I practice dividend investing and the key points of my style of investing are as follows:
1) Consistent dividend payout
Management should pay dividend every year whenever possible. A steady increasing dividend over time is preferred.
2) Strong management
A lot of focus needs to be on management skills and capability. A good business model and sound strategies are very important for improved performance and dividend over time. Do keep a look out for competitors’ business models and strategies too.
3) Align your investment with Mr. Market
Mr. Market currently favours gadgets (consumer, energy saving and automation), healthcare, life science, lab equipment (food safety etc.), measuring instruments (what can be measured must be measured in modern living), MICE industry and travel retail. This is likely due to the above average growth rate in these industries and the large potential market in the future.
I will put more of my investment in industries that Mr. Market prefers to ride the uptrend.
4) Diversification
As I do not practice Margin of Safety (MOS) investing style, diversification is a must to safeguard against poor judgement on my side. For dividend investing, it is not advisable to put more than 10% of your current net worth in any one stock at the time of purchase. Thus, I will have at least 10 stocks in my portfolio at any time.
I am not sure which investing guru promotes MOS investing style as I find that it tends to screen out too many good stock candidates. I follow Warren Buffett’s advice to pay a fair price for an excellent business and a good price for a reasonably good business.
5) Be flexible
If a company’s quarterly result is way below expectation, I will usually immediately sell or greatly reduced my investment in it if I feel that the poor result is due to increased competition or wrong strategies adopted. It is always better to be safe than sorry. I can always buy back the same company later if its result improves in the future.
Some of my current stocks are as follows:
a) First REIT
b) CEI
c) Chip Eng Seng
d) Kingsmen
My current annual dividend yield for all the above stocks are above 10% except for CEI (9.7% yield). The high dividend yield is because I purchased these stocks when they were cheaper. The first 3 stocks have increased dividend for this year due to better results while Kingsmen has maintained its dividend.
(28-02-2015, 07:52 PM)CY09 Wrote: [ -> ]Hi Weii,
No problem, i am happy to share my thoughts etc. Btw just curious, you mentioned the focus in high growth industries, bio medical etc, are the stocks you are looking at listed on SGX? Is it possible to share what are you looking at; if you are not comfortable to share publicly, feel free to share by PMing me
In the current market sentiment, I sense among some VB members and the general retail market, the pessimism they have towards Penguin and the oil support industry at large. To quote Berkshire's 1990 shareholder letter: "The most common cause of low prices is pessimism - sometimes pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer."-- 1990 shareholder letter
Of course, if it is a good business then stick with it, if it is not, you shouldn't have bought in at the first place.