Since the beginning of this year, there have been continuous bad news in the market. Unfavorable factors such as the Russian-Ukrainian war, intensified inflation, the Fed raising interest rates and shrinking the balance sheet, and China’s closure and control… have led to an overall decline in the stock market. 29.1%.
Recently, Taiwan stocks have shown a trend of bottoming out and rebounding. Some students asked me if I can enter the market at this stage? My opinion is that I don’t know where this wave of Taiwan stocks will eventually fall, because there are too many variables affecting the market, but from a fundamental point of view, the current valuations of many stocks have fallen to reasonable levels even undervalued.
Although the external environment is full of various unfavorable factors, I think the stock market still has some fundamental support. The overall earnings of listed companies continue to grow, the average price-earnings ratio is only 11 times, and coupled with high yields, the long-term outlook for Taiwan stocks is still uncertain. Bearish, when the market corrects to a reasonable stage, it is bound to launch a new wave of rising prices.
The stocks I currently hold are all aimed at long-term holdings. These stocks are not only expected to continue to grow in future profits, but more importantly, the expected dividends can continue to grow!
When there is a pullback correction or a bearish trend in the market, it is relatively difficult to buy low and sell high to make a profit. Therefore, buying stocks at this stage cannot expect the stock price to rise sharply in the short term, but should focus on dividend income.
For example, the stock price of MediaTek (2454) fell below RMB 600 at the lowest level when foreign capital kept restocking. From the perspective of value investment, assuming the worst situation, MediaTek’s EPS in the next three years will not grow at all. , the cash dividend will only maintain the level of 73 yuan allocated this year. With the current stock price of regarding 700 yuan, the total income following deducting the dividends for three consecutive years is 219 yuan. Your investment will only lose money, but the chances are probably not high.
MediaTek (2454) Cash Dividend Grows for Three Consecutive Years
If MediaTek has not risen at all following three years, you will still have an average cash yield of 10% a year; but if MediaTek’s future operating performance is like the annual double-digit growth mentioned by the company’s executives at the legal meeting, then MediaTek’s EPS will With continued growth, investors not only earn dividends, but also have the opportunity to earn capital gains from rising stock prices.
When the market outlook is full of variables, the primary pursuit of investors is not a sharp rise in the short-term stock price, but a long-term and stable dividend distribution, and it is best that the dividend can increase every year, so that even if the stock price does not rise, the dividend income can still increase year by year.
SINBON (3023) Cash Dividend Grows Year by Year
A company that can continue to increase its cash dividend every year usually has certain conditions. The continuous growth of earnings is the basic element. In addition, the company’s free cash flow must also be maintained well. The interest rate means that the company’s net profit growth, free cash flow utilization, etc. in the past few years are all above the level of other companies in the market, such as Xinbang (3023), Hongquan (9939), Sinolease (5871), Guimeng (5306), Chongyue (5434), it is expected that dividends will have the opportunity to maintain the past growth in the next few years. Dividend growth stocks that meet the above conditions are the preferred stock selection targets at this stage.
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