Thursday, November 6, 2008

Stocks dividend yield - Oct 2008

It had been more than a year since I started investing especially in stocks that pay good dividend payouts. As I have a high risk tolerance and a long term investment horizon, I prefer not to put my money in the banks or fixed deposits.

I did a calculation on the dividend yield of my stocks portfolio as I am curious how that yield fares. The yield works out to be 3.84% per annum for the period of November 2007 to October 2008. The yield is calculated based on the total dividends received as a percentage of my cumulative and monthly weighted average investment amount for the same period.

Just for the sake of comparison, I attach a chart of SGS Bonds yield curve. From the chart, you can see that only a 20 year SGS Bond can achieve close to the yield of my stocks portfolio. Of course SGS Bond is relatively safe in contrast to my stocks portfolio in which I need to take higher risks. Therefore I expect to gain on invested capital at the end of 20 year period to justify for the risk undertaken.

Yield curve of SGS Bonds

Because of slowdown in the global economy, I anticipate my forward dividend yield to fall. I will probably monitor the yield in future again and shall continue to add more dividend paying stocks into my portfolio if opportunity arises.

1 comment:

Mike Dirnt said...

Managed to find the historical dividend yield of STI and the other index by sectors: