dividend only roi vs. capital only roi

[tiger_handheld]

i always keep hearing people say I made (x%) roi last year... it was a great year!

i'm wondering... what is considered "good" roi for dividends only?

Meaning I invested 10k in XYZ and receive $100 each quarter for a total of $400/$10,000 = 4% return per year guaranteed.

[SFU_wmc]

Depends what you're investing in.
You could had invested $10k in XYZ, received $400 in dividends.
But your initial $10k might be worth $9500 now, or $3k or whatever.

[Gerbs]

Dividends usually lower your stock price by the same amount at the declaration date.

[Spoon]

How good your ROI is depends on the risk you take as well as how the relative market is performing.

If you purchase something safe like a telecom or bank stock, your expectation might be that it'll perform slightly below or relative to the broad market, so that could be considered good.

If you purchase a risky penny stock and it performed the same as your safety stocks or the relative market, then you might feel that it under performed since you assumed more risk and had the same outcome.

You can't really peg a number to it since it's quite subjective. Whether the investment pays a dividend is irrelevant as there's safe/risky stocks that pay a div. It's more about whether they preformed according to your expectation.

[lowside67]

Originally Posted by tiger_handheld

i always keep hearing people say I made (x%) roi last year... it was a great year!

i'm wondering... what is considered "good" roi for dividends only?

Meaning I invested 10k in XYZ and receive $100 each quarter for a total of $400/$10,000 = 4% return per year guaranteed.

This is a weird question. As has been pointed out, there is no such thing as a "good" return - return is proportional to risk taken. A better question might be "what is a typical return that a normal Canadian balanced investor might expect" although even that is still at best relying on somebody's opinion of a normal investor's risk tolerance.

Also, it is not really generally accepted to discuss "ROI" for dividends only. You are generally measuring the YIELD of your investment (which is what you are asking about), or your ROI of your investment (which is the total return of dividends + capital appreciation versus initial investment).

-Mark

[tiger_handheld]

i guess i'm trying to separate the total ROI (assume you take a stock like RBC that you bought for $20 and now it's around $100 and pays a quarterly dividend of $1.00)

capital appreciation is 400%
dividend return is 20%

do people measure like this? especially if you are a buy-hold type investor?
if so, whats a target roi?

[tiger_handheld]

Originally Posted by lowside67

Also, it is not really generally accepted to discuss "ROI" for dividends only. You are generally measuring the YIELD of your investment (which is what you are asking about), or your ROI of your investment (which is the total return of dividends + capital appreciation versus initial investment).

-Mark

This part is helpful. So is there a target yield?

[lowside67]

Originally Posted by tiger_handheld

This part is helpful. So is there a target yield?

All of my post is helpful, you just aren't taking the time to read it and digest what I am saying.

Brookfield's yield is ~3%
RBC's yield is ~5%
Enbridge's yield is ~7%

These are all "good" yields, but the reason they are different is because there is a different risk profile to each. It's your choice how much risk you take and then the yield corresponds to that. Your target is personal to you as it's based on your unique appetite for risk.

-Mark

[ilovebacon]

I just purchased msft stocks in April and didn't receive any dividends. Is it because I didn't purchase it on a specific date in order for me to receive them?
The dividend payout was last week.

[tiger_handheld]

Originally Posted by lowside67

All of my post is helpful, you just aren't taking the time to read it and digest what I am saying.

Brookfield's yield is ~3%
RBC's yield is ~5%
Enbridge's yield is ~7%

These are all "good" yields, but the reason they are different is because there is a different risk profile to each. It's your choice how much risk you take and then the yield corresponds to that. Your target is personal to you as it's based on your unique appetite for risk.

-Mark

assuming the portfolio holds those 3 stocks, the combined yield is 5%.
my question is what is a generally a reasonable combined yield? is 5% good

usually a when people say i'm able to consistantly achieve 9% roi for the average joe, this is good (but this roi includes capital + dividends) .... i'm looking just for dividends.

[Spoon]

Originally Posted by ilovebacon

I just purchased msft stocks in April and didn't receive any dividends. Is it because I didn't purchase it on a specific date in order for me to receive them?
The dividend payout was last week.

You need to purchase on or before the ex-dividend date to receive a dividend. None of the other dates really matter.

[ilovebacon]

If I am looking on the long run and hold onto it. Will I receive dividend for the next payout?


Sorry to steal your thread, tiger.

[Spoon]

Originally Posted by ilovebacon

If I am looking on the long run and hold onto it. Will I receive dividend for the next payout?


Sorry to steal your thread, tiger.

Most companies distribute quarterly and some annually. As long as you're holding it long term, you'll get your dividend.

Do note that nothing's guaranteed in life. During downturns like now, it's not unheard of for businesses to reduce or completely remove a dividend if business outlook has changed. Also realize that if a $10 stock has a $1, dividend, your $10 stock immediately becomes a $9 stock the day after ex-div. It's just a matter of whether you want that $1 to be in their hands or yours. Your net worth has not changed just because you received a dividend.

[tiger_handheld]

Originally Posted by ilovebacon

If I am looking on the long run and hold onto it. Will I receive dividend for the next payout?


Sorry to steal your thread, tiger.

How will you measure how well you are doing as you hold it?

[ilovebacon]

Originally Posted by tiger_handheld

How will you measure how well you are doing as you hold it?

I was thinking maybe 10 years as I keep buying more.

Saving it for retirement or emergency funds I suppose..

[tiger_handheld]

Originally Posted by ilovebacon

I was thinking maybe 10 years as I keep buying more.

Saving it for retirement or emergency funds I suppose..

right... so how will you measure the return? I'm going to assume you will have more than msft in your portoflio.

your situation is exactly what i'm trying to ask in this thread.

since you wont be selling, you wont have any capital appreciation, only dividends. is getting 4% return in your portfolio good just on dividends?

so - how will you measure?

[ilovebacon]

I'm pretty new to this haha. I'm sure the stock price will raise with the dividend in return and just sell it when I'm older. I'm not too focus on the market as I am focusing on my career. It sure beats leaving money in a TFSA