FTSE100 offers many important observations/insights, but in this blogpost main focus is dividend stock picking.

https://www.hl.co.uk/news/articles/how-different-are-the-s-and-p-500-and-ftse-100 says

the FTSE 100 includes a lot of banks, oil companies and miners. These companies tend to be quite cyclical meaning they’re closely linked to the economic health of the country and tend to follow the ups and downs of the economy. They generally don’t have a lot of room for explosive growth. … The S&P 500 trades on a price to earnings ratio of 22.2, which is much higher than the FTSE 100 – currently trading on a PE of 14.4. Additionally, the historic dividend yield on the S&P 500 is 1.8%, compared to 4.8% for the FTSE 100.

— DRIP
Note most comparisons of FTSE100 vs SP500 graphs ignore dividend. It is hard to verify but some authors say that DRIP would dramatically change the picture.

— hot tech stocks [hot money, low CDY] has a huge presence in SP500
I think four articles comparing FTSE100^SP500 (or DJIA) all singled out this as the biggest of many reasons for the superior 10Y performance of SP500.

Coincidentally, Vance of DBS said the Singapore STI suffers the same weakness. “Sunset industries”.

— survivorship bias and natural selection ..
If we compare two ETFs tracking FTSE100 vs any tech-heavy index, we need to ask which index is adjusted more often. Tech-heavy, frequently adjusted indices tend to benefit from survivorship bias and natural selection. If no adjustment allowed, then the fatality rate (of tech stocks) becomes more apparent.

I guess (without evidence) that a tech-heavy index ETF would buy low sell high more often, due to index adjustments. The passive ETF manager would follow the index, to swap out laggards and swap in rising stars.

This blogpost is about indices, but here is a digression. ARKK and TRBCX are more tech-heavy than SP500, and more actively managed. I don’t have the bandwidth or skill.

div^capital_gain: which do you bet on@@

Posted on Fri, 15/Jan/2021Tue, 28/Jun/2022 by tiger40490

Between dividend and capital gain, which *one* is your primary focus financially? Which one do you bet on? Choose one please.

— Betting on dependable dividend income for retirement .. is betting on the “business” to generate free cash flow.
After we pay $40 for a XOM share, we hope to receive around $2 payout every year, without worrying about the short-term fluctuations in XOM price, assuming we don’t need to sell.

— Betting on capital gain is betting on supply/demand, betting on sentiment, betting on collective human reaction to news.

In this bet, inherent profitability of the business (heart@valInv) is perceived like weather or another source of news.

For example, when Twitter banned Trump, investor sentiment turned negative but some reactions were positive. Energy news impact energy stocks in complex ways, due to investor reaction.

— buy-n-forget .. is harder for tech stocks.
Tech stocks, China stocks, financial stocks generate paltry dividend. So I am forced to monitor the sentiment and hope to escape before any crash.
— buy-n-hold .. is the default for dividend investors. During the long holding period, we hope to be lucky with DYOC.
— Market timing .. is much less important for dividend investors. They kinda watch for entry points. They don’t watch for exit points, except for reallocation/re-balancing.

Buying too high …. is kinda tolerable for dividend investors, as long as DYOC is well-maintained. This depends primarily on dividend cut/raise decisions by the business.

dividend safety: naysayers #T, tobacco

Posted on Thu, 14/Jan/2021Sat, 06/Feb/2021 by tiger40490

In my Jan 2021 mail to Tanko, I wrote “https://www.fool.com/investing/2020/10/08/could-att-cut-its-dividend/ is one of many analysts preaching caution against T:US. At any time, there will be some bulls and some bears about T:us. I don’t take U-turns due to one article. But it’s fair to say that many investors view T:US as under threat.”

Q: how reliable is an annuity like Allianz Income Protector, SocialSecurity or CPF-life?
A: There are always naysayers. They point at inflation (uncertainties grow over long horizons), international interest rate risks, national fiscal policies, even trade wars! I mean, which country on earth is forever safe?

Singapore government has the will and the way to sustain the annuity. So does U.S. government and insurers.

Q: how safe is the dividend of T:US or any stock on earth?
A: At any time, there will be bears. They point at long-term risks, evolving competitive landscape,,,

I choose to look at the track record and I choose to trust the management. They have a moat, a brand, a high ground to defend and grow their business. Why would they have no choice but become a sitting duck?

