment of portfolios or financial planning. CA engages in such activities just to impress their clients and for monetary gains. Any advice by a CA in investment matters should not be taken as mandate.
These are just my personal views based on my experience. I fully respect the CA qualification and their expertise in taxation, accounting and auditing.
New & Old investors should thoroughly understand that a CA is not an investment professional. You should hire a qualified CPF or CFA to manage your financial goals and investments.
http://ghanishtnagpal.com/ca-investment-advisor/
I have seen and experienced that people in India give their CAs god like status concerning ALL financial matters. This is highly due to the lack of financial literacy in India and the advent of qualified investment advisors. This advisory role has largely been taken up by CAs even though they are in no way qualified for the role. CA is just an accountant and is not an asset manager on in any position to give good financial advice.
Different Roles of professionals in Finance:
Chartered Accountant are the elite accountants that have gained a charter in their practice. They are experts in auditing, taxation and financial management. They attain their charter through rigorous practice in auditing and giving three exams which are said to be the second most difficult after the CFA exams.
Chartered Financial Analyst are the gold standard of the asset management community. They engage in fund management and managing large assets of HNIs in foreign countries. (As CFA is not yet popular in India), they are highly sought after and highly respect professionals, with a much focused study solely based on asset valuation and management.
Certified Financial Planner is a certification that is bestowed by the FPSB, they deal in a broad range of financial issues ranging from financial goal planning to retirement planning. They give advice on insurance, estate and investment advisory.
Financial Advisor, the word is very liberally abused in India. Everyone ranging from a stock broker’s relationship manager to an insurance salesman is termed a financial advisor. This watering down of the word has led to a skepticism concerning their advice. I rather not write further on the topic.
To simplify the explanation we can assume that, both CA and CFA are engineers. One is a mechanical engineer and the other is an software engineer. Now if we want to build a car we go to the mechanical engineer and if we need a software we go to the software engineer. We cannot ask the mechanical engineer to develop a software for us and neither can we ask the software engineer to build a car for us! In the same way the CA cannot give investment advice and neither can the CFA audit accounts.
Please understand the following points before you start to refer your Chartered Accountant for investment advice:
CA is qualified and taught accounting and tax. They are not taught anything remotely related to investment or financial planning. They are not qualified for research decisions or track economic factors. There is no item in the syllabus for CA qualification that prepares him for a role in investment advisory. He can only give an advice as any other layman.
Your CA’s role is limited to calculating tax and auditing accounts. Matters on investments to save tax should come under the role of your CPF, as they are qualified to do so.
CA has no qualification in financial planning. The CA is not taught on risk assessment and is also not an expert in asset management. They are in no way equipped to handle any assessment of portfolios or financial planning. CA engages in such activities just to impress their clients and for monetary gains. Any advice by a CA in investment matters should not be taken as mandate.
These are just my personal views based on my experience. I fully respect the CA qualification and their expertise in taxation, accounting and auditing.
New & Old investors should thoroughly understand that a CA is not an investment professional. You should hire a qualified CPF or CFA to manage your financial goals and investments.
http://ghanishtnagpal.com/ca-investment-advisor/
The general public tends to forget that shareholders of publicly traded companies are their owners. And as owners they are entitled to a portion of profit their corporation generates. This profit is paid out as dividend.
Payout of this dividend is at the discretion of the management of the corporation, they pay dividends because a consistent dividend payout provides certainty about the financial health of a company.
Dividends are also sought after by investors for regular income and their tax benefits. As history indicates change in dividend payout can have an effect on the stock price of a company aswell.
Companies that pay dividend have a more stable stock price trend as investors hesitate when selling a dividend paying stock. Dividend Growth over a long period of time also increase the stock price of the stock by leaps and bounds.
There are three approaches to dividend policy: Residual payouts, Stable Payout and Hybrid Payouts.
Residual Payout Policy:
As a company generates profits. These profits are used to finance new projects and ventures. Any profit remaining is paid out as dividend. These companies focus on managing debt and other business functions, this indicates that all operating expenses are met and satisfied before any payout.eg, DRREDDY ltd.
Stable Payout Policy:
The residual policy has an effect of irregular and erratic dividend payouts. In sharp contrast to that, the stable payout policy focuses on giving dividends first, and then using the rest of the profit to finance business functions. These companies are more investor friendly and set a fixed fraction of yearly profits that are paid out to investors. This is to provide confidence in the management and reduce uncertainty among the shareholders.eg, SBIN ltd.
Hybrid Payout Policy:
These companies focus on both the financial functions of the corporation and consistent dividend payout for he investors. These companies set a small and easily manageable fraction of yearly income as dividend payout. They pay bonus payouts only when there is profit left after all business functions are completed. This policy is common in most commodities dealing corporations.eg, GGC ltd
http://ghanishtnagpal.com/companies-decide-dividend-payout/
Payout of this dividend is at the discretion of the management of the corporation, they pay dividends because a consistent dividend payout provides certainty about the financial health of a company.
Dividends are also sought after by investors for regular income and their tax benefits. As history indicates change in dividend payout can have an effect on the stock price of a company aswell.
