Dividend yield is at the heart of many bad decisions

Many poor investment decisions are based off this one metric. After all, everyone loves dividends. Passive income. Financial freedom. That’s perfectly understandable. The only issue is that dividend yield is one of the worst possible valuation metrics you can use.

Is the dividend payment a one off?

The first thing that investors need to watch out for are whether dividend payments are one off or “special dividend payments”. “Special dividend payments” are normally use to indicate that these dividends are meant to be one off because of a special event. For example, in the case of Singtel, they IPOed Netlink Trust in 2017 and declared a special dividend. However, if you didn’t know this and bought Netlink Trust on the basis on the dividend yield that year, you would be fooled into thinking that the regular dividend would be 20....