Avoiding the dividend traps

Livewire Exclusive

Livewire Markets

Dr Don Hamson, Managing Director of Plato Investment Management, says one of the keys to successful income investing is to avoid the ‘dividend traps’. Not only can the traps reduce income but they often result in material loss of capital as the price of the security also falls. Hamson says some of the red flags he looks at are 1) Steadily falling share prices, which artificially inflate the yield 2) Companies where the underlying business is facing structural and competitive challenges which may place future earnings under pressure. In addition, Hamson says a well constructed income portfolio should also include companies that might not be ‘high yield’ today but have the capacity to grow their dividends in the future. In this video Hamson discusses dividend traps in the context of grocery retailers and highlights one sector that he believes is often overlook as a source of income.


MORE ON



2 topics

Livewire Exclusive brings you exclusive content from a wide range of leading fund managers and investment professionals.

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.