I had a lengthy but productive discussion with a friend recently. i shall share it below.
as usual, no lengthy essays as i like to present in a short and concise manner.
we can see the obvious gains we can achieve through the effects of compoundation, and it is one of the more proven method, if not the most.
why then is it harder to succeed in singapore through the same principles of dividend investing and reinvesting?
we can see in the usa, there are numerous companies such as mcd, colgate, general mills, coca cola and more, which are perpetual dividend raisers. a lot of these companies have raised their dividend yoy for the past 25 years, some even more. u can google them out. And more importantly, a lot of these companies pay a quarterly dividend. and last but not least, no rights issue exists for them.
so we see a lot of investors in usa, are basically 'passive' dividend investors and sticking to the strategy of investing and reinvesting in these companies will lead to serious wealth being created. 15% pa is quite normal, if the plan is stuck to and no early cashing out occurs. this basically means doubling in less than 5 years. and if one starts at 20 and ends at 60, it will mean a multiplication factor of some 267 times. He won't want to end this cash generation machine in the first place!
now, there are NO companies in singapore which satisfy the above 3 important qualities, at least at the current moment. even pure blue chips, we hardly see them increase dividend yoy and they don't pay quarterly dividend. If you use 10 year as time frame, none fit the criteria. Correct me if I am wrong. JMH comes close, but it pays twice a year. If you use 5 years, then some reits come into the picture.
thus, unless one is prepared to invest in companies outside of singapore, the above points very very important factors to consider, if one is in the serious business of building solid wealth.
thus because it is not clear cut at all in singapore, hence the singapore dividend machine is not the same per se. It is basically not as simple here and more likely than not, a lot will end up buying and selling more frequently than what is necessary, buying and selling the wrong stock, or holding on to the stock which represents lost opportunity costs.
as usual, no lengthy essays as i like to present in a short and concise manner.
we can see the obvious gains we can achieve through the effects of compoundation, and it is one of the more proven method, if not the most.
why then is it harder to succeed in singapore through the same principles of dividend investing and reinvesting?
we can see in the usa, there are numerous companies such as mcd, colgate, general mills, coca cola and more, which are perpetual dividend raisers. a lot of these companies have raised their dividend yoy for the past 25 years, some even more. u can google them out. And more importantly, a lot of these companies pay a quarterly dividend. and last but not least, no rights issue exists for them.
so we see a lot of investors in usa, are basically 'passive' dividend investors and sticking to the strategy of investing and reinvesting in these companies will lead to serious wealth being created. 15% pa is quite normal, if the plan is stuck to and no early cashing out occurs. this basically means doubling in less than 5 years. and if one starts at 20 and ends at 60, it will mean a multiplication factor of some 267 times. He won't want to end this cash generation machine in the first place!
now, there are NO companies in singapore which satisfy the above 3 important qualities, at least at the current moment. even pure blue chips, we hardly see them increase dividend yoy and they don't pay quarterly dividend. If you use 10 year as time frame, none fit the criteria. Correct me if I am wrong. JMH comes close, but it pays twice a year. If you use 5 years, then some reits come into the picture.
thus, unless one is prepared to invest in companies outside of singapore, the above points very very important factors to consider, if one is in the serious business of building solid wealth.
thus because it is not clear cut at all in singapore, hence the singapore dividend machine is not the same per se. It is basically not as simple here and more likely than not, a lot will end up buying and selling more frequently than what is necessary, buying and selling the wrong stock, or holding on to the stock which represents lost opportunity costs.
