The Good, The Bad and The Dividend

Monday and Tuesday I was very optimistic about two of my investments. An Ex-Dividend date released with a 5% yield in just under 2 months for Vianet (VNET.L)  and then there is Starbucks. Starbucks is a long term investment, as it wont make you rich overnight. With a sound structure, the demand will always be there and the position in the market is spot on. The only coffee company that can hurt Starbucks is Starbucks itself. Entering the alcohol and food market can make or break the confidence of the investors. Being an optimist, I think the transition period will be tough, but ultimately it will thrive. I have a lot of faith in the Starbucks board and marketing approach, after all , it has become one of the most recognisable brands in the world, even with their ridiculously long names for drinks.  SBUX <- Take a look if you haven’t already.

Tesco, who knows what investors are thinking about that. Could it be a bargain? or a slippery slope downwards. I chose to invest at a relative low price with a long term intention. Currently its my worst performing stock in my portfolio and is making it look quite sour. Sound problematic? I do not think so, It is too big of an organisation, with a sound structure and market acumen to not bounce back after what has been a terrible 18 months. Ultimately the question is not if, but when will Tesco bounce back. I certainly think they will, hence the investments. I stand by my wins and losses, so if you take my advice, we are in it together!


About andrepartridge
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3 Responses to The Good, The Bad and The Dividend

  1. Pingback: The Good, The Bad and The Dividend – Memoirs of an Investor

  2. cheekos says:

    Many people who actively covet dividends don’t realize what they actually are. A dividend is merely a partial payment of cash that is (generally) on the corporation’s balance sheet. Once distributed, that cash leaves the corporation, generally reducing the share price by an equivalent amount. The receipt of a dividend is a taxable event, whether you reinvest it or not. The exception is that, if the stock is held within a tax-deferred account (i.e. a 401k or IRA), taxes will be deferred until any funds are withdrawn.

    Whether dividends are of value to an investor, or not, depends upon whether you need the cash. Also, if your investment plan remains in growth mode, it might be better for (for you) if the company were to retain the cash on its balance sheet, as long as it can be deployed better from within its overall Business Plan.

    There are some mature corporations, such as energy and utility companies, that have less expansion in their Business Plan. Many other investors (i.e. retirees) do traditionally buy such stocks specifically for those cash dividends. So, when you invest in those companies, you must accept the fact that they generally do pay dividends, whether or not you particularly want them.

    Liked by 1 person

    • Hi Joe,
      Thanks for your comment, very valuable looking at the market movements that occur naturally with dividend payments around the ex-Dividend dates. It seems to be very psychological for new investors, that they see the outcome of the dividends in their account. They are not getting ‘virtual wealth’ but ‘actual tangible wealth’ in the form of a payment. My portfolio is geared up to having certain stocks that have dividend payments, 2% – 7%, yield, along with other companies and corporations that do not pay dividends as they are in the growth stage and is reinvested in RnD.

      I really like the psychology on your final sentence!
      “you must accept the fact that they generally do pay dividends, whether or not you particularly want them”

      Really shows how completely different investing strategies can be!

      The Young Investor


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