Companies that pay dividend have a more stable stock price trend as investors hesitate when selling a dividend paying stock. Dividend Growth over a long period of time also increase the stock price of the stock by leaps and bounds.
There are three approaches to dividend policy: Residual payouts, Stable Payout and Hybrid Payouts.
Residual Payout Policy:
As a company generates profits. These profits are used to finance new projects and ventures. Any profit remaining is paid out as dividend. These companies focus on managing debt and other business functions, this indicates that all operating expenses are met and satisfied before any payout.eg, DRREDDY ltd.
Stable Payout Policy:
The residual policy has an effect of irregular and erratic dividend payouts. In sharp contrast to that, the stable payout policy focuses on giving dividends first, and then using the rest of the profit to finance business functions. These companies are more investor friendly and set a fixed fraction of yearly profits that are paid out to investors. This is to provide confidence in the management and reduce uncertainty among the shareholders.eg, SBIN ltd.
Hybrid Payout Policy:
These companies focus on both the financial functions of the corporation and consistent dividend payout for he investors. These companies set a small and easily manageable fraction of yearly income as dividend payout. They pay bonus payouts only when there is profit left after all business functions are completed. This policy is common in most commodities dealing corporations.eg, GGC ltd
http://ghanishtnagpal.com/companies-decide-dividend-payout/
How to Save on Mutual Fund Fee?
I have a very strong bias that mutual funds are run by sheep and fake experts who don’t live up to their promises to investors. They promise to give spectacular investments and lots of research for a fee. The mutual fund industry is the biggest scam in the financial markets. They spend most of their time giving predictions on CNBC and again give a contradicting statement when the market changes mood. These salaried sheep who are after investors for fee and bonuses are like a leech sucking away the life blood the AMC industry.
Most mutual funds did not beat the NIFTY50
Over the past 5 years 85.44% of active , blue-chip fund managers failed to outperform the broad market. Their performance was even weaker after calculating fee deducted returns.
This means that investors are taking on the exposure to the equity market without getting the returns that the broader market enjoys. Frankly, as mutual funds are generic in nature protecting your nest egg is even more difficult as possibilities of better returns are almost nil.
At the same time when investing in bond funds is a very very good idea. They have a very low expense ratio compared to equity funds and deliver the much needed diversification in bond investment.
People argue that investing in equity mutual funds is the best way to diversify
While mutual funds are the theoretically optimal way to diversify, assuming they do indeed generate returns. But mutual funds often over diversify. This leads to subpar gain and unnecessary exposure to second grade investments. After a certain point it is simple overkill.
Management fees Matter
Whole a managers portion of the fee is usually around 1-2%p.a. of total assets , which doesn’t sound a lot of money at first, But since considering that mutual fund are long term investments. This 2% gets accumulated and compounded; it is a 10% loss from total profit if 2% is compounded yearly for 5 years.
How to save this entire fee and still get good return?
In my opinion one should invest in NIFTY50 ETFs these are exchange traded funds that carry nominal management fee as they are passively managed. They mimic the performance of the broader market. This way you will never under-perform the market.
If one wants to take higher risk, they can opt for a private money manager on a profit sharing basis. These professionals are trained to design tailor made portfolios for investors and guide them through other financial decisions as well.
http://ghanishtnagpal.com/save-mutual-fund-fee/
I have a very strong bias that mutual funds are run by sheep and fake experts who don’t live up to their promises to investors. They promise to give spectacular investments and lots of research for a fee. The mutual fund industry is the biggest scam in the financial markets. They spend most of their time giving predictions on CNBC and again give a contradicting statement when the market changes mood. These salaried sheep who are after investors for fee and bonuses are like a leech sucking away the life blood the AMC industry.
Most mutual funds did not beat the NIFTY50
Over the past 5 years 85.44% of active , blue-chip fund managers failed to outperform the broad market. Their performance was even weaker after calculating fee deducted returns.
This means that investors are taking on the exposure to the equity market without getting the returns that the broader market enjoys. Frankly, as mutual funds are generic in nature protecting your nest egg is even more difficult as possibilities of better returns are almost nil.
At the same time when investing in bond funds is a very very good idea. They have a very low expense ratio compared to equity funds and deliver the much needed diversification in bond investment.
People argue that investing in equity mutual funds is the best way to diversify
While mutual funds are the theoretically optimal way to diversify, assuming they do indeed generate returns. But mutual funds often over diversify. This leads to subpar gain and unnecessary exposure to second grade investments. After a certain point it is simple overkill.
Management fees Matter
Whole a managers portion of the fee is usually around 1-2%p.a. of total assets , which doesn’t sound a lot of money at first, But since considering that mutual fund are long term investments. This 2% gets accumulated and compounded; it is a 10% loss from total profit if 2% is compounded yearly for 5 years.
How to save this entire fee and still get good return?
In my opinion one should invest in NIFTY50 ETFs these are exchange traded funds that carry nominal management fee as they are passively managed. They mimic the performance of the broader market. This way you will never under-perform the market.
If one wants to take higher risk, they can opt for a private money manager on a profit sharing basis. These professionals are trained to design tailor made portfolios for investors and guide them through other financial decisions as well.
http://ghanishtnagpal.com/save-mutual-fund-fee/
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