Originally Posted by
Beagle
I have a long standing investment approach which looks at the yield in the medium term based on the net invested capital now. You won't read about it in any investment handbook, its my personal approach which I have found extremely rewarding over many years.
In a nutshell I look at the medium term and consider the sustainable dividend yield based on the net price of the share to me after treating any share trading cum dividend as if the near term dividend receivable is a partial return of my initial purchase price. In this day and age of almost zero interest rates even a 2 month delay in the final dividend for FY20 can be treated this way. My underlying thinking with this revolves around the fact that for any new shares purchased now I was not a shareholder in FY20 so am not really entitled to consider any dividend from that year as a dividend per se, its simply a partial return of my invested capital for FY21 and beyond dividends.