No company is free of threats. Having a threat is not the same as surrender and implosion. Yes many iconic companies have fallen (Yahoo, Motorola, Nortel, Nokia… in tech) but many more have survived multiple threats, crises and challenges.

Eg: “With the world-wide decrease in smoking in the 21st century, shares of Philip Morris were no longer considered the ‘safe haven’ they once were.” Personally I would say this is a long-term trend, but in the 20-year horizon, my DYOC may stay above 4%. Question is “can NAV recover?”

— moat: strengths are relative, limitations are absolute.
context: In Value Investing framework, moat protect profit and dividend

For most moats, the strength is never absolute or permanent. We can only identify relative strengths.

T:US is one of the biggest phone networks
O:US has a large portfolio and strong reputation so it can attract reputable tenants, negotiate good lease terms. It also has good cash flow to withstand economic down turns better than competitors
XOM?
GE?
Baba?

MAPIC: j4$1100 #

Posted on Wed, 06/Jan/2021Mon, 20/Feb/2023 by tiger40490

GEX knows the developer and can help reduce Megaworld type of problem.

Below are some of the potential benefits/ROI for the $1100 fee [membership fee + training fee]

t$Cost is $1100 + tcost. There’s refund guarantee — doesn’t feel like a marketing gimmick.

[!u=Not a unique benefit of this program. Without this program, I can also achieve the same]

— [u] benefit: micro_view.. Due to my experience trading stocks, mufu etc I have never focused on selecting specific units or locations that are underpriced, undervalued, or under pressure to sell.
Apparently, personal network is the “key”.

— [u] benefit: Risk /mitigation/..” Risk comes from not knowing what you are doing.” I have learned something from my ventures. The learning is crucial. I think P.Liew takes lots of bold actions because he is experienced. GS takes many risky bets than other ibanks thanks to risk mgmt system. The risk is still present and these players can fail, but their risk profile is very different form a foolhardy (傻大胆) or inexperienced investor.

So in the beginning it’s important to get your feet wet following a veteran.

Overseas rEstate (or SG commercial) is high risk hig return. I hope MAPIC has safety features built-in, to protect the small retail investors. If a small investor is too risk averse (like my wife), then perhaps they should stay away after paying for the training. This is Scenario K below/above.

— [u] benefit: guided expedition (to Everest) .. Except in U.S. stocks, I always believe paid guidance [consultation, advice] beats free guidance. In this case, the guidance covers due diligence [legal matters, rental projection, political risk assessment], negotiations, contract modifications .. very complex to a beginner.

My sister has some experience. To an experienced business person like her, it may not be so complex.

Compared to the assistance I received on Brazil project or Cambodia projects, I hope GEX team is more involved, more committed. Hopefully Comparable to NCT’s guidance, but I doubt it.

However, NCT is one-person, with limited bandwidth. What I offend him or he shifts his focus elsewhere?

— [u] benefit (IFF I take up a bulk deal): access to a SG commercial space .. SG location offers many real advantages over U.S., SEAsia, China… Advantages like familiarity and legal framework. So in SG the commercial space is very attractive.

This program brings me closer (if not “access”) to this and other alluring markets.

In a sense, the $1100 is a club membership to access this market + UK/Au markets.

— [u] benefit (IFF I take up a bulk deal): access to UK/Au markets, unrealistic without guidance.
I always have a secret fantasy to own a non-HDB property, but I have always stayed away, based on assumptions… Unproven Assumptions about risk. This risk comes from not knowing what you are doing, as discussed above/below.
— Q2: would I take on an A$500k home and sell my BGC unit? No. BDYK [BetterTheDevilYouKnow]

As explained in forward hazard rate, My BGC unit is now a much safer asset than it was in 2015. This improvement in “hazard rate” is realized, concrete and bigger than the promised improvement due to the GEX’s risk mitigation expertise.

Concentration risk and size of exposure is much better (smaller) at BGC.
No mortgage needed.
Tenants are probably easier to find in BGC than in a typical suburb, unless the suburb is special but we won’t know it until we try (see FHR)
.. NGRY could be better or worse.
See blogpost on DCC

So why would I dispose of a safer, more proven cash cow for something riskier?

