11-20-2020, 10:01 AM
Maybe use a couple stocks as an example. Briefly illustrate the risk.
-Keep T, it's a great example of........
-high yield has more risk to capital, the 7% yield might be 2%, or worse.
-it's an aristocrat, through thick and thin you do get yuor dividend.
-Add an Aristocrat that pays just over market yield but still beats it, and offers steady growth in share price over time.
-An electric UTE isn't a bad example either. Use one that is not paying a dividend not covered by FCF.
As Mike basically stated, there is no free lunch whether a cash yield or potential increase in capital. Return is the inverse of risk, and it's not a linear relationship. A typical stock with a 12% yield is not 4 times more at risk of a bad outcome than a 3% yielder. It's probably over 10X riskier in the end.
-Keep T, it's a great example of........
-high yield has more risk to capital, the 7% yield might be 2%, or worse.
-it's an aristocrat, through thick and thin you do get yuor dividend.
-Add an Aristocrat that pays just over market yield but still beats it, and offers steady growth in share price over time.
-An electric UTE isn't a bad example either. Use one that is not paying a dividend not covered by FCF.
As Mike basically stated, there is no free lunch whether a cash yield or potential increase in capital. Return is the inverse of risk, and it's not a linear relationship. A typical stock with a 12% yield is not 4 times more at risk of a bad outcome than a 3% yielder. It's probably over 10X riskier in the end.