Dividend yielding investments

[TheDorian]

As mentioned on your blog (@RetireJapan) you do invest in dividend yielding stocks/ETF/indexes?

I am curious what is your goto there, apart from that regularly I receive the Monex newsletter where, a few days before closing date they announce the highest dividend yield stocks.

https://info.monex.co.jp/report/hint/index.html

Unfortunately this one closes today so not sure its useful, I can post it earlier next time if anyone is interested.
I am a bit cautious thought because I really don't know some of the high dividend yielding companies they list and don't want to have 4% dividend yield just to lose 10% on the capital investment.

Whats your opinions?

[RetireJapan]

Hi TD

I tend to do a search with a stock screener (like Google Finance) and specify dividend yield as one of the search perameters.

I found half a dozen Japanese companies last year with a relatively high yield using that method:

https://ibb.co/jwwJdk

Having said that, I put most of our money into indexes and just use 'play money' for the dividend stocks.

[Jamo]

If you can read Japanese the screening tool in SBI is pretty helpful. You may have to create an account to use it though.

[beanhead]

I used the superscreener tool on Rakuten to search for Japanese dividend-paying stocks. Curiously, this tool is not available when you look at the US market with Rakuten.

I chose 3 low-cost Japanese stocks, and it will be interesting to see if their dividends remain stable:

1) MUFJ Financial Group
2) Sojitzu
3) 7-Bank

2 banks out of 3, so not so diversified (!), but my thinking was that banks don't usually go bankrupt. Also, as most people know, the minimum purchase of Japanese stocks is 100, so most Japanese stocks are priced a bit too high for 'play-money'.

[mighty58]

Here's the latest list of companies in Japan projected to pay more than 3%. Only 24 companies! If you're thinking of getting in, keep in mind the ex-dividend day (often Mar 31).

https://info.monex.co.jp/static/product ... 210315.pdf

[beanhead]

Here's the latest list of companies in Japan projected to pay more than 3%. Only 24 companies!

24 is just out of the TOPIX 100, isn't it? I think there are others with small capitalizations that also pay 3-4%. eg Sojitz

Lots of trading companies and financial firms on that list (banks, insurance companies).
I think Buffett said his investment in Japanese trading companies was driven by their dividend payouts, didn't he?

[mighty58]

24 is just out of the TOPIX 100, isn't it?

Good catch, you're right, I misread the title as simply TOPIX.

The shosha's are definitely good dividend plays, and with decent profit levels and well-diversified business models, their stock prices are fairly resilient.
I did find it somewhat amusing that Buffet didn't bother differentiating between them and instead just bought all of them though.

[RetireJapan]

I did find it somewhat amusing that Buffet didn't bother differentiating between them and instead just bought all of them though.

To be fair, he pretty much did the same with US airlines a couple of years ago

[Kanto]

I am not a dividend investor myself, so perhaps I am out of the loop, by why not just choose a high-dividend ETF?

Betting on single Japanese companies seems a bit risky, especially considering the attraction of dividend investing is safe and consistent income in retirement.

I mean, the things Softbank has been doing recently....

[mighty58]

why not just choose a high-dividend ETF?

Good question. Out of curiousity, I did a quick search on Japan-listed high-dividend ETFs, and found 13... of those, only two have yields over 3%, and none are over 4%. So I guess "chasing yield" is the answer to your question, but the concentration risk is indeed high.

BTW, the Softbank at the top of the dividend list is Softbank Corporation (9434), ie. the telecoms company, and not Softbank Group Corporation (9984), the wild venture capital-like conglomerate. They couldn't have picked worse names to differentiate themselves, but that's another issue.

Getting back to your point about concentration risk though, I struggle with this myself, as my employer is one of the companies on that list, and I've been buying via the employee stock purchase plan for close to a decade now. This one stock is now taking up 20% of my portfolio, but the milk of the dividend teat has so good I've been loathe to sell, despite knowing better about portfolio concentration risk.