I like investing cautiously in shares of companies giving dividends. I decided to increase and diversify a bit in different sectors. I thought why not make my own list of stocks and purchase them for dividend earning whenever they are available in low price in market..
This is keeping in mind that keeping money in banks is no longer profitable. Hence, we will also try to get best safety for our investment.
So, I kept in mind following things:-
Invest in high quality businesses that have a proven long-term record of stability, growth, and profitability.
Rank stocks by dividend history and corporate history length (the longer the better). Stocks must have paid steady or increasing dividends be it low or high market condition.
Stocks with more than 20+ years of rising dividends that have outperformed the Nifty over the last 10 years by atleast 2-3% points per year.
Invest in businesses that pay the highest dividends per amount invested. The higher the dividend yield, the better. Additionally, only invest when stock is trading below its historical average valuation multiple to avoid investing in overpriced securities.
Rank stocks by dividend yield. Only stocks trading below their 10 year historical average valuation multiple are eligible for buy. A yield of 4% per year would be good.
The highest dividend yield stocks always outperform the low yield stocks in the long run.
Remember you are investing for growing your money and earning dividend yields per year as your average monthly income that could be anything from 25 thousand per month upto one lakh per month.
Accordingly we will need to plan. But 1st lets frame out our basic strategies before becoming too hopeful. Otherwise its going to be tough.
If a business is paying out all its income as dividends, it has no margin of safety. When a business downturn occurs, the dividend must be reduced.
Another form of risk is purchasing overpriced businesses. Try to avoid it.
Companies that are repurchasing large amounts of shares are generating large amounts of cash flows. When times get tough, the money spent in the past on share repurchases can be used to support the dividend instead, creating a margin of safety. Additionally, a company repurchasing its own shares is signalling that shares are undervalued or at the very least at fair value.
So, now rank stocks by share repurchase yield too.
The buyback stocks have outperformed the nifty in the long run.
Invest in businesses that have a history of solid growth. If a business has maintained a high growth rate for several years, they are likely to continue to do so. The more a business grows, the more profitable your investment will become.
Rank stocks by earnings-per-share growth estimates. If earnings-per-share growth estimates are unavailable or unreasonable, then revenue-per-share growth or dividend-per-share growth estimates can be used instead.
Growing dividend stocks have outperform stocks with unchanging dividends in the long run. Look for businesses that people invest in during recessions and times of panic. These businesses will have a relatively stable stock price that will make them easier to hold for the long run.
Now rank stocks by their long-term volatility and beta
The low volatility stocks outperform the nifty in the long run. We can check volatile stocks on VIX index.
If you are offered a 25 lakh today for a house of cost 12.5 lakh, you will sell the house. It is the same with a stock. If you can sell a stock for much more than it is worth , you should. Take the money and reinvest it into businesses that pays higher dividends.
Hence, a very important rule sell when the normalized P/E ratio has crossed over 40.
The low P/E stocks outperform the high P/E stocks.
Now, no one can be right all the time. Spreading your investments over multiple stocks in different sectors reduces the impact of being wrong on any one stock. But always be cautious these stocks must give out dividends even when their sector is not performing so well maybe due to low market demand of their services or products.
So we may build a diversified portfolio over time.
**** In the end remember not to buy/invest in stocks is better than a wrong decesion to buy/invest in a wrong stock or a good stock but at wrong timing ****
It also make a monthly updated list (ranked in order) of over 100 dividend stocks with 25+ years of dividend payments without any reduction. In short, it has everything you need to add high quality dividend growth stocks to your portfolio.
I myself trry to invest 5% of my salary every month in any one of them, for this I select out 10 such shares every month and finally invest in one only.
My suggestion is all of you who read this must also try to make your own ?MUTUAL FUND? So, I prefer to call it my own "DISTINCT FUND" and I definitely want it to perform better than any mutual fund !!!
Happy investing.
Read some of the following very good reference books in 2017.
Read one business article from a magazine and a business newspaper on a daily basis to get the real live feel of the market conditions.
Read - to go and directly buy the books copy paste the links provided below.
