Dividend Yield Play

[rozella]

In the case of LPT's you will notice that the announcement says estimated distribution, but I don't think that I have ever seen it vary from the estimation. The distribution is confirmed about the same time as the paydate when the have their AGM, but of course exdistribution day has well & truly gone by then.

Re the short period between announcement & exdistribution date.
To comply with the ASX Listing Rule 3.20, the record date needs to be no less than 7 business days after the announcement of the dividend/distribution. Also the exdividend/distribution date is 4 business/settlement days prior to the record date.

Example: DRT
Announcement date: 16th December 2005
Record date: 30th December 2005 (8 business days difference)
Exdistribution date: 22nd December 2005 (4 business days difference)

This is why the likes of GAN, CPA, MCW, CNP & many others will need to report on Monday if they are to be quoted exdistribution by the 23rd December. Their record date will need to be 2nd January for this to happen. It is very confusing when there are public holidays involved or non settlenment/business days.

If anyone follows the dividend/distribution announcements, they would be aware of the number of reporting mistakes companies make with dates, not allowing for non settlement days or announcing record dates on weekends etc. The amendment is usually slipped in late at night. example SKW on 12th December at 20:31 pm

rozella

[ann]

Thanks Rozella, that was very interesting,

How do you cope when there is such a huge number going ex divie all at once?

Do you have a 'favourites' list or does it depend on the payout and chart appearance? You would have to miss out on a lot of good ones wouldn't you?

[ann]

If anyone is looking for the list of ex divies for this week it is near the bottom of page 1.

[rozella]

See, I have already confused myself.

"This is why the likes of GAN, CPA, MCW, CNP & many others will need to report on Monday if they are to be quoted exdistribution by the 23rd December. Their record date will need to be 2nd January for this to happen. It is very confusing when there are public holidays involved or non settlenment/business days."

Record date can't be 2nd January 2006, because New Years Day falls on a Sunday, so the holiday is the 2nd January, soooo....it should read 3rd January.

2006 Trading Calendar
http://www.asx.com.au/supervision/op...endar/2006.htm

"How do you cope when there is such a huge number going ex divie all at once?

Do you have a 'favourites' list or does it depend on the payout and chart appearance? You would have to miss out on a lot of good ones wouldn't you?"

In the middle of reporting season it is quite hectic, if only there was a standard reporting format with all the dates & divvies on a particular page. Some reports we need to wade through 140 pages or so to find the relevant info.

There is no particular favourites......all ordinary stocks that declare a dividend or distribution go on the exdiv list, then if certain stocks meet with my criteria using marginlending, then I transfer them onto a personal watchlist as possible prospects.

rozella

[ann]

There are quite a few people who are interested in trading for dividends.

That is, they buy just before a company pays its dividend and then sell soon after.

Here is a link to the ASX about it.....

http://www.asx.com.au/investor/warra.../dyp_rules.htm

I was speaking to Rozella about this on the ex-divie list. As there is an interest in this, lets start a new thread.

I will move some posts from the ex-divie thread to this one.....

[ann]

I can't work out how to move the posts to here.....bad luck, perhaps Scotty can do it...I wanted all the posts of Rozella's and mine from his 5.27pm post on the 17th onwards.....any chance please Scotty?

EDIT: Thread split as requested, Scott

Thanks Scotty,

[rozella]

There are a few ways of squeezing a bit more out of dividend trading......the ASX uses warrants as their example.......I choose to use marginlending.

I will start the thread going by posting my personal trades since 30th November. There is not that many atm, however it is a waiting & watching game.

30-11-2005
Decided I would not become involved with the SIG/AWP merger, as I like uncomplicated trades & then I know where I am going. So I took the opportunity of a strong market today & sold SIG @ 1350.0, but it looks as though it still has some go left in it.

Sold SIG today @ 1350.0
Bought 17th November @ 1304.0 with a margin of 65%
Investment 456.4/share
Exdiv 5th December, dividend & special dividend 49.0/share fully franked 21.0/share
Gross profit 46.0/share = 10.08% return on investment. 13 days

02-12-2005
Bought CNP today @ 618.0 with a margin of 70%
Investment 185.4/share
Distribution announcement expected the middle of December, distribution last year was 16.0/share zero franked.

