Yes, there are good dividend stocks on Bursa Malaysia and there are in fact even dividend growth stocks. For those who prefer to get straight to the point, you can download the 2020 Dividend Growth Stocks on Bursa Malaysia List from the link below:
*Do read on though…
Download the Bursa Malaysia Dividend Growth Stocks list here:
2020 Dividend Growth Stocks Bursa Malaysia
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Related post you might want to read:
What are dividend growth stocks?
Stocks that pay an increasing amount of dividend every year.
Notice that what is important is the amount of dividend and not the dividend yield. We’ll get to that in a bit.
Let’s look at the topic step-by-step.
[For those who are already initiated and just want to get the list, please go ahead as this will be a pretty basic discourse. *Do come by again as we will be updating the list and adding more interesting things.]
What is a dividend?
Dividends are cash that companies give to their shareholders for owning their shares. It’s money, hard cold cash.
Where does that money come from? Most often, it is from the profits that the company made.
Companies do business, they make a profit (money), part of the profit is given back to the owners/shareholders (you and I).
Why dividend growth stocks?
It’s a hedge against inflation.
When considering investments, I believe many of us are looking at it from the perspective of someone who will not be needing that money generated from the investment anytime soon. We have a stable income to sustain our lifestyle (and more, thus the reason we can afford to invest in the first place) and we are looking to compound and grow our investment.
One way to understand the value of dividend growth is to look at it from the view of someone who is depending on that dividend to sustain their lifestyle. It may be you in a few years time if you are aiming to retire early and support yourself with your investment income.
You have say 10,000 units of company A shares. Company A pays a $1 dividend every year. Company A increases its dividend by lets say 10% every year. This is how much money you will be getting from Company A to support your lifestyle:
Year 1: $10,000 ($1/share)
Year 2: $11,000 ($1.1/share)
Year 3: $12,100 ($1.21/share)
Year 4: $13,310 ($1.331/share)
Year 5: $14,461 ($1.4641/share)
Of course, this is just for simple illustration purposes. You won’t find stocks increasing their dividend by 10% every year for years on end. Even Warren Buffets famous dividend grower Coca-Cola has a 5 year dividend growth rate of 5.6% for the past 5 years.
Compare this with Company B that pays the same starting dividend of $1/share but does not increase its dividend. The amount of dividend you will get from Company B will be the same $10,000 every year.
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Should I chose high dividend yield over dividend growth? Which is more important?
A great question, one that I as a new dividend investor have always asked.
Company C has a 12% dividend yield but doesn’t increase its dividend or even has a history of reducing its dividend.
Company D has just a 4% yield but has been consistently increasing its dividend.
Which of the two is a better proposition as a dividend investment? Even if C continuously cuts its dividend, can’t we just buy more shares as the price falls to offset the falling dividend by owning more shares?
This is an interesting question which we will hopefully cover in more detail later. Buying more stocks though implies that we have an alternate source of income and don’t need to draw from our dividends to sustain our lifestyle.
Getting out of the rat race, living off of the passive income from dividends is likely the end goal of many investors. It’s the modern dream. Hence why I suggested we look at it from the perspective of someone who is using their dividends to pay the bills.
Nevertheless, many of us may still be working towards our financial independence dream. We have an income to support our lifestyle and some to invest. Buying more, dollar cost averaging and compounding is something we’re just enthusiastic about. If this is you, you must be interested to know the different possibilities of various dividend investing strategies.
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DISCLAIMER: I am not a financial analyst or financial advisor. I am just an enthusiastic investor and trader who loves to learn and grow by sharing and exchanging knowledge and ideas. I am also invested in many of the stocks in the dividend growth list and plan to buy more of all of them.