«By fruits, they will learn them (…)
So every tree is good brings and good fruits … «
(C) Matthew Gospel (7:16, 7:17)
I can not get used to the modern world — to the fact that we all live in a «glass house» and for all of us constantly watched the «big brother».
But sometimes the constant attention of the «Big Brother» is even useful. For example, as soon as I started writing a draft of this article, Yandex immediately began to throw me with references to all sorts of materials glorifying or criticizing the dividend strategy. Very convenient — I don’t even need to look for anything))
I confess — it really helped in work — especially articles criticizing the dividend strategy. Since some of these objections, I would most likely saw in the comments and still work with these objections would have to.
So, to business.
Dividend strategy is one of the easiest and most common in the Russian market.
Actually, it would be strange if this strategy did not get distribution in our country — our market is famous for one of the highest dividend returns in the world.
The essence of the strategy in two words —
The truth is that long-term
Why is it so — why the exchange rate of shares is less concerned about the dividend investor, but he cannot be indifferent to it? Let’s analyze it in the framework of the overall parsing of the pluses and minuses of the dividend strategy.
So, pros and cons. Which is characteristic, quite according to the laws of Marxist dialectics,
Therefore, I propose first to simply consider in the overall list of the «Pro and Contra» Dividend Strategy. Moreover, I will give both the arguments against this strategy with which I fully agree and controversial — for clarity. Well, at the end of the article, let’s try to sum up and draw conclusions.
Let’s go in order.
From this, plus a dividend strategy flows — focusing on companies that have a good dividend history you, most often, do not acquire a muddy and incomprehensible office of «Horn and hooves». But the revolving side of this plus is that the rapidly growing starts will completely go out of the zone of your investment attention.
The argument is absolutely sound, in my opinion. Another thing is that this is as they say «not a bug, and the feature» of the dividend strategy. In finance, risk and yield are always proportional. Therefore, acquiring solid companies that have passed the stage of stormy growth (and stormy falls) you acquire a more relaxed asset. Naturally, with other things being equal, this asset is potentially less profitable than the assets with a higher risk. Here are just those who «Topit» for assets with a higher income forgets about the current side of the medal — about the highest risks.
However, no one bothers the investor by choosing a company to his portfolio, making dividends important, but far from the only selection criterion. Yes, therefore, it may be that UNIPRO with his 11% of dividends will lose the preference to prefect with only 8%, but much more development prospects. But after all, the supporter of the dividend strategy is not obliged at all to be storm on the dividends and not noticing anything around. Dividends are the cornerstone. But this is not the only stone in the construction.
So this argument can not be fully correct. Yes, navigate exclusively on dividends — not the best idea. But what prevents other criteria to take into account and making the dividend yield only the first stage of selection?
This is exactly the moment when we can return to the question «Why a dividend investor still worry the exchange rate costs of his shares, although not as strong as a supporter of many other strategies.
Let’s give a visual example.
See. If this year we expect 11% of the dividend yield from UNIPRO, or 12% of IDGC of the Center and the Volga region, then at first glance the dividend investor should have to sell the prefiers of the Sberbank and to win in Unipro.
Is it so? No. We will have to go «to the next level of dusk».
After all, our dividend investor wants in a year, and after two receive many dividends. Moreover, it is advisable — an increasing amount in rubles for each share. And for this, it would be nice to grow the course of shares. Sber, who this year plans to earn more than a trillion rubles, will give a little more than 8% of the dividend yield (if everything goes well in the second half of the year, as in the first).
This is a record. But the Sber is almost every year (except Pandemic) puts records. That is, in a year, you can quite wickedly assume that he will earn more money. And another year — again will increase its net profit. A UNIPRO or IDGC of CIP — actually, like other network and generating companies — have much less prospects for growth.
So we see that the dividend investor is not obliged to be a stiff man, unsuitable in the company nothing but the size of dividends. When choosing a company for the investment portfolio, its perspectives may well lie down on the scale of the scales next to the current dividends. That’s just a dividend investor believes that the prospects for choosing a company should be «close», and not «instead of» dividends. Why? About this a little further.
And what with an increase in the course of shares? If a financial thing is hit by any shock, then prosperous businesses (their shares) are nevertheless falling in price. Since the stock exchange a lot of people and funds will be soldered them — to obtain liquidity and solve their problems. But what will happen at this moment with the dividends of the prosperous business? He will continue to pay them with a high probability — after all, everything is in order with Cashflow and net profit. That is, we see — the course of shares depends on the company’s business indicators, and from market sentiment (which is very difficult to predict). And dividends in much greater degree depended only on the company’s indicators.