Q2b: would I take on an SG commercial and sell my BGC unit? Plausible

currency risk
legal system
easier to find local agents
easier to manage when I’m in the U.S.

— a few minor benefits

[u] benefit: (IFF I take up a bulk deal) reduce concentration_risk of Cambodia while maintaining my allocation to rEstate sector
[u] benefit: (IFF I take up a bulk deal) good use of my spare cash. As I said before, I would have a growing pile of spare cash before I leave MLP.
[!u] benefit: (IFF I take up a bulk deal) reduce dependency on WSC_harbor and support stay-home mom, as explained in [21]to sis:G3specific goals@invest` #Shiller. See Q3 below.
[!u] benefit: learn something about sReit
benefit: possibly a comprehensive course for an investor overweight on rEstate (for decades), but self-taught.

— Q9: how could I regret this decision?
Scenario K: I don’t find anything meaningful in the 2D course. I don’t find any suitable deal.
Scenario: I find out that elsewhere I could access the same deal at equivalent or better prices (more likely for wealthy investors). Unlikely since I don’t even look at the non-HDB market.

The investment “opportunities” could be irresistible and derail my carefree bubble.

— The #1 biggest problem .. big mortgage is a potential derailer, and was one of the biggest show-stoppers in the past, whenever I considered overseas properties. Most retail investors are too greedy and aggressive.

Case in point — refinance to buy a second property. This strategy is sure to derail your ezlife bubble. You may break part of your bubble and roll it to cashflow low ground, not due to a storm, nor a swan event but a misstep, a manmade disaster. https://www.credible.com/blog/mortgages/cash-out-refinance-to-buy-second-home/ has a numeric example. Imagine your current home value is $400,000 and your current mortgage balance is $100,000. Now, say you want to make an $80,000 down payment on a second home. You’ll take out a cash-out refinance loan (mtg2) worth $180,000 (sized for you). Out of that, $100,000 will pay off your existing mtg1, and you’ll pocket the remaining $80,000 for the down payment. Your 2nd home will be on a brand new mortgage, but your 1st home will carry the 180k mtg2.

Right now, am actively planning the max-leverage (thing/scheme) with minimum cpfOA balance, no IRAS prepayment, no mtg PRP. The longer I /hold up/ this max-leverage, the heavier my burden weighs

high burn rate due to IRAS and big mtg
exposure to LIR hazard
loss of opportunity to earn interest on cpfOA

So as soon as I lose interest/patience/hope in grabbing another property, I would abandon this max-leverage

— The #2 biggest (and neglected) item is U.S. relocation. (U.S. housing plan…) … Not If but When!

Div stocks are much easier to liquidate. Selective cash-out. Low transaction cost.
Aus, BGC property would all tie me down .
SG commercial rEstate is better in terms of NRY, currency, legal risks, but quantum too big.

==== Q3: div stock ^ overseas (or SgCP) rEstate.. Shall I invest 200-300k into div stocks including Reits?

Paradox: I feel it’s unlikely I would invest so much into stocks. If I have 300k free cash (including wife’s) I would leave it as is rather than buying div stocks. But if there’s a rEstate deal, I would jump in head first (risky)

jolt: With div stocks the quantum advantage is also its /handicap/, as I can’t persuade myself to commit 500k on an ETF or 10 stock (diversification). So I end up on a very slow incremental top-up. See also [21] speed up: riskCapital4U.S.eq

jolt: I think the idea of buy-n-forget is 3x more effective with rEstate than div stocks. With rEstate there’s not much monitoring to do.

Jolt: shifting allocation between asset classes is costly and slow with rEstate.

sReits can be a proxy for SgCP, and can be better than usReits due to local knowledge, but this plan requires lots of due diligence.

Paradox: I have a strict discipline to never borrow money to buy stocks, but I do borrow money to invest in rEstate !

Paradox: consistent payout trec .. the dividend superstars are more proven than most rEstate markets.

DYOC ^ 中长线 #K.hu

Posted on Sun, 03/Jan/2021Tue, 28/Jun/2022 by tiger40490

— This is a Jan 2021 self-description of my trading style to a respected fellow investor.
I’m relatively new to stocks, growing my own portfolio and my own system. In my “system”, dividend takes center stage. I think your view is quite common and mainstream. It’s not wrong (though it may not meet my objective).

