Dividends: More Is Less, Less Is More

It's a lesson seldom honoured by investors, because it goes against our inner-built reflex: when choosing yield stocks in the share market it is seldom wise to pick the highest yield. Study history (longer than yesterday or even last year) and investors will find "yield without growth" ultimately loses out when matched against "yield with growth", at least if you're interested in total investment return. It goes without saying that yield with growth offers lower yield, at first. Last year I devised a graph which combines market pricing of yield stocks in the Australian share market with implied risks going forward. Short term price movements aside, I think many an investor would do himself, and his portfolio, a great service by taking it in and incorporating the knowledge in future share picks and choices. This also explains why Transurban has been, and remains, my favourite yield pick. To read more: (VIEW LINK)

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