When invest in stock market, why are people so hard up over dividends?

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#1
Shocked 
When invest in stock market, why are people so hard up over dividends?

That day I discussion stock market with friend, they say they look at dividends first. No dividend no talk. even my finance trained friend also say he look at dividend first. I hear him say this buei ta han dunno what he thinking.

I was thinking, dividends dont matter. The idea of receiving dividends every year sounds nice, but if you think carefully, its just left pocket right pocket. When you receive dividends, the share price will drop together with the dividend.

In fact, having no dividend is better because you are in control of when you receive your dividend.

Shouldnt other valuation ratios like PE, NAV, debt, gearing,growth be more important?

So really, why are people so hard up over dividends when they invest?


no offense to dividend warrior, just trying to have healthy debate so everyone become wiser. I know dividend warrior subscribe to the idea of dividend + growth. I dont agree with dividend, but I agree with growth.

[Image: dividend.jpg]

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This chart shows the returns you get when choosing high dividend stocks vs low dividend stocks. As you can see, there is NOTABLE NO DIFFERENCE!
[Image: TeHD54B.png]


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Sing Inv SING INVESTMENTS & FINANCE LTD
[Image: JcBlPkY.png]

Look at this company
Do rights issue. Then after that do dividend issue.
How dumb is that? Give you a Drumstruck , then take away the whole chicken

This type of company must avoid because they are doing stupid things

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High Dividend stocks - Good or bad? Buy liao can huat big big?

I see buying dividend stock seems to be very in. Buy liao every year company give you money. Shiok shiok.

Is it really good or bad? Dividend give you liao the price will automatically devalue. End up also back to square one mah? Left pocket right pocket.

Why is it when come to investing, people think of dividend as 1 of the top priority? Is it the right way of investing? Confused11:

Preferably Please dont say something generic like "depend on strategy". Break it down into its nuts and bolts in terms of risk reward liquidity returns etc
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#2
show me an example of the company which should offer dividend given profitability. We can start from there instead of arguing for nothing.
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#3
(25-12-2013, 06:10 PM)freedom Wrote: show me an example of the company which should offer dividend given profitability. We can start from there instead of arguing for nothing.

I am going through the 5 yr time series financials of many companies. When I find a good example i will post it ok?

The basic idea when to give dividend is when the company does not have good investment opportunities.

Technically speaking,give dividends when the company's rate of return (return on equity) on the best investment project is less than their cost of equity.

Its sad that many companies give dividends to manage their shareholder's expectation. And its also sad that many shareholders do not understand this concept, and impose unnecessary demand on the companies.
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#4
It should be read as "should not offer dividend". Sorry for my mistake.

In reality, such company rarely exists or only exists for a short period of time, which makes no long term sense.

Still any good profitable company should distribute dividend. Without a dividend, more than 90% companies should be just avoided. I think your friends have better financial sense than you.
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#5
Please take a look at UOB, OCBC, SPH, SIA Engg, Sats, M1. These are good examples of dividend stocks. What left pocket to right pocket? If these companies are not making $ yr after yr how are they going to pay sustainable or increased or special dividend? Yes xd price dropped, after xd price How? Please check for yourself.
Not a call to Buy or Sell

Mr Bump: All I Can Smell Is My FEAR
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#6
(25-12-2013, 06:48 PM)freedom Wrote: It should be read as "should not offer dividend". Sorry for my mistake.

In reality, such company rarely exists or only exists for a short period of time, which makes no long term sense.

Still any good profitable company should distribute dividend. Without a dividend, more than 90% companies should be just avoided. I think your friends have better financial sense than you.

(25-12-2013, 06:50 PM)kbl Wrote: Please take a look at UOB, OCBC, SPH, SIA Engg, Sats, M1. These are good examples of dividend stocks. What left pocket to right pocket? If these companies are not making $ yr after yr how are they going to pay sustainable or increased or special dividend? Yes xd price dropped, after xd price How? Please check for yourself.



i am not talking about profitable companies who give dividend, share buy back or special dividends when they should. Those are healthy signs. I absolutely agree with companies doing this.



I am talking about how people so easily misled into using dividends as a performance metric. Where profitability, ROE and ROA are much better metric.

I am also talking about indebted companies who give dividends, share buy back or special dividends when they should not! For example, companies who give dividends when they have high debt(and the interest rates on those debts are high). And companies who give dividends followed by rights issue.
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#7
Becoz they might be people who are used to putting their $$ in fixed deposits? 'Forced' to look for higher yields due to low interest rates high inflation.
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#8
(25-12-2013, 07:01 PM)wahkao Wrote:
(25-12-2013, 06:48 PM)freedom Wrote: It should be read as "should not offer dividend". Sorry for my mistake.

In reality, such company rarely exists or only exists for a short period of time, which makes no long term sense.

Still any good profitable company should distribute dividend. Without a dividend, more than 90% companies should be just avoided. I think your friends have better financial sense than you.

(25-12-2013, 06:50 PM)kbl Wrote: Please take a look at UOB, OCBC, SPH, SIA Engg, Sats, M1. These are good examples of dividend stocks. What left pocket to right pocket? If these companies are not making $ yr after yr how are they going to pay sustainable or increased or special dividend? Yes xd price dropped, after xd price How? Please check for yourself.



i am not talking about profitable companies who give dividend, share buy back or special dividends when they should. Those are healthy signs. I absolutely agree with companies doing this.



I am talking about how people so easily misled into using dividends as a performance metric. Where profitability, ROE and ROA are much better metric.

I am also talking about indebted companies who give dividends, share buy back or special dividends when they should not! For example, companies who give dividends when they have high debt(and the interest rates on those debts are high). And companies who give dividends followed by rights issue.

I am still waiting for an example. I don't see the management to distribute dividends to bankrupt the companies they manage. More often than not, I see the opposite behavior.

My entire thesis is based on "no dividend no talk". Of course, I am less familiar with the exact financial knowledge of your friends than you. But based on "no dividend no talk", they start well.
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#9
Some examples
Sing Inv SING INVESTMENTS & FINANCE LTD
[Image: JcBlPkY.png]

[Image: UqFCzQa.png]
[Image: wquUmly.png]
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#10
Did any of your example fail already? If not, at least they did nothing wrong yet. Just they did not do what you think of.

Why do you think you know better than the management of the company?

If the management thinks they have more than what they need, paying a dividend has nothing wrong, at least to me. Maybe not for you.
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