My objective is dividend as a (relatively) dependable income source, not capital appreciation. (What’s your objective?) If a stock has stable dividends then usually the business is resilient. As I said previously, if I buy at $100 and the price goes $30 to $150 over 3Y, I can afford to ignore the fluctuation to the extent that the dividend amount stays steady. If the actual dividend amount is steady (like $4/Yr, or 4% div yield on cost), then I intend to wait for 25 years to recover my capital. Patience and holding power are keywords in my “system”.

In your comments , I notice a recurring view represented by 正道 . I think many investors think their own “system” is the mainstream (probably yes) and is safe/prudent (??). Following these mainstream “systems”, I am also investing a small amount in ETFs based on sp500 stocks. I also look at each company’s long-term prospect, but not as the centerpiece, because I don’t have time or expertise to evaluate that.

Is dividend investing 正道? I believe it is fairly popular, proven, relatively safe, but less mainstream within my cohort. If you say a focus on dividend is not 正道 then I think thousands, possibly millions, of investors would disagree, esp. in the U.S. There are many articles about using dividend as a major retirement income.

Actually all “systems” I have come across are imperfect and risky. (For low-risk, we would consider government bonds and the money market.) Within the universe of stock markets, I consider U.S. stocks safer than other regions, blue chips safer than unknown names, long-living companies safer than young stocks, proven profitable companies safer than growth stocks with low P/E.

If I were to use my objective and my safety criteria to judge another person’s system (possibly mainstream system), I might conclude it’s not 正道 not sustainable, perhaps because the realized dividend yield on cost is too low, making it tough to hold the stocks through a downturn. Overall, I feel my own new and evolving “system”, with my focus on dividend, is not mainstream but safer than many mainstream systems. I seldom buy tech stocks or financial stocks (I can name some exceptions). I do agree with the caution that fixation on current div yield can be unwise and regrettable, because some stocks stop paying high dividends after a few quarters, so an initial $100 become ~~$50 in NAV (for many years) + $10 in cumulative dividend~~. Again, buy-n-hold would become a challenge.

You are right about dividend fluctuations. It’s rare (and precious) to find stocks with steady rising dividends + current dividend yield above 4% . I will name some examples in the future (Perhaps AT&T ? )

Note my 3Y holding period is not applicable to some ETFs.

On Thu, 21 Jan 2021 at 17:11, Bin TAN (Victor) wrote:

You said “big trends are usually only in mid to long-term, where short-term tradings, are usually noises compared to long-term. 抓大放小才是正道”.

I prefer buy-n-hold, hopefully for 3Y or longer, rather than short-term trading. However, I mostly buy for dividend rather than windfall profit. There’s nothing 大 in my approach. I estimate that 90% of my Robinhood assets have a published current dividend yield of 4% – 7% (actually dividend yield on cost is what I care about.)

While you (like other investors) monitor the stocks in your portfolio, I tend to monitor the dividend amounts. If I buy at $100 and the price goes $30 to $150 over 3Y, I can afford to ignore the fluctuation to the extent that the dividend amount stays steady.

Actually, I don’t monitor dividends. Dividend amount fluctuates less than stock price which is determined by supply-n-demand on the market. Dividend amount is decided by management, regardless of stock price.

rewarding DYOC ]%%experience

Posted on Sat, 02/Jan/2021Wed, 19/Apr/2023 by tiger40490

If without eroding NAV I can generate 6% dividend on 10k then this is a strategic asset class for me, better than most FSM funds.

— Some examples I could look into
6% ABBV
8% AGNC [r] – but price is slightly “red” on rbh which ignores div received.
10% ARCC [f] –
15% BCSF [f] –
6% BP – rare blue-chip above 5% but DYOC falling
.. 6% = (0.31 x 3+0.62)/average price $27
15% BPY [r] –
CVX
8% DOW .. rare blue-chip above 5%
10% EPD –
14% ET –
7% GLPI – DYOC might rise further
13% HTGC [f] –
5% MFC [f] – after-tax .. rare blue-chip above 5%
MO
9% NAVI [f] –
11% NLY [r] – but price is slightly “red” on rbh which ignores div received.
11% ORC [r] – but price looks red
11% TCPC [f] –
12% TWO [r] –
16% RWT [r] –
RC [r] –
4% Shell –
9% SPG [r] –
STWD [r]
7% T:US – My earliest 2019 T:US shares were typically bought /at around/ $29
16% TRTX [r] –
9% XOM – rare blue-chip above 5%
UBS?
[f=financial sector]
[r=Reit]

— Where can I see the actual dividend cash amount coming into my cash account?

