6% Annual Yield

[OngHuatHuat]

How difficult is it to have consistent 6% yield for years without loss of capital? Any strategies?


Some REITs/Business Trust may offer high yield but for certain counters, share price keep dropping.


How about the use of overseas investments? Like those denominated in Ringgit or HKD or USD?

 

[BBCWatcher]

How difficult is it to have consistent 6% yield for years without loss of capital?

In a ~2% inflation economy/currency, and as you've phrased the question ("consistent," "without loss"), it's impossible.

A 6% yield is only ever voluntarily paid/offered to compensate investors for accepting at least some capital risk. That's the deal. If you want no loss of capital, that's a high quality government bond such as a Singapore Savings Bond, and that yields about 2.X% (X currently a low number).

....Do you want to rephrase your question?

 

[chopra]

jus benchmark to temasek holdings n GIC n that shld answer from a sinkie perspective

 

[bubbleteajanjee]

In a ~2% inflation economy/currency, and as you've phrased the question ("consistent," "without loss"), it's impossible.

A 6% yield is only ever voluntarily paid/offered to compensate investors for accepting at least some capital risk. That's the deal. If you want no loss of capital, that's a high quality government bond such as a Singapore Savings Bond, and that yields about 2.X% (X currently a low number).

....Do you want to rephrase your question?

Greta advice on this and yes, you might need bro to rephrase your question exactly to the one you need to know. We are here to help out. Cheers!

 

[OngHuatHuat]

Greta advice on this and yes, you might need bro to rephrase your question exactly to the one you need to know. We are here to help out. Cheers!

Without the loss of capital is the difficult part.


Need more input.

 

[henrylbh]

How difficult is it to have consistent 6% yield for years without loss of capital? Any strategies?

Can only dream. Temasek with all its brain and muscle also CMI

 

[focus1974]

How difficult is it to have consistent 6% yield for years without loss of capital? Any strategies?


Some REITs/Business Trust may offer high yield but for certain counters, share price keep dropping.


How about the use of overseas investments? Like those denominated in Ringgit or HKD or USD?

Best strategy for this will be ...
Wait wait wait wait wait...
Until GLOBAL Market crashes big time like 2008/9...

then scoop up with all your balls... the bluechips you want..

then hold for a decade..

history repeats itself..
and human behaviour never changed... we do not buy when we should be buying...
we do not sell when we should be selling..

 

[BBCWatcher]

There's a whole thread entitled Hyflux 6% Perpetual Securities. There was a reason those notes offered 6% nominal coupons.

Need more input.

Set the unicorn aside. What are you trying to achieve?

 

[revhappy]

Best strategy for this will be ...
Wait wait wait wait wait...
Until GLOBAL Market crashes big time like 2008/9...

then scoop up with all your balls... the bluechips you want..

then hold for a decade..

history repeats itself..
and human behaviour never changed... we do not buy when we should be buying...
we do not sell when we should be selling..

What baffles me looking back at valuations, during the GFC, valuations were actually not bad, S&P 500 was very cheap based on trailing earnings, compared to what it is now and I remember those days it felt like we are in a huge bubble. But now for some reason it doesn't feel like a bubble.

 

[3dfxplayer]

Anything that isnt guaranteed by the government and denominated in your local currency is not risk free, you have to take some risks if you want 3-4% above the risk-free rate. Anyway you don't really want to focus too much on gross yield, even blue chips with high dividend yields can sometimes do very poorly over a long period of time, just look at KO or IBM, the risk adjusted returns for these stocks are pathetic if we factor in the volatility over the last 20 years.

 

[3dfxplayer]

What baffles me looking back at valuations, during the GFC, valuations were actually not bad, S&P 500 was very cheap based on trailing earnings, compared to what it is now and I remember those days it felt like we are in a huge bubble. But now for some reason it doesn't feel like a bubble.

Trailing P/E is a backward looking indicator, its useless for forecasting future stock prices.

EPS for the SPX fell by 90% during the depths of the GFC, but of course the market had already adjusted for that months before the EPS crash happened. The stock market is forward-looking, you cannot trade it with a lagging indicator.

 

[homer123]

Well , last month there were ton of investment grade preferred shares on sales at 6% in US markets..

