Easter is upon us and chocolate and eggs are everywhere. Meanwhile, I've been looking at my new found wonder of dividend yields.
Here in Australia, we are lucky enough to have a "long weekend". Public holidays are abound and most workers have Friday to Tuesday (inclusive) off work. So this weekend was already set aside in my mind to be devoted to working out which local stocks and investment devices (managed funds etc) are going to give me a good dividend yield and therefore a good return for my investment.
I figured that I'd spend about 2-3 days (not full days, you understand) looking into some of the main stocks around and seeing which ones, in different sectors, would give good dividend yields.
I'll share with you the dividend yield (DY) basics that I learned over the course of the last hour or so. Basically speaking, a pay out of 50 cents a share from Company A compared to a payout of $5 a share for Company B seems a simple enough calculation - Company B stocks are the shiznit. But, if Company A's share price is $2 and Company B's share price is $80, the story suddenly changes. This is where I started to get excited about the DY factor. Yes, a larger amount per share looks attractive from a payout point of view, but if the share price means I can't afford that many of them, then there's not really much point in me investing my money in that company.
It was this realisation (yes, it may be obvious to some, but do remember that this is a learning experience project for me as well as a financial one) that made me think about working out a spreadsheet and graph to chart out the historical dividend payouts for a few select companies listed on the ASX. All that data collection and collating was the reason I had happily set aside a few days to number crunch in my spare room at home that is sort of a home office for my fiancee and I share (more about that in the next post maybe).
So, first move made was the good old favourite of a google search. I typed in a few keywords and the first site that popped up was www.sharedividends.com.au which then gave the historical data I was going to be researching myself. As in ALL the data.
So, it didn't quite take me the amount of time I thought that it would take to do the research as that site is free to use and provides a number of ways to view the information. You can sort out the listings in order of share price, when the next divided pays out, the DY. It's a veritable nirvana of numbers.
Therefore, my next few days will, instead, be a lot easier in that I just need to look into which stocks pay out the best in a regular fashion.
Of course, going of the rule of diversification, I'll also be keeping in mind that I need to vary not just the companies I invest in, but also the sectors where I invest. There's no point investing purely in mining, in case this carbon tax (something that I see as completely stupid) comes in as the industry as a whole might reduce the dividend payouts in the hope of keeping some surplus cash lying around to pay off a carbon tax bill to the government.
Same for the banks - they might be hit by something big (I'm thinking that the next thing is going to be the banning of the mortgage exit fee halfway through this year) which causes them to tighten their belts on dividends.
But, simply, spreading around the wealth the sectors should hopefully give me the returns that I want.
So, overall, have a great easter (and if you don't go in for the whole easter thing, then do what I do - enjoy time off work by getting drunk!)
As always, feel free to email any comments or suggestions to me on info@working2wealth.net and I'll make sure that I respond.
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