Sound approach to investing for income?

Reader says...

I am a Singaporean student who is interested in building up a dividend portfolio.

I like to seek your advise whether it is viable to reinvest dividends into shares of the same counter, as the commission seems too expensive to do so.





Is there any way which companies can give out share in place of dividends?

Will this be a sound approach to building a dividend portfolio?






AK says...

If we are investing for income, we want our investments to be able to pay dividends in cash. 

Sometimes, companies might ask if shareholders would like to receive their dividends in cash or scrip (which means new shares)?

If there is an opportunity for arbitrage, then, for the income investor, taking the dividends in scrip might make sense.






And I mentioned it before:

"Many S-REITs have DRPs (or DRIPs), Distribution Re-investment Plan. Some readers asked me if I would take part in these plans.

"My answer is that I invest in S-REITs for income. So, I would usually take the cash distributions unless there is a chance to benefit from arbitrage which happened once before for AIMS AMP Capital Industrial REIT and some might remember that I blogged about it."

For those who are interested in this:
http://singaporeanstocksinvestor.blogspot.sg/2013/05/aims-amp-capital-industrial-reit.html






Always question how is the company generating cash and ask if the dividend being paid is sustainable.

Otherwise, we could be investing for growth or it might be a value trap or it could even be a scam (or maybe I am just talking nonsense here).





As you are new to my blog, you want to read this blog:

http://singaporeanstocksinvestor.blogspot.sg/2015/10/invest-for-income-and-ignore-two-ms.html

If we would like to invest the dividends we receive from our investments, there is no hurry to do so unless Mr. Market is in a big depression.

If we don't need the money, save the money.

Build up our war chest.

And pounce when opportunity knocks.





I know that patience is sometimes the hardest thing. 

I know because I am human too.

http://singaporeanstocksinvestor.blogspot.sg/2013/02/little-book-of-value-investing.html

Related post:
Sit with all that cash and do nothing?