07-12-2005
Sold PRK today @ 737.0
Bought 21st November @ 730.0 with a margin of 70%
Investment 219.0/share
Exdiv 5th December, div + special div = 32.0/share fully franked 13.72/share
Gross profit 39.0/share = 17.81% return on investment. (franking excl.) 16 days

07-12-2005
Sold a parcel of SGB today @ average 2817.0
Bought 28th September @ 2780.0 with a margin of 75% Investment 695.0/share.
Dividend 70.0/share fully franked 30.0/share
Gross profit 137.0/share = 19.71% return on investment. 70days

2 parcels to go.

rozella

[rozella]

08-12-2005
Sold my 2nd parcel of SGB today @ 2824.0
Bought 9th November @ 2815.0 with a margin of 75%
Investment 703.75/share
Exdiv 28th November, dividend 70.0/share fully franked 30.0/share
Gross profit 79.0/share = 11.22% return on investment. (franking excl.) 29 days

08-12-2005
Bought TCL today @ 680.0 with a margin of 70%
Investment 204.0/share
Exdistribution 23rd December, distribution 24.5/unit, zero franked.

08-12-2005
Bought another parcel of CNP on the close @ 616.0 with a margin of 70%
Investment 184.8/share
Distribution announcement expected the middle of December, distribution last year was 16.0/share zero franked.

14-12-2005
Sold both parcels of CNP today prior to distribution announcement.

Sold CNP today @ 645.0
Bought 2nd December @ 618.0 with a margin of 70%
Investment 185.4/share
Distribution announcement expected the middle of December, distribution last year was 16.0/share zero franked.
Gross profit 27.0/share = 14.56% return on investment. 12 days

Sold CNP today @ 645.0
Bought 8th December @ 616.0 with a margin of 70%
Investment 184.8/share
Distribution announcement expected the middle of December, distribution last year was 16.0/share zero franked.
Gross profit 29.0/share = 15.69% return on investment. 6 days

15-12-2005
Just back from golf to find that my last parcel of BOQ was sold on the open.

Sold BOQ today on open @ 1430.0
Bought on 27th October @ 1376.0 with a margin of 70%
Investment 412.80/share
Exdiv 7th November, dividend 40.0/share fully franked 17.14/share
Gross profit 111.14/share = 26.92% return on investment. 49 days

rozella

[ann]

That was Rozella doing a cut and paste job.

He is just trying to illustrate with dates facts and figures that you can make dosh with DYP trading.

[rozella]

Yes ann, it is pasted directly from my trading diary.

rozella

[rozella]

A few early birds have reported their dist. prior to open today...MCG, RNYCA, & DUE & more coming as I type. TSO just in.

rozella

[ann]

Hi Rozella,

With the immense volume coming through this month how do you make your decision about which stocks to buy?

Do you look at charts?

In a previous post you said........

There is no particular favourites......all ordinary stocks that declare a dividend or distribution go on the exdiv list, then if certain stocks meet with my criteria using marginlending, then I transfer them onto a personal watchlist as possible prospects.

What criteria do you use? Bearing in mind this is your own set of criteria and not a recommendation, just to clarify for the readers.

You say you put it on a watchlist as possible prospects, how long would they be on your watchlist prior to a purchase decision being made?

I look at that list of stocks this month and it just appears totally overwhelming. How on earth would a trader be able to wade through the Company Reports to see if all was well with the company, having to cope with so many?

I would have thought anyone trading for Dividend Yield could run the risk of losing quite a bit of money if their choices were wrong or if all of a sudden the market starts to fall. This is where I could see a potential for quite rapid drops in a company's share price if yield traders were trying to bail out all at once. Particularly if they were on a margin loan.

I quite like the sound of the concept, I just worry that anyone who is not very aware of the overall economic climate as well as the companies future prospects could come to grief in a big way.

Would you know if there are many people actually participating in Yield Play?

I guess what I am asking is, could you tell us a little about how you developed your strategy and make your trading choices. I can see by your trading diary you appear to have done very well.....what is there to say the next person will be able to achieve those sort of figures? Wouldn't it be possible for someone not as experienced as yourself to come out backwards?

