As announced on 15 Dec 2016, Fed raises interest rate. There was also some indication that it will continue to raise interest rate for 3 times in the year 2017.
Do note that “debt” stated in this post below relates to “bank borrowings” and “interest bearing debt”.
How will this impacted my plan?
For those companies that are significant leveraged, their net profit will be impacted negatively. This will created a downwards pressure on their share price.
In the aspect of these companies’ cashflow statement, more cash will also be required to either “pay off the debt” or “pay off the financing cost”. This will result in less cash being used to pay dividend. Thus, dividend yield maybe reduced in future and share price will most probably be affected.
So what should I do?
I will be including “debt to equity” as a major consideration of my future purchases. This …Read the full article →