10-12-2011, 11:45 AM
If you are a recent shareholder of SPH, you must have felt very happy with your stock selection ability as you see its share price staying strong even as the market was volatile and weak. You’d have seen it hitting a high of $3.94 as it approaches xd and gleefully waited for the 17ct dividend. But on 8-Dec, when it xd, it dropped more than 17ct. You must have consoled yourself by blaming it on the weak market as STI had dropped a lot on that day. It continued to slide on 10-Dec and closed at $3.64. Yes, yet another bad market day. But, doubts begin to form in your head… What you’d read in the forum seems to be true… SPH is in a sunset industry… In your mind, you start to make plans to get rid of it asap, cut loss even if necessary…
If you are a long term shareholder of SPH, you’d have been through many similar such cycles as described above, especially so, when the market was weak and volatile. By now, you’d become so used to it and you expect SPH share price to recover again. In the worst case, perhaps one year later, when they’re declaring that “big” close to 20ct dividend. Ya, no worries, you may even try to pick up some more “cheap” ones to add to your collection if it drops even further, giving you a higher yield.
I belong to the latter group of SPH shareholders. I have rode the SPH roller-coaster share price from $2.xx to $5.xx during the past decade or so, including the days when it had a SPH100 category before they did a 5-for-1 split (used to trade above $30 back then at its high before the split and Capital Returns). But, in recent years, instead of a buy-and-hold-forever strategy, I am a bit more active in “managing” my SPH shares to make a couple more % returns. As SPH is in a matured phase of their business cycle, I’m not afraid that if I were to sell my SPH shares, I’d be “caught out” if it were to do an exponential rise in share price. That only happens for companies who’re still growing annually at a healthy pace. As many had kindly pointed out in the forum, their print business is in a sunset industry. At best, they can only maintain their EPS for our DPS by expanding their Property business segment and managing the future decline of the Print business by slowly converting to an online model.
What I do is I usually sell most of my SPH shares a few days before it goes xd and I buy back again at my own leisure after it goes xd. In this recent case, I sold mine at $3.91 about a week before it goes xd and I just bought some back at $3.64/5, two days after xd (I usually have to wait for months to buy back at a good “discount”). In this example, I “save” an extra 9ct, if I use $3.65 as the reference. Yes, SPH may drop even further as market is still weak and volatile. But, don’t forget, I belong to the latter group of SPH shareholder and die-die, I must have some in my long term portfolio for the dividends to pay for my daily expenses.
To summarise, I list the conditions on when the above is applicable (for me),
1. Focus on a stock in a mature phase (flat or slow growth) and one you don't mind holding long term ie. Fundamentally strong companies
2. Market has to be weak and volatile. If market is strong, share price has a high chance to drop less than dividend payout amount after it goes xd.
3. High dividend payout, especially those stocks which pays dividend only once a year or for those with semi-annual payout, then usually during the higher year end payout
The next stock I’ll be trying the above is STEng for their FY11 (Dec) dividend, if market remains weak and volatile. Wish me luck!
Warning : Don’t try the above unless you are experienced enough to blame yourself if anytime goes wrong!
If you are a long term shareholder of SPH, you’d have been through many similar such cycles as described above, especially so, when the market was weak and volatile. By now, you’d become so used to it and you expect SPH share price to recover again. In the worst case, perhaps one year later, when they’re declaring that “big” close to 20ct dividend. Ya, no worries, you may even try to pick up some more “cheap” ones to add to your collection if it drops even further, giving you a higher yield.
I belong to the latter group of SPH shareholders. I have rode the SPH roller-coaster share price from $2.xx to $5.xx during the past decade or so, including the days when it had a SPH100 category before they did a 5-for-1 split (used to trade above $30 back then at its high before the split and Capital Returns). But, in recent years, instead of a buy-and-hold-forever strategy, I am a bit more active in “managing” my SPH shares to make a couple more % returns. As SPH is in a matured phase of their business cycle, I’m not afraid that if I were to sell my SPH shares, I’d be “caught out” if it were to do an exponential rise in share price. That only happens for companies who’re still growing annually at a healthy pace. As many had kindly pointed out in the forum, their print business is in a sunset industry. At best, they can only maintain their EPS for our DPS by expanding their Property business segment and managing the future decline of the Print business by slowly converting to an online model.
What I do is I usually sell most of my SPH shares a few days before it goes xd and I buy back again at my own leisure after it goes xd. In this recent case, I sold mine at $3.91 about a week before it goes xd and I just bought some back at $3.64/5, two days after xd (I usually have to wait for months to buy back at a good “discount”). In this example, I “save” an extra 9ct, if I use $3.65 as the reference. Yes, SPH may drop even further as market is still weak and volatile. But, don’t forget, I belong to the latter group of SPH shareholder and die-die, I must have some in my long term portfolio for the dividends to pay for my daily expenses.
To summarise, I list the conditions on when the above is applicable (for me),
1. Focus on a stock in a mature phase (flat or slow growth) and one you don't mind holding long term ie. Fundamentally strong companies
2. Market has to be weak and volatile. If market is strong, share price has a high chance to drop less than dividend payout amount after it goes xd.
3. High dividend payout, especially those stocks which pays dividend only once a year or for those with semi-annual payout, then usually during the higher year end payout
The next stock I’ll be trying the above is STEng for their FY11 (Dec) dividend, if market remains weak and volatile. Wish me luck!
Warning : Don’t try the above unless you are experienced enough to blame yourself if anytime goes wrong!