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Strategies & Market Trends : Dividend Growth Investing -- Ignore unavailable to you. Want to Upgrade?

To: MathematicalInvestor who wrote (1)	11/12/2024 4:53:04 AM
From: The Kiwi Investor	Respond to of 3

You want recommendations as a dividend investor I will explain strategies that have worked for me. I will tell you the principles that have worked for me in purchasing dividend stocks. First Crucial Step Types of shares to look for Only buy defensive shares so that is basically only Utilities, Gas, Oil and Coal Mining shares so stuff like gas pipelines, electricity pole lines, Electricity generators and Water works. Usually electricity companies particularly in North America tend to be a mining company, an energy distribution company and a generator all in one company. These shares will always pay a steady dividend but with with very steady growth. You're not going to wake up tomorrow as a millionaire. As a dividend investor your shares will grow with inflation and when people pouring money into defensive assets usually during a recession. Being a dividend investor your trading massive Growth for Protection. You want the company to still exist to pay you your dividends as a shareholder especially during crisis points like recessions and wars. So when looking at your company, Look for its share dividends during the 2008 Financial Crisis and The Covid Lockdowns. 2nd Crucial Step A fair price I normally determine a company's fair purchasing price by its dividend yields Overvalued is under 4 percent annual yield Average is between 4 and 4.5 percent yield Undervalued is 4.5 to 6 percent yield Very Undervalued is over 6 percent yield Normally undervalued companies come with debt problems and investors want to reduce their risk. If it's borrowing money to pay dividends then that is a big red flag. If it has borrowed significant money to build a new highly productive asset then it usually is a good buy. I also look for the valuation of the company's total assets vs the market cap. That's why utilities are great; the companies financial statements tell you the valuation of their assets pretty well and they include depreciation on their assets. Their assets will continue to be productive even during a recession. So an example of me putting all these ideas in to practice is My purchase of Genesis energy There is an electricity company in NZ called Genesis Energy which owns a vast portfolio of thermal and hydro generation assets. in NZ during a dry season last year the hydro dams which made up 55 percent of NZs Electricity generation and hydro was not producing no where near that amount that amount of electricity. The country started using thermal generation. Which genesis was expecting that demand was going to be high for next couple of months so Genesis borrowed vast amounts of money to buy energy in the form of coal and natural gas instantly at great expense. Then this year there was a wet season recently so the price of electricity went down so that thermal energy was not needed so they were stuck with lots of energy they could not use. So the company slashed dividends to pay off that debt they took out and people sold vast amounts of shares. The market cap of the company is 2.2 billion but the company's renewable assets are mainly large Hydro dams are worth 3.3 billion. Hydro dams are cheap energy costing less than 35 dollars a megawatt and all of genesis's other assets were worth 700 million for a total of 4 billion dollars. The market believes the company has toxic assets and bad debt when they have extremely good assets. The best part is that even with a cut dividend the yield on the shares is at current price's is 5.7 percent. I would not purchase any shares if i was a foreign investor because the NZ dollar goes to 50 cents against the USD during a recession like in 2008, Unless you live in NZ your not using NZ dollars in your daily life that weak currency would be a real pain. I hope you have learnt something and feel free to contact me if you want to further chat about dividend investing.