Thanks
Ann

[ann]

Hi Rozella,

I had a quick look at DUE and it says it goes ex Distribution on the 22nd and record date the 30th. Is three days sufficient notice? Can it be less than three days from time of announcement to time of ex Distribution?

I will put up a chart for DUE in the ASX Small/ mid caps section and watch how it goes. I imagine a lot of people will want to trade this as it is a large Distribution.

[rozella]

Originally posted by ann
Hi Rozella,

I had a quick look at DUE and it says it goes ex Distribution on the 22nd and record date the 30th. Is three days sufficient notice? Can it be less than three days from time of announcement to time of ex Distribution?

They must report no less than 7 business days prior to record date, & they are spot on (next Mon & Tues are non business days).
Exdistribution day is 4 business days prior to record date, which is also spot on, allowing for the non business days.

Yes DUE's dist. is up 23.7% on the same period last year, so it is now on my prospect watchlist.....thats not a recommendation by the way. Margin LVR is 65%, so div divided by investment, yields me 13.27%, providing I can sell it at my buy price after exdist date.

You have asked a lot of questions in the previous post, so I will have to answer in bits atm......There has been 16 distribution announcements today with more to come, so flat out reading atm + one eye on my trades.

rozella

[ann]

Thanks for taking the time to get back.....all in your own good time.

I put up a few views about DUE in the stocks section...

[rozella]

Plenty to do today, we have had 36 announce distributions/dividends up to now, with still about 2 hours of reporting still to come.

Bought IPG today @ 209.9 with a margin of 70%
Investment 62.97/unit
Exdist date 22nd December, distribution 8.5/unit zero franked

Bought DUE today @ 253.0 with a margin of 65%
Investment 88.55/unit
Exdist date 22nd December, distribution 11.75/unit zero franked

rozella

[rozella]

G'day ann, in reply to your earlier post where you asked.......

"With the immense volume coming through this month how do you make your decision about which stocks to buy?"

I place all stocks declaring dividends into my spreadsheet which tells me then with marginlending which stocks would show (div+fc)/Investment as a percentage, are over 10%.....this is my 1st step. Then if these (10% +) stocks have good volume, increased profits, increased dividends, good outlook for the future, then I feel that the probability of the stock rising is reasonable.......this is the perfect situation, which does not always happen, so I grade them.....best first etc. This makes a short list.

"Do you look at charts?"

Yes I do, but only eyeballing trends & supports lines, to grasp the overall picture. I used to do a lot of t/a but with this strategy it is basically a waste of my time. Others may not agree.

"What criteria do you use? Bearing in mind this is your own set of criteria and not a recommendation, just to clarify for the readers."

See the first paragraph of this post.

"You say you put it on a watchlist as possible prospects, how long would they be on your watchlist prior to a purchase decision being made?"

It depends on how far off the exdiv date is. If I thought there was room for a few trades in/out before exdiv, I would do it now, but generally 2/3 weeks prior to exdiv. I have not been able to find a common number of days prior to exdiv to suit all stocks, as what can be correct last year, may not work this year.

"I look at that list of stocks this month and it just appears totally overwhelming. How on earth would a trader be able to wade through the Company Reports to see if all was well with the company, having to cope with so many?"

That list is now only 3 pages as of yesterday, but in reporting season it can reach 9.

I am not concerned about reading too much reporting for my trading.....it is the direction of the price that interests me, so as above, I filter out a short list. Yesterday, there were 37 stocks reporting, but only 7 met with my 1st step.

"I would have thought anyone trading for Dividend Yield could run the risk of losing quite a bit of money if their choices were wrong or if all of a sudden the market starts to fall. This is where I could see a potential for quite rapid drops in a company's share price if yield traders were trying to bail out all at once. Particularly if they were on a margin loan."

This is where traders must develop a sound trading plan, including disciplined stoploss & risk management rules. Marginlending taught me to be disciplined, I think it is a great invention, & I feel cheated when I can't use it. For example, if someone owned AMP @ 1800.0, & TLS @ 850.0 originally, if they had a margin loan, & could not pull the trigger, big brother would have done it for you, & saved you a squillion.

"I quite like the sound of the concept, I just worry that anyone who is not very aware of the overall economic climate as well as the companies future prospects could come to grief in a big way."

