18 Feb 2022
Value Investing Principles: Income is key
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
For three decades we have been asked… ‘why invest in listed businesses?’
The answer is simple answer, as investors we want to own an increasing income stream.
Peter Thornhill who first presented me with this chart in 1991 or 1992 has sent us an updated version to remind us of the relentless growing dividend income stream that is created from being invested in boring publically listed industrial companies.
Click for chart.
Yes the dividend income can fall such as during COVID-19 crash in 2020 but so too did rental income and interest income.
The bonus of investing in businesses that sell goods and services is that the price (capital value) increases for quality businesses and every time prices fall due to fear and panic, investors are presented with an opportunity to buy more quality listed businesses at discounted prices.
WARNING, this does not constitute Personal Advice and is general in nature. To discuss if this is appropriate for your given circumstances please do not hesitate to contact us directly.
At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.