A lot of people pooh pooh dividends. But I'm going to stick up for companies which pay it out regularly. The purest form of return on investment is dividends because this the the hard money which investors see. Take for example a well known tech company, Apple. As profitable as they are. Very few investors have seen money coming in the form of dividends.
The idea of shareholder return is more important than ever as Apple has gone off its highs. those people who bought shares near the top are wondering. Where is my return? The company has billions of dollars! But their poor dividend policy won't be winning over those investors who bought near the high!
The major rule is, if the stock has a high beta and DOESN'T pay out much dividends. Sell these stocks first in times when defence is of the utmost importance. The rationale is simple. You aren't getting much return to hold these stocks and if the market turns, the likelihood of a high beta stock turning lower at the same time is higher than normal.
Number 1 rule:
To play defense, sell those stocks with high beta which DOESN'T have much of a dividend return.
You could go through your portfolio and rank each holding in terms of beta and dividend return. Just have those which are low on dividend return, and high on beta on your potential sell list.
0 comments:
Post a Comment