Statement?
Once Rbh support sent me a file

— rental properties

#4-116: I earned about $12k/Y on 185k = 12% GRY but NRY is probably below 10%.

stable div^ fractional@growth_stock

Posted on Thu, 17/Dec/2020Mon, 10/May/2021 by tiger40490

If I must choose Between stable dividends and fractional shares of growth stocks, I still favor stocks showing stable dividend.

Unlike most small investors, I want “cash cow assets” producing dependable current income for several financial needs like family support, and to supplement my salary, and enhance brbr . Rental property is the archetype of cash cow. Even when NAV (resale valuation) drops, rental income keeps coming in. In equities, Utility stocks are the closest thing.

With the hot growth stocks, I indirectly hold a lot of fractional shares via the funds I bought. One share of an ETF or $1000 of a mufu hold lots of fractional shares, due to the fundamental nature of these products.

Some examples

WNS
Twitter
Moderna
Baba, JD.com

— Drawbacks with low-dividend growth stocks, in bad times (or good times)
Background: I prefer to periodically cash out some small (fractional) quantity of shares for the reasons stated in the beginning. Fractional liquidation might be comparable (a poor cousin?) to periodic dividend payout.

when a growth stock has fallen but I need some cash … it’s hard to convince myself to liquidate 1.1%. No such agony with a dividend stock, whose business model supports stream of dividend, which meets my financial needs.
liquidating a productive asset .. psychologically or effectively, each time we would be liquidating some 1.1% of a productive asset. It feels stupid, unwise, and adds to the reluctance and burden of due diligence. In contrast, dividend stocks are cash cows and we never need the agony to kill the cow to get the milk. Echoed on [[Living off Dividends in Retirement]]
one of the key drawbacks is the loss of sleep and focus at work. (See buy-n-forget→ sleep]peace, focus@work: avoid 0-div ) This risk is reduced by consistent dividends, which helps me achieve buy-n-forget.
due diligence @ each sell= burden …. You have to endure due diligence each time, regarding when and how to cash out some amount. The current income thus produced is unstable, inconvenient, stressful….If you happen to be busy with work, family member, illness or any major decision, then you don’t want the extra job with the due diligence. Echoed on [[Living off Dividends in Retirement]]
timing/window …. each time we worry about missing the best window to liquidate some (albeit small ) quantity of this grow stock.
Tax Lot accounting …. is a non-trivial “extra job”.
Fractional shares don’t support limit orders. Some growth stocks are too big to sell in one whole share.
pre-clearance .. each time you need a pre-clearance. If you forget it, you run the risk of compliance violations

oil majors hate to cut dividend

Posted on Sun, 31/Mar/2019Tue, 22/Feb/2022 by tiger40490

https://www.investopedia.com/articles/active-trading/073015/dividend-versus-buyback-which-better.asp claims “Although dividend payments are discretionary for a dividend-paying company, reducing or eliminating dividends is not viewed favorably by investors. The result could lead to shareholders selling their shareholdings en masse if the dividend is reduced, suspended or eliminated.”

https://finance.yahoo.com/news/big-oil-big-crisis-save-204611096.html?.tsrc=rss says

A Janus Henderson researcher said “At some point though, borrowing to pay the dividend is not sustainable…. Nobody wants to be the CEO who cuts the dividend. They understand that any company that cuts, its shareholders will flow into competitors and be very, very hesitant to ever come back.”

Shell, Chevron, and Total may also choose to save money for dividends by reducing their share-buyback programs, which are typically seen by investors as more discretionary than the quarterly cash payouts.

GS research said “In past oil downturns, Big Oil on aggregate did not respond to challenging macro conditions through material dividend cuts,”

As of Oct 2020, BP, Shell … all cut dividends, but XOM bucked the trend

dTanbinvest

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[19] dividend as foundation4retirement #^bond

[[Living off Dividends in Retirement]] #5%CDY

FTSE100 showing div stocks=slow