by: Tam Ging Wien
– Avoid Falling into this High Yield Trap
As investors, we like to invest in stable stocks with high and predictable dividends. After all, that is the point of income investing isn’t it? We invest our hard earned money to and we want to see income coming back in a periodic and predictable manner.
We also look at the yield and are happy that the dividends is outpacing inflation.
We likely to see the stock price increase as the performance of the company increases thereby allowing it to increase its dividends.
These are stocks that we want to hold on forever.
However, what if I tell you that sometimes, the dividends that you see is not what is seems to be?
Based on the closing price of StarHub Ltd (StarHub) on 30-Dec-2016 at $2.81 and a dividend of $0.20, StarHub trades at a yield of 7.12%! …