dividend trap

[beefjerky]

Hi guys can someone explain to me how some companies are able to give ridiculous amount of dividends like 1000%? I used cimb stock screener and noticed this. Doesn't this mean that as long as we buy before the xd we would definitely earn?

 

[spiritGate]

Hi guys can someone explain to me how some companies are able to give ridiculous amount of dividends like 1000%? I used cimb stock screener and noticed this. Doesn't this mean that as long as we buy before the xd we would definitely earn?

Yes. If buy before CD and hold until first day of XD, you will get the dividend. Also, you must check whether the 1000% dividend yield is a one off thing. You must check the dividend history, if lets say it has been giving 1000% dividend yield then most likely it will give it every year. If not, it will be only for that particular year nia. (maybe because the company want to repay or give bonus to their shareholders after so many years of support and etc.)

 

[felixleong]

its probably an error..........

like how can a $1 stock pay $10 dividends?

unless it was a $11 stock
paid $10
and became $1

LOL

 

[beefjerky]

For example when I see ug Healthcare is 983% yield and another example is Jaya hold which gives 2000%+

Oh and one.more question after xd the stock will definitely drop by the amount.of dividend given out so isn't it the best time to short the stock?

 

[starsaver]

Name the counter pls

 

[kelvin_99]

Hi guys can someone explain to me how some companies are able to give ridiculous amount of dividends like 1000%? I used cimb stock screener and noticed this. Doesn't this mean that as long as we buy before the xd we would definitely earn?

If these counters consistently pays out this kind of dividend yield it won't be long before the yield drops as everyone will be rushing to buy them.

My initial take is that there is something fundamentally wrong with this. If it is too good to be true it probably isn't. And, if there have really is such a "gold mine", congratulations to you

Cheers

 

[lzydata]

For example when I see ug Healthcare is 983% yield and another example is Jaya hold which gives 2000%+

Are you sure you are reading your source correctly? UG Healthcare was only listed in Dec 2014 and has not even paid a dividend yet. Jaya Holdings recently did a capital reduction.

Goes to show that you can't depend on a screener especially for things like dividend yields - always double check with SGX's Corporate Actions to see how much was actually paid out and whether they are dividends.

 

[beefjerky]

free photo upload

 

[Bedokian]

Legally dividends are to be paid out from profits and/or capital divested. If there is such a high return, I would be surprised that no one had realized the company's true value. This would, I think, be a true classic case of WK3's "low risk, high returns" counter.

 

[beefjerky]

Hmm I guess cimb stock screener does have some.issues then. My apologies

 

[spiritGate]

Hmm I guess cimb stock screener does have some.issues then. My apologies

Some shares does gives more than 100% dividend yeild lile xyec, iirc. But is just for that year nia. So is impt to underatand why they give such a high div.

 

[doody_]

I never trusted these stock screeners... usually outdated/wrong as they are probably automated.

 

[felixleong]

I once had a friend who bought a stock claiming it had a dividend yield of 50%

Half year later when the company paid dividends he got the shock of his life! The dividends were 10 times less than expected! The yield was actually 5%!

The stupid person that keyed the data into the stock screen had an extra zero on the dividend pay out( example 50 cents instead of 5 cents)

 

[Perisher]

Some shares does gives more than 100% dividend yeild lile xyec, iirc. But is just for that year nia. So is impt to underatand why they give such a high div.

I doubt it pays out more than 100%, because if it does, then buying that counter 1 day before XD all in is a no brainer. Unless the company is filing bankruptcy.

A simple math will tell you, gaving out more than 100% dividend will result in not only you not paying anything but you doubled your $$ in 1 day.

A million dollar all in, next day become $2m.
Even if the price fall the next day to $0, you also have no losses.

 

[wahkao3]

case1: Jaya
Jaya sold off all assets to Mermaid and now its a shell company
upon selling off the assets, it gave the proceeds back to shareholders as a 1 time super dividend

 

[Tornesoul]

in any case, any payout ratio above 100% is hardly sustainable in the long run. (except for one-offs)

its like u spending more than ur salary every month.

 

[wahkao3]

in any case, any payout ratio above 100% is hardly sustainable in the long run. (except for one-offs)

its like u spending more than ur salary every month.

companies that consistantly pay more than 100% payout ratio are usually companies in decline phase.

 

[Perisher]

I don't really care if the company is in decline if it can actually pay out the dividends which is more than 100% before it collapsed, I will buy in a heartbeat. Too bad, no such company exist.

 

[wahkao3]

I don't really care if the company is in decline if it can actually pay out the dividends which is more than 100% before it collapsed, I will buy in a heartbeat. Too bad, no such company exist.

i am talking about above 100% payout ratio, not dividend yield
there is a big difference

 

[Perisher]

i am talking about above 100% payout ratio, not dividend yield
there is a big difference

I know? I'm talking about dividend yield over 100%.
If not I did be talking about '100% payout ratio, I would buy in a heartbeat' no?

More specifically, I'm referring to spiritgate's more than 100% dividend yield and beefjerky's examples.

You do know that TS is referring to dividend yield and not payout ratio ya?