2024 Q3 P/L Challenge

To retire soundly, I am an advocate of building a dividend portfolio. With the interest rate coming down, the rates offered by bond or money market fund will also slowly come down. So I have gradually moved my fund to invest in good quality dividend stocks to lock in the dividend yield which is still attractive to me.

My criteria:

1) Dividend yield of at least 5%

2) Positive and stable free cash flow

3) Consistent dividend payout ratio of at least 60% and not more than 100%

4) Consistent track record of paying dividends even in times of recession and crisis (eg Covid period) and preferably growing

5) Growth in revenue & net profit

6) Gearing (ie Debt/Equity) < 1x

7) Return on Equity (ROE) >8%

8) Low capital expenditure requirement (ie not in capital intensive business)

The above information can be easily found in Moomoo app under the respective stock.

A lot think that dividend investing generates lesser return. While this may be true as compared to value or growth investing , dividend investing can be rewarding if you enter the stock at the right price which will present good capital gain in addition to consistent dividend. For this, I will often look at P/E and P/B (for banks and REITs) and compared that with its historical average and it's peers. On top of that, dividend stocks are less volatile and you can sleep soundly if you invest in good quality dividend stocks!

Unexpected surprise? That will be rewards from Moomoo. Pleasantly surprised with Moomoo app and moved some of my stocks to this account. Very informative and user friendly too. Pls keep it up and keeps the rewards coming

5 Do's

1) Do your own due diligence

2) Do understand your own risk appetite and investment horizon and objective

3) Do your own portfolio sizing and diversification

4) Do control your own emotion when the stock prices plunges due to temporary issue

5) Do consider to reinvest the dividend received rather than spending it to achieve better compounding return

5 Don'ts

1) Don't concentrate on only 1 or 2 stocks unless you can bear the volatility and have super high conviction. Always prepare a watch list

2) Don't FOMO. Nothing go up in a straight line, only deploy fund when the price is right

3) Don't ignore fees associated with investment/trading.

4) Don't fall into dividend trap - choose dividend stocks solely based on dividend yield without looking at the fundamental of the companies.

5) Don't be complacent - market is volatile hence don't think you have won the world if the stock price goes up to the sky. Be humble and market will reward you.

Thanks.