Stoploss & risk management, but that is the same for any strategy.

"Would you know if there are many people actually participating in Yield Play?

I would not really know, obviously I am talking to those that are involved, so they are the only ones I know, & also the ASX promotes it.

"I guess what I am asking is, could you tell us a little about how you developed your strategy and make your trading choices. I can see by your trading diary you appear to have done very well.....what is there to say the next person will be able to achieve those sort of figures? Wouldn't it be possible for someone not as experienced as yourself to come out backwards?"

Prior to the dividend trading strategy, I was struggling to make a reasonable trading profit for a living, & did a lot of soul searching, & found that "The lure of a dividend, gives a stock a reason to rise" so I spent hours & hours doing research & backtesting, & over time developed my very simple rules to suit me.

The Trading Diary you mention is an example using only eod data, selling only when the stoploss & trailing stops are hit, allowing profits to rise. This example is updated on a daily basis to show how a very simple strategy can achieve reasonable profits.

My posts on the forum use the same data & criteria, but I trade intraday, usually taking profits when they reach approximately the dividend amount, then re-enter again on a low day & try to repeat the process. I don't always stay in for the dividend.

As far as someone else being able to achieve the same figures, well it is not rocket science, so it is up to them.....any trading is the same. I keep coming back to a trading plan, but if someone wants to buy stocks then forget about them, then they would probably only achieve average buy & hold figures. Trading is a job, & in any job you become better as you gain more experience.

rozella

[rozella]

Bought MCW today @ 202.0 with a margin of 65%
Investment 70.7/share
Exdist 22nd December, distribution 7.6/unit zero franked

rozella

[rozella]

Bought SGP today @ 660.0 with a margin of 70%
Investment 198.0/unit
Exdist 22nd December, distribution 20.5/unit, franked to 21.77%

rozella

[ann]

Hi Rozella,

That was very interesting and I will re-read it a few times.

I see you are not using your system for a Dividend Yield Play but merely timing the stocks for a rise? The dividend is a bonus?

At the moment with the very short time between announcement of distribution and the actual ex distribution day you won't be expecting the stocks to rise in the short term? Ex-divie days can knock a stock down a bit, as a lot of traders who watch the notices will be putting in low bids on the ex day to run the sellers down in the hope of a future rise.

Although, do ex-distribution days wipe all bids and offers off the boards as happens with ex-dividends?

I am not excited by what I see on the charts of either of those companies you bought today.

Would you mind me putting up the charts for both of your choices or would you feel I was being critical?

I won't put them up if you would rather I didn't.

Ann

[rozella]

"I see you are not using your system for a Dividend Yield Play but merely timing the stocks for a rise? The dividend is a bonus?"

I use it for both, & usually decide whether to hold for the dividend the day before exdiv. I plan the year out for the amount of dividends I require for the year.

"Although, do ex-distribution days wipe all bids and offers off the boards as happens with ex-dividends?"

Yes, just the same.

"I am not excited by what I see on the charts of either of those companies you bought today.

Would you mind me putting up the charts for both of your choices or would you feel I was being critical?

I won't put them up if you would rather I didn't."

I don't mind at all, it is no secret, I have disclosed my buys.
I always allow for a stock to drop the div+fc on exdiv day, so anything less is a bonus.

rozella

[ann]

Lovely, thanks for that Rozella,

Everyone can barrack for you.

On the 19th you bought IPG [property trust sector]
and DUE [utility sector] and on the 20th you bought MCW and SGP [both property trust sector].

Let's look at the Property Trust Sector the XPJ for a start, just to get a look at the 'Big Picture'.

[rozella]

Keep in mind that WDC has the lions share of the property sector, & does not come up for a distribution until February. This can actually work in our favour being in a different cycle of the strategy, as when it approaches its distribution, it lifts the sector helping the smaller stocks to recover from this period. LPT's vary with there recovery.......anything between 1 day to 60 days....but don't count on it.

rozella

[ann]

For the sake of DUE lets have a look at the Utility Sector XUJ.

I put up a thread for DUE and I couldn't pick the dominant pattern. Perhaps negative as I look at the XUJ.

[ann]

Thanks Rozella,

Very valid comment.