Tag: Rotork

  • Dividends are overrated

    A couple of weeks ago an interesting article was posted on Stockopedia:

    'Dividends are more reliable than accounts' 

    This is a pretty bold statement and, having ruminated on it a bit, one I can't help but disagree with. I started typing a comment by way of response on there, but having got a bit long, I figured I'd move it over here with a suitably gauntlet-laying title. My teachers always did say I was prone to exaggeration! Click through and read the article for yourself if you want to get it from the horse's hooves, but I'll attempt to summarise the author's argument here as fairly as I can:

    Active management is bad because it's difficult to spot profit warnings coming, and difficult to discern future profitability. It is better to base investment decisions on a 'fundamental measure, like dividends'.

    On unreliability

    The charge that accounts are unreliable is one that comes up quite often. I note one thing to start with; if you like investing in AIM-listed Chinese companies, or exciting little oil & gas plays, I sympathise with you - you might well find published accounts a decidedly questionable source of information.  (more…)