I believe that this argument against the dividend strategy is generally correct, but it is rather necessary to take into account people trying to create what is now fashionable to call the «dividend pension». For a stable cash flow, indeed, renal real estate (paper or real is a matter of taste) or bonds. Another question is what the percentage of yield gives you this «stable cash flow». But, for everything in life you have to pay — for stable — too.
Argument in my opinion is correct. Let’s say right — mathematically accurate. You really paid taxes and reduced these investment capital.
But this argument misses one important detail, you didn’t just pay taxes and everything.
There has also changed something — you received mobility for your portfolio, which you would not have, without receiving a dividend flow. You received liquidity that gives you the opportunity to work on the bugs that you could earlier to allow.
I will explain my thought.
Of course, if you are an absolutely brilliant investor and always acquire only the best papers, at the best time and correctly count your budget for the decades ahead — then further arguments are not about you.
In other words, if you, as an investor, always shoot unmistakably exactly — then the dividend flow may not need to work on errors.
But if you are an ordinary person, then the dividend flow will help you make more accurate «shots». Of course, it will not be able to fully correct all your mistakes, but it’s a little corrected — quite.
Here, managed shells are used at our Msta-C Gaubics. This, of course, not a self-picking rocket and 180 degrees will not change the direction, but it may well correct the petty «shoals» of the gunner. So and dividends.
We look at the examples how it works.
What happens in each case?
In a situation with a company that dividends pays — you can averaged your position all 10 years old and by the time you exit the sidewall will already be completely with other indicators on the account.
In a situation with a company that dividends does not pay — you can only tolerate and overcome (I do not suggest a fixed loss — the company is high-quality, that’s just a sense from her in a ten-year sidewall — like a goat of milk).
Only in this case you urgently needed money
When you were invested — you, of course, were going to be a long-term investor, but thought that «long-term» is five years. And here — ten years the sidewall.
Compare — the company, without paying dividends, forces you to fix the loss. I emphasize — the company has prospects — but you needed money, and you are in a dead end.
And what with a dividend alternative — she dividends gives you the liquidity, which you can, including and shut down holes that have suddenly formed in the personal budget.
What to do? Sell shares with a loss? Not the most pleasant option.
But the dividend flow gives you the opportunity to correct this error — you can reinvest your money to the market — but no longer in the same Issuer from which dividends received.
Here is this freedom of maneuver — it stands dear. Probably — and 13% of taxes it also costs))
Well, the conclusion is so «attracted by the ears», which I do not even know how to begin to criticize.
Firstly, there are many thousands of thousands of companies in the American market, you can even choose a highly diversified portfolio from this number — well, it is clearly not a problem. I would say that even in the Russian market to find a dozen two companies with normal dividends, it is quite possible — although this argument (about diversification) would work better.
But the argument about «Great Security» is exactly the tension of the owl to the globe. Obviously, companies, paying dividends, with other things being equal — these are more relaxed and sustainable companies. Add to your portfolio stuck in sustainable companies, some startups to strengthen security in the portfolio ??? This is nonsense.
Let’s show on the example.
Suppose I only have a prefect prefect in my portfolio. Straight 100%. In the logic of this analyst, if I add another 50% of PJSC «Horn and hooves» (startup, registered half a year ago and the preparing flight to Jupiter) — then the safety of my portfolio will grow sharply ??? So it seems to me — everything will be just the opposite))
So this logic is about greater diversification and greater safety if the dividend strategy is refusing — we will consider the analytics to be considered an insidious agent))
Almost any other strategy requires more active participation of the Investor himself. And the dividend portfolio in the situation of the disease or the sudden end of the investor is a pension for him or for his heirs. And for this function, more or less decent capital is really needed.
The argument about the amount of capital is partially fair — one of the advantages of the dividend strategy exhibits itself fully only at a fairly significant amount of investment. But many of its aspects work with the initial sums.
Dividend strategy is one of the easiest and safest.
The dividend strategy can play another profitability — this is normal for the final world, if a safer tool loses more risky yield.
Dividend strategy makes it possible to correct an investor error, constantly generating cash flow from investment and creating liquidity in the portfolio.
Dividend strategy All its advantages reveals on a large amount of investment, but this does not mean that it is not suitable for the capital accumulation phase. The quieter you go, the further you’ll get.
Dividend strategy causes greater dislike brokers, because Conjugate with a small number of transactions and does not generate profit brokers (with this, a huge number of crushing articles about this strategy is connected — usually the authors of such articles are employees of brokerage companies))
In my opinion — a dividend strategy is a fairly simple, understandable and safe tool that «God himself ordered» to use the Russian investor — in the market, where one of the highest dividends in the world — to become