04-26-2015, 07:48 AM
Like others said before me I would also like to say that I think you should avoid the stock market for short period like that.
On a more personal note I prefer dividend growth and low yield over high dividend yield.
I found it that companies that pay more than 5% dividends per year has a lot harder time to keep up the dividends during recessions.
If we'll look at David fish ccc list from January 2008 and December 2008 than we find the following:
8 out of 23 companies that paid at least 5% dividends reduced or stopped their dividend payments during 2008.
2 out of 115 companies that paid less than 5% dividends reduced or stopped their dividend payments during 2008.
So basically if we take 2008 as an example than paying at least 5% dividend resulted in 34% chance to reduce dividends while paying less than 5% had 1.7% chance to reduce dividends.
It is important to note that the price of a dividend company that reduces dividends is getting punished considerably so you can add a huge capital loss on top of the dividend cut.
This adds up to investors that were focused on higher dividends took a 34% risk for a major loss while lower dividend yield investor had only 1.7% risk of a minor loss.
On a more personal note I prefer dividend growth and low yield over high dividend yield.
I found it that companies that pay more than 5% dividends per year has a lot harder time to keep up the dividends during recessions.
If we'll look at David fish ccc list from January 2008 and December 2008 than we find the following:
8 out of 23 companies that paid at least 5% dividends reduced or stopped their dividend payments during 2008.
2 out of 115 companies that paid less than 5% dividends reduced or stopped their dividend payments during 2008.
So basically if we take 2008 as an example than paying at least 5% dividend resulted in 34% chance to reduce dividends while paying less than 5% had 1.7% chance to reduce dividends.
It is important to note that the price of a dividend company that reduces dividends is getting punished considerably so you can add a huge capital loss on top of the dividend cut.
This adds up to investors that were focused on higher dividends took a 34% risk for a major loss while lower dividend yield investor had only 1.7% risk of a minor loss.