Five pointers to consider when looking at dividend investing


Ok so you are looking to get back in to the market or use the current dip to add to your portfolio and everyone in every article is saying look for Yield! Well how do you do that or how  do you explain it to a client? I found this article on Morning Star and it was very easy to read and understand so I thought it would be appropriate to pass it on. It discuss 5 points to consider when looking a Dividend Investing:

  1. Look at the past and future – where have dividends come from in the past and can the company sustain them into the future.
  2. Look behind the yield – why is the yield high. Is it because the capital value has fallen or because dividends increasing over time. Capacity to grow its dividends is essential.
  3. Look closer at cyclical stocks – Cyclical companies like Newcrest Mining (NCM) may also have a tendency to pay sporadic dividends and you do not want to be buying into a story that will change in the short-medium term. Again consistency and future capacity are the core.
  4. Look beyond banks – don’t get overexposed to one sector . Look at consumer staples (MTS, WOW, WES), Healthcare, Infrastructure all defensive high yielding sectors. Because the Global financial Crisis revolved around banking, this sector has been more volatile in the recent past and looks to continue in this vein for years to come.
  5. Look for tax implications – what is useful for one type of investor is not for another. Franking Credits are the “CREAM” for a SMSF Pension Investor but of little or no use to someone on a higher Tax Bracket. Look at the after tax implications of an investment for your particular circumstances

So as I said some good points to consider and if you want to read the article in full please go to Click here

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

SMSF Specialist Adviser 

 Follow SMSFCoach on Twitter Liam Shorte on Linkedin NextGen Wealth on Facebook   

Verante Financial Planning

Tel: 02 98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

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