Tuesday, 16 December 2014

Dividend Weighted Investing

A couple of days ago I was browsing www.msn.com/en-us/money and while on the site an old investment idea clicked to me. Dividend weighted investment. This is an approach of identifying stocks that make dividend payout with regular frequency and giving special attention to those stocks exclusively.

 I checked the New York Stock Exchange (NYSE) and found over four hundred (400) stocks that paid dividends ranging from .5% to above 10% in some cases and with a 3%-4% yield on stock price an average with these dividend payouts. Most of the dividend payout/stock price yields were better than saving interest rate and treasury rate of returns.

Yes, I know people will argue that stocks are risky and there is a chance of suffering permanent loss of capital, but banks go bust and governments default on their promised to pay you a particular rate of return on the money loaned to them, only later to hear that you have to take proverbial haircut, (they operating more like Ali-"barber"). So I say that to suggest that risk is everywhere. Even if you plant a garden the weed will eat your fruits.

Exchange Traded Funds are now being designed using this strategy or approach to compile portfolios. Take a look at www.wisdomtree.com/dgrw/ 

See link on the dividend aristocrats: https://www.youtube.com/watch?v=BKyUKGp27FA


Dividend weighted investing can be a strategy or an investment approach.

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Feel free to ask question or make comment.

FII