Friday, January 29, 2016

Share Investment Had Two Types Of Incomes

Share investment had two types of incomes:

·         Capital appreciation

·         Dividend income

Every investor has their own method of investing that suits them the most. For youngsters, normally they are more to risk seeker while for elder person they are more to risk adverse. High dividend yields are attractive to investors who desire current income and stability with lower risk. This yield is then reinvested. This process of reinvesting repeats itself for as long as you own the stocks. As the interest on your investment is compounded, it will greatly increase your return over the time.


Dividends are money in your pocket, and after they’re paid they can’t be taken from you. The share price movement of a company is mainly affected by market sentiment and the company earnings. However, dividends are mainly affected by company earnings itself only. No matter how bad the market condition is, as long as the company is still making good profit, they will still declare good dividend regardless how low is their share price! Unless the management is not generous or they want to retain for expansion, then that’s different story.

KLCI index had dropped about 5.13% till Dec 2015. Many shares had dropped below their support line and some had broken a new low. I not sure whether the market will still going down but investors may start to collect some good undervalue stocks. There are many good fundamental companies with cheap price in the market. Heavy drop in made those high dividend stocks more attractive. So, for some investors, it is a good opportunity to collect, isn’t it?

High dividend yield is one of the powerful tools which can help us to achieve financial freedom.  For example, if you invest RM1million in REITs by retirement age, with average D/Y of 6% after tax, you will get RM60k annually, which equivalent to RM5k passive income a month! By that time, you do not need to do anything, to get RM5k a month. This is what we called financial freedom.

Before I stop here, I would like to share some good consistent earning company and REITs with D/Y more than 6% (as at 28th August 2015).

No.
Stocks
Price
D/Y
1
Tasek
15.000
11.33%
2
Media Prima
1.050
10.48%
3
SEGi
1.400
9.29%
4
Rexit
0.400
8.75%
5
Perstim
4.210
8.31%
6
Magnum
2.600
7.69%
7
Atlan
4.560
7.68%
8
CCM Duopharma
2.450
7.55%
9
YTL E-Solutions
0.535
7.48%
10
Padini
1.370
7.30%
11
BJToto
2.950
7.29%
12
CYL
0.700
7.14%
13
Star
2.540
7.09%
14
JCY
0.640
7.03%
15
Classic Scenic
1.150
6.96%
16
Uchi Tech.
1.450
6.90%
17
Deleum
1.080
6.48%
18
Yi-Lai
0.805
6.21%

No.
REITs
Price
D/Y
1
Atrium
1.04
8.94%
2
Quill Capita
1.04
8.06%
3
YTL
1.04
7.67%
4
AmanahRaya
0.83
7.52%
5
Amanah Harta Tanah
0.97
7.42%
6
UOA
1.50
7.37%
7
Amfirst
0.78
7.14%
8
Hektar
1.51
6.95%
9
IGB
1.31
6.39%
10
Axis
3.27
6.04%
11
Sunway
1.49
5.86%
12
Tower
1.10
5.82%
13
Alaqar
1.34
5.71%
14
Pavilion
1.51
5.44%
15
Capitamalls
1.33
3.47%
Note: Atrium had just disposed one of its properties and it is giving out higher dividend from its gain on disposal. On the next quarter and onwards, its earnings income expects to b drop and will not be able to pay high dividend. YTL had proposed private placement which expect to be done on beginning of next year. By the time, the company earnings will be dilute and investors will get lesser dividend for each share.
Feel free to comment. (Some of the above points taken from theedgedaily.com)

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