myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.

Monday, 23 April 2012

Dividend Payout Ratio divide by Forecast PE = Dividend Yield

Some companies have a dividend policy. Knowing their dividend payout ratio (DPO) and their forecast P/E, you can estimate the DY thus:

= DPO / PE

= D / E x E / P

= D / P

DY = Dividend / Price

P/E = Price / Earnings

DPO = Dividend / Earnings

Bursa Malaysia stock market high dividend yield stock

One of the ways to look for Bursa Malaysia stock market high dividend yield stocks is to look at the company dividend payout ratio.

If a stock forecast PE ratio is 10x and the dividend payout ratio is 40%.

Then 40% divided by 10 = 4% dividend yield.

Zhulian shares dividend payout ratio is 60%.

Assuming Zhulian forecast PE ratio is 8x. Then 60% divided by 8 = 7.5%

Zhulian forecast dividend yield will be 7.5%.

Pchem dividend payout ratio is 50%.

Assuming PChem PE ratio (forecast 2011) is 20x.

50% divided by 20 = 2.5%.

Therefore, Pchem dividend yield will be 2.5%.

Why use forecast PE ratio?

The dividend yields as stated in the newspaper are historical dividend and the company may not pay that amount of dividend anymore.

Why dividend payout ratio is important?

If don't have such a policy, we don't know how much dividend the company is going to pay. If the company have a dividend payout ratio policy, and with forecast PE ratio, we then know what is the forecast dividend yield.

Therefore, we should look for stocks with low PE ratio and high dividend payout ratio because it will lead to high dividend yield.

But I want remind investors not to invest in stocks just base on high dividend yield. High dividend yield stocks are good, but other things also important, such as PE ratio, growth, gearing, etc. I suggest we use a minimum of few factors, that is PEGGY Method.

Do you want to get 10% dividend yield but your share price drop 20%?

http://politemarket.blogspot.com/2011/03/bursa-malaysia-stock-market-high.html

List of stocks with dividend payout ratio. Some of them are actual dividend policy, and some are a commitment or target made by the management.

Boustead 70%
MSM 50%
TSH 20% to 30%
PChem or Petronas Chemical 50%
UOA Development or UOADEV 30% to 50%
Tambun Indah Land Bhd stock 40% to 60%
Maxis 75% but paying more than that.

My previous list. I am not sure whether all are still valid because I did not get the update. But Freight and Zhulian are no change.

Topglove 40%
Mamee-Double Decker (M) Bhd 50%
Tecnic Group Bhd 50%
Homeritz Corporation Berhad 40%
Freight Management 40%
Zhulian 60%

http://politemarket.blogspot.com/search/label/Dividend%20Payout%20Ratio

High Dividend Yield Malaysian Stocks

http://beyondsolutionmalaysia.blogspot.com/2011/03/high-dividend-yield-malaysian-stocks.html

ECM's list of high-yield stocks for uncertain times - The Edge Malaysia

http://www.theedgemalaysia.com/in-the-financial-daily/196736-ecms-list-of-high-yield-stocks-for-uncertain-times.html

KLCI 30 highest dividend stocks

Search:

