stock market investment strategy
The dividend yield is the basis of the system of long-term investment, which is described in this article.
Let me remind you that the dividend is a part of the profit, which the company pays to its shareholders. However, in this system of dividends interest not themselves in a pure form, but as an expression of dividend yield, and not in percentage and in price terms. To calculate this indicator is quite simple. For this it is necessary to divide the annual dividend of the present value of the shares and the higher will be the result, the better.
The logic of this method is simple. Needed to find a shares, which недооцененны market, but have the potential for their growth in the future. While speculators raise the price of any other securities, clearly revalued market, you need to quietly find a paper, estimated now well below their fair value and buy them, as they say, on the cheap.
To work on this system it is necessary to choose only the blue chips of the Russian stock market. From the beginning of the need to conduct an analysis of dividend yield among the securities of Russian blue chips, and then submit the results in a specially created table. Of all the candidates presented in the table should be selecting the five with the highest dividend yield. Then you must drop the paper with the highest dividend yield, because suddenly she does not simply underestimated, but actually with the company was not very good. The remaining four paper have in the order of their value in such a way that the most expensive campaign was the last, and the cheapest in the first place. This is in them and should invest money in the system Хиггенса-Erdman. For recommends that in the first two put at 30% of the capital, and in the last two to 20%, can be attributed in equal shares it does not matter. An important point is the fact that the formed investment portfolio of not need to touch during the year under no market circumstances.
Exactly one year review process need to spend again. If changes in the shares of no, everything remains as it is. If the processing has identified new leaders, the money moves in them, and from those, which fall out of a portfolio should get rid of. This procedure is repeated every year, at least not often.
Usually meeting of shareholders held in may or June. During these periods and released new data on dividends. Accordingly, summer and autumn are the best seasons for the selection of shares in its investment portfolio by this strategy. Although, of course, the calculations can be performed at any time, the main thing, that the data are up to date, and the calculation was done exactly with that of their dividend yield and cost.
However, one should not expect that this strategy will work better than the market consistently. It does not happen. In a year she will play the market, at one go in a leg or win it just a little. But whatever it was, in the time interval of 5-10 years and more, a strategy will be the overall result, which can be very happy.
