Subscribe to RSS feed
posted on 6 Jul 2015  -  5,867 views
One factor that affects whether I purchase a stock or not is how much dividends it gave out last year, and for how many years it has been doing so. This is because when I purchase stocks, I am hoping mainly to benefit from dividend gains rather than capital gains.
One obvious question would be:
how much can we rely on the dividends that was paid out in the past to predict future dividends?
One might suggest going into the fundamentals of the company and estimate how likely the company can continue doing so. I personally find it to be a complex and qualitative task, therefore, the statistician in me decided to answer a simpler question with an easy-to-compute solution:
Historically, what is the percentage where the absolute amount of dividends paid out by a particular company (listed in SGX) this year is greater or equal to the previous year's?
Below are the numbers that I have computed. It is comforting to know that close to 60% of dividends paid out this year is greater or equal to last year. In fact, it was only in 2008 and 2009 where it fell below 50%.
This means that if you randomly purchase a stock with dividends today, there is a
60% chance that next year, that you will be able to receive dividends greater or equal to this year. You can find the
current dividend yields of companies listed in SGX here.
Overall - 59.89% (3079 / 5141)
2003 - 62.91% (95 / 151)
2004 - 74.65% (159 / 213)
2005 - 66.67% (224 / 336)
2006 - 64.73% (268 / 414)
2007 - 64.67% (302 / 467)
2008 - 46.83% (236 / 504)
2009 - 32.69% (169 / 517)
2010 - 70.52% (342 / 485)
2011 - 66.80% (330 / 494)
2012 - 56.79% (301 / 530)
2013 - 59.54% (312 / 524)
2014 - 67.39% (341 / 506)
Maybe a 60% probability is not good enough for you, or maybe you are not as greedy as I am and would not mind even if the payout is reduced as long as there are some dividends.
So the next question is, historically, what is the percentage where the absolute amount of dividends paid out by a particular company (listed in SGX) this year is greater or equal to 50% of previous year?
Almost every year (except 2008 and 2009), you can expect a payout of at least 50% of last year's dividends,
80% of the time.
Overall - 77.71% (3995 / 5141)
2003 - 78.15% (118 / 151)
2004 - 85.45% (182 / 213)
2005 - 80.06% (269 / 336)
2006 - 79.47% (329 / 414)
2007 - 80.51% (376 / 467)
2008 - 65.28% (329 / 504)
2009 - 59.19% (306 / 517)
2010 - 83.30% (404 / 485)
2011 - 85.63% (423 / 494)
2012 - 77.74% (412 / 530)
2013 - 79.39% (416 / 524)
2014 - 85.18% (431 / 506)
At this point, you might have a few questions in mind;
"Are these numbers different if we only consider blue chip companies?"
"Does dividend yield affect the numbers above (i.e. Won't it be easy for low yield companies to grow their dividends)?"
"How often do companies that start giving out dividends stop?"
In my upcoming articles, I will dig deeper into the numbers and answer the questions above. Feel free to leave a comment if you have any questions that you would like answered.
Next Article >
< Previous Article
How Much is a Stock Worth?
Can you avoid investing?
List All Articles
Other articles by evankoh
Frequently Asked Questions
I regularly receive questions related to SGXcafe and often the same questions are asked over and over again, hence I think it is time to consolidate them in one place. This article will serve as a placeholder for FAQ and I will update this article as I receive more questions. How do I use SGXcafe? While I constantly add new features to SGXcafe, they will be centered around two themes: Helping you manage ...
How diversified are you?
As the idiom goes, "Don't put all your eggs in one basket". It is common knowledge that diversification is very important when it comes to investing. However, the questions are: How to diversify? How diversified are you? How do you measure diversification? Google "How to diversify" and there are countless articles out there "teaching" people how to diversify. In my opinion, many articles are either ...
A Quick Update
It has been a week since the survey. Thank you to all who responded to the survey. The survey results are quite open to interpretation. If we simply look at the absolute number of people willing to pay to keep SGXcafe going, the logical choice would be to close SGXcafe as it is far from sufficient. However, if we look at the percentage of people willing to pay, it is quite encouraging as 42% of the ...