How do you reduce risk while investing? Depending on who you ask, you will get a different answer. For my co-founder David Kuo, he prefers to receive cash, in the form of dividends, from the stocks he owns. That’s his number one rule: every stock he owns must pay a dividend. Period. In David’s mind, if a company has excess cash that it doesn’t need, it should pay it out as a dividend. An example would be Singapore Exchange (SGX: S68) which paid out around 60% of its profits for fiscal 2023 as a dividend. In fact, Singapore’s sole stock exchange operator has earmarked a 6.3% increase in dividends for its fiscal 2024. Yet, despite the allure of dividends, it may not be enough for value investors.

Risk is in the eye of the beholder 

For value investors, the inherent unpredictability of running a business is, by itself, a risk....