Hey friends,
Here is your April Newsletter!!!
As you all know I’m a good fan of Stock and I recommend and motivate people to invest and learn about it. But most people don’t know the Magical spell of stock “Dividends”
So I’m going to write about things you don’t believe about stock Dividends in this newsletter which may helpful to you,
💹Dividends
This is a newsletter, not an article so I don’t want to write about what is dividends and how they work. Instead, I say it in simple words. Dividends are like your annual interest for Fixed Deposits.
💰Returns
You know what, honestly reply to me to this Email with your fixed deposit holding and its interest. I bet you it’s not more than 16%, Am I right. Yes, I understand if you invest 100K in Your FD you will get 15K in years. The total would be 115K
.
Now let me tell you my calculation, I have some companies which pay me more than 16% annually (One pays 23%). If I invested that 100K into that company I will get 16K interested after a year.
You may be ready to argue now, How if the stock price went down them my capital would lose its value. I get it. Wait for me to finish my calculation.
As I always say Stocks are not a smart decision for the short term. Those are good for the long term. let’s talk about a time frame of 5 years of time. I’m sure not all companies’ prices will worthless after that. As I’ve seen many Dividend companies provided massive returns over the years.
Back to calculation, So for FD earns 15K for 5 years and After 5 Years total would be 75K.
But, In Stocks, you get around an average of 15% year for the 5 years. Then it also gives you a 75K yield. But If the capital gain is 10%(Not a great gain in 5 years). You will end up 75K +10K = 85K.
Alright, That’s it simple maths can change a lot of things in the long run. Can you believe this?
This is my view on the financial market comparison. Dividends are subjected to each company’s terms and conditions. Companies can reduce or change the dividends anytime they want. It doesn’t mean they have to pay the dividend return every year. Even though they can stop providing dividends if they want.
So if you are impressed by this maths, Don’t put your all life saving into a random Dividend company and after 5 years if the maths don’t work as I wrote please don’t plan to take a screenshot of this newsletter and sue me in court in the name of misleading information. I’m an innocent guide, not a financial expert guru. 😂
By writing this disclaimer, I can give some support to my lawyer. Ok Jokes apart let’s further read.
📊My Holdings
I’m into stocks for less than a couple of years. According to current yield and performance, I invested in these 5 companies for dividends. Only for dividends not in the hope of capital gain.
- Melstacorp
- Chevron Lanka
- Royal Ceramics
- LB Finance
Soon planning to add Lanka Walltiles as fifth. But not added yet.
I picked these all based on my own research and all are from different sectors. It’s good diversification. But the real beauty is all companies do a great capital performance over the year with amazing dividend yield. (Average of 12-16)
🙂So what next?
So for this month, I give you three important things to analyse before buying shares of companies.
- Analysis of the fundamentals, the more strong fundamental can give more assurance.
- Decide whether the company has the potential to expand and perform well for the next 50 years.
- Check how much the company service and invest in their customer. The more a company invest and service to their customers the more likely to get a good future then.
It’s that much easier.
As usual, feel free to reply to this e-mail if you want to give me feedback or ask any questions.
Have a great day.
Thiru
Top Important Video!!!
✍️Quote of the Month
Never invest in a business you cannot understand. – Warren Buffet