Stock name	ISIN	Last trade	P/E	EPS	Div PS	Ex Div Date	Payout Ratio	Div Yield
MALAYAN BANKING	MYL1155OO000	8.84	13.5	0.7	0.60	Nov 25 2011	92	6.79
MAXIS	MYL5051OO007	6.10	18.1	0.3	0.32	Mar 13 2012	95	5.25
MALAYSIA INTL SHIPPING	MYL3816OO005	5.16	0.0	-0.4	0.25	Sep 26 2011	-62	4.84
BAT MALAYSIA	MYL4162OO003	55.00	21.8	2.5	2.46	Mar 06 2012	98	4.47
DIGI.COM	MYL6947OO005	3.93	24.4	0.2	0.18	Feb 17 2012	109	4.45
TELEKOM MALAYSIA	MYL4863OO006	5.39	16.2	0.3	0.23	Sep 08 2011	69	4.25
UMW HOLDINGS	MYL4588OO009	7.51	17.4	0.4	0.30	Jan 11 2012	69	3.99
RHB CAPITAL	MYL1066OO009	7.52	10.9	0.7	0.29	Oct 12 2011	43	3.91
YTL POWER INTL	MYL6742OO000	1.79	10.0	0.2	0.07	Mar 13 2012	37	3.66
KUALA LUMPUR KEPONG	MYL2445OO004	23.80	15.8	1.5	0.85	Feb 21 2012	56	3.57
PUBLIC BANK	MYL1295OO004	13.74	13.4	1.0	0.48	Feb 15 2012	47	3.49
GAMUDA	MYL5398OO002	3.57	14.9	0.2	0.12	Jan 04 2012	50	3.36
PETRONAS CHEMICALS	MYL5183OO008	6.70	15.1	0.4	0.22	Dec 07 2011	50	3.32
PETRONAS DAGANGAN	MYL5681OO001	18.84	21.2	0.9	0.62	Mar 08 2012	70	3.32
SIME DARBY	MYL4197OO009	9.89	13.7	0.7	0.30	Nov 29 2011	42	3.03
IOI CORP	MYL1961OO001	5.36	17.2	0.3	0.16	Mar 14 2012	51	2.99
PETRONAS GAS	MYL6033OO004	16.80	24.7	0.7	0.50	Dec 08 2011	73	2.98
AMMB HOLDINGS	MYL1015OO006	6.33	12.8	0.5	0.19	Nov 30 2011	38	2.94
CIMB GROUP HOLDINGS	MYL1023OO000	7.63	14.1	0.5	0.22	Mar 09 2012	41	2.88
GENTING MALAYSIA	MYL4715OO008	3.85	15.3	0.3	0.08	Sep 28 2011	33	2.13
HONG LEONG BANK	MYL5819OO007	12.46	14.0	0.9	0.26	Mar 13 2012	29	2.09
HONG LEONG FINANCAL	MYL1082OO006	12.36	12.2	1.0	0.25	Dec 13 2011	25	2.02
AXIATA GROUP	MYL6888OO001	5.36	19.4	0.3	0.09	Oct 20 2011	33	1.68
PPB GROUP	MYL4065OO008	16.70	20.2	0.8	0.28	Sep 09 2011	34	1.68
MMC CORP	MYL2194OO008	2.73	24.8	0.1	0.04	May 27 2011	32	1.28
YTL CORP	MYL4677OO000	1.71	14.3	0.1	0.02	Nov 04 2011	17	1.17
GENTING	MYL3182OO002	10.92	14.2	0.8	0.08	Sep 28 2011	10	0.73
MALAYSIAN AIRLINE SYSTEM	MYL3786OO000	1.28	0.0	0.0	0.00			0.00
PLUS EXPRESSWAYS	MYL5052OO005	0.00	0.0	0.0	0.00			0.00
TENAGA NASIONAL	MYL5347OO009	6.59	20.8	0.0	0.00			0.00

http://www.topyields.nl/Top-dividend-yields-of-KLCI30.php

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My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?

myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Monday, 23 April 2012

Dividend Payout Ratio divide by Forecast PE = Dividend Yield

Some companies have a dividend policy. Knowing their dividend payout ratio (DPO) and their forecast P/E, you can estimate the DY thus:

Bursa Malaysia stock market high dividend yield stock

High Dividend Yield Malaysian Stocks

ECM's list of high-yield stocks for uncertain times - The Edge Malaysia

KLCI 30 highest dividend stocks

All equity security investments present a risk of loss of capital

The Ultimate Hold-versus-Sell Test

Some thoughts on Analysing Stocks (KISS)

Benjamin Graham

Sell the losers, let the winners run.

Investment Style

Warren Buffett

Political and Economic News

Interesting Blogs