January : Top 100 Diversified Undervalued Indian Stocks For FY 2017-2018 by Mahesh Kaushik (Author) Read free on kindle unlimited http://amzn.to/2Hhz4Xm
February : The Winning Theory in Stock Market Paperback – 18 Jan 2013 by Mahesh Chander Kaushik (Author) Read free on kondle unlimited http://amzn.to/2HhJEha
March : How Chandu Earned And Chinki Lost In The Stock Market? Kindle Edition by Mahesh Kaushik (Author) Read free on kindle unlimited http://amzn.to/2EtGxRe
April : One Up On Wall Street: How To Use What You Already Know To Make Money In The Market Paperback – April 3, 2000 by Peter Lynch (Author), John Rothchild (Contributor) Read kindle edition on Amazon.com http://amzn.to/2CoC5l8
May : How to Avoid Loss and Earn Consistently in the Stock Market: An Easy-To-Understand and Practical Guide for Every Investor Paperback – 14 Jul 2015 by Prasenjit Paul (Author) Read free on kindle unlimited http://amzn.to/2EsV5Rn
June : Stocks to Riches: Insights on Investor Behaviour Paperback – 1 Jul 2017 by Parag Parikh (Author) Not available on kindle buy paper back at Amazon http://amzn.to/2o4kVok
July : Everything You Wanted to Know About Stock Market Investing Hardcover – 1 Oct 2013 by CNBC TV 18 (Author) Buy hardcover edition from Amazon.com http://amzn.to/2EFcSrV
August : Everything You Wanted to Know About Investing (A New Perspective) Hardcover – Sep 2013 by Shalini Amarnani (Original Author) Buy hardcover at Amazon http://amzn.to/2C20JMz
September : VALUE INVESTING AND BEHAVIORAL FINANCE: INSIGHTS INTO INDIAN STOCK MARKET REALITIES Hardcover – 1 Jul 2017 by Parag Parikh (Author) Buy hard cover available at Amazon http://amzn.to/2o1Gje4
October : The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor (Columbia Business School Publishing) Hardcover – January 15, 2013 by Howard Marks (Author), Paul Johnson (Author), Bruce C. Greenwald (Foreword) Read kindle edition from amazon http://amzn.to/2ELg7xI
November : The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns Hardcover – March 5, 2007 by John C. Bogle (Author) Read a paperback edition from Amazon http://amzn.to/2ELLBnK
December : A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (Eleventh Edition) Hardcover – January 5, 2015 by Burton G. Malkiel (Author) Read on kindle from Amazon http://amzn.to/2GgdLnG
Slated to be read next year:
January : The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) (Collins Business Essentials) Paperback – February 21, 2006 by Benjamin Graham (Author), Jason Zweig (Author), Warren E. Buffett (Collaborator) Read a kindle edition on Amazon http://amzn.to/2ELg19k
Next one to come from below in the coming months:
The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means Hardcover – May 5, 2008
by George Soros (Author)
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets (Incerto) Paperback – August 23, 2005 by Nassim Nicholas Taleb (Author)
Extraordinary Popular Delusions and the Madness of Crowds & Confusión de Confusiones (Wiley Investment Classics) Hardcover – December 28, 1995 by Charles Mackay (Author), Joseph De La Vega (Author), Martin S. Fridson (Editor)
Common Stocks and Uncommon Profits (Wiley Investment Classics) by Philip A. Fisher (Author)
Irrational Exuberance 3rd edition Revised and Expanded Third Edition by Robert J. Shiller (Author)
How to Make Money in Stocks: A Winning System in Good Times and Bad, Fourth Edition Paperback – May 18, 2009
by William J. O'Neil (Author)
Reminiscences of a Stock Operator Paperback – January 17, 2006 by Edwin Lefèvre (Author), Roger Lowenstein (Foreword)
Market Wizards, Updated: Interviews With Top Traders Paperback – January 17, 2012 by Jack D. Schwager (Author)
Trade Your Way to Financial Freedom Hardcover – December 13, 2006 by Van K. Tharp (Author)
Japanese Candlestick Charting Techniques, Second Edition 2nd Edition by Steve Nison (Author)
Encyclopedia of Chart Patterns Hardcover – May 2, 2005 by Thomas N. Bulkowski (Author)
Life is simple, so you just keep it simple, dont complicate it.
Dear Friends,
I like discount brokerages not just because it helps save money but because its also a great innovative concept based on foundation called honesty ...
I used Zerodha Trading Platform Now? You'll love it to :-
Join Zerodha trade on their simple kite platform.
To join click on my referral link here
https://zerodha.com?c=ZK8607
I quote this site "That said, we also realized there is this small community of traders who are extremely talented and passionate. But, the biggest problem they face are: Not enough trading capital. A client with Rs 1lk returns 10% in a month which is brilliant, but that is just Rs 10,000, which in today’s world, is not enough to survive trading full time (more than 90% of our traders have less than Rs 1lk in their account). To earn more, he starts over trading taking bigger risks, and eventually ends up making a loss. Most of the times before blossoming into a great trader, the career ends."
Read more at
https://zerodha.com/z-connect/zerodha/why-zerodha/opentrade-learn-following-star-traders
So, if my blogs help you and if you wish to join Zerodha do it by using my link below it will be of help ...
https://zerodha.com?c=ZK8607
No comments:
Post a Comment