How difficult is it to have consistent 6% yield for years without loss of capital? Any strategies?


Some REITs/Business Trust may offer high yield but for certain counters, share price keep dropping.


How about the use of overseas investments? Like those denominated in Ringgit or HKD or USD?

 

[BBCWatcher]

Anyway you don't really want to focus too much on gross yield, even blue chips with high dividend yields can sometimes do very poorly over a long period of time, just look at KO or IBM, the risk adjusted returns for these stocks are pathetic if we factor in the volatility over the last 20 years.

I don't think so. Warren Buffett has famously done very well with KO since his first stake in 1987.

As for IBM, it has been disappointing for many years now, but wow, what a stock over the course of its long history. IBM is the most famous example of the Dow Jones Industrial Average's bad stock substitution timing. The DJIA took IBM out of the index at precisely the wrong time (1939), and the stock then spent the next several decades rocketing up. More recently IBM was the Dow's worst performing stock in 2018, but then it had a terrific January to kick off this year. So who knows.

I don't like investing in individual stocks, though.

 

[BBCWatcher]

Well , last month there were ton of investment grade preferred shares on sales at 6% in US markets..

Yes, with tons of potential for capital loss.

 

[homer123]

No.. I am talking about investment grade notes or preferred stock of large insurance companies.. Please don't make sweeping statement without understanding.

Yes, with tons of potential for capital loss.

 

[3dfxplayer]

I don't think so. Warren Buffett has famously done very well with KO since his first stake in 1987.

As for IBM, it has been disappointing for many years now, but wow, what a stock over the course of its long history. IBM is the most famous example of the Dow Jones Industrial Average's bad stock substitution timing. The DJIA took IBM out of the index at precisely the wrong time (1939), and the stock then spent the next several decades rocketing up. More recently IBM was the Dow's worst performing stock in 2018, but then it had a terrific January to kick off this year. So who knows.

I don't like investing in individual stocks, though.

KO wasn't a dividend play in 1987, it was growing rapidly, not stagnating like it is right now. Stocks always do much better during its growth phase because earnings growth is the key driver of stock prices, you don't want to invest in a company when growth has stalled or gone into terminal decline, the dividend yield is almost irrelevant because dividends come out of earnings anyways.

IBM is up 25% in the last few weeks but thats not going to make up for 2 decades of underperformance. GE was also a blue chip and a dividend play and its up 50% in the last few weeks, but guess what its down over 80% in the last 2 decades, that high dividend yield did little to shield investors from the painful loss.

 

[3dfxplayer]

Well , last month there were ton of investment grade preferred shares on sales at 6% in US markets..

Investment grade is not the same thing as risk free. AIG and Lehman bros were also investment grade before they went under in 2009.

 

[revhappy]

Trailing P/E is a backward looking indicator, its useless for forecasting future stock prices.

EPS for the SPX fell by 90% during the depths of the GFC, but of course the market had already adjusted for that months before the EPS crash happened. The stock market is forward-looking, you cannot trade it with a lagging indicator.

Have a look at this chart. There was consistently a gap between earnings and price from 2003 to 2014, except for the year of the GFC. But suddenly after 2014, the gap closed. So after 2014, markets are as overvalued as they were in the year 2000 dot-com bubble. Over the next decade, I see a maximum of 25% upside and a minimum of 50% downside.

 

[3dfxplayer]

Have a look at this chart. There was consistently a gap between earnings and price from 2003 to 2014, except for the year of the GFC. But suddenly after 2014, the gap closed. So after 2014, markets are as overvalued as they were in the year 2000 dot-com bubble. Over the next decade, I see a maximum of 25% upside and a minimum of 50% downside.

The huge gap between earnings and price just before the GFC didnt predict the subsequent crash in stock prices, so I'm not sure what the point is with this chart...

Its impossible to know if stocks are overvalued or cheap right now because the E in P/E is an unknown and dynamic variable. This is why I think P/E is a worthless indicator for valuing stocks.

 

[OngHuatHuat]

When I said strategies, I really mean it.

There's a whole thread entitled Hyflux 6% Perpetual Securities. There was a reason those notes offered 6% nominal coupons.


Set the unicorn aside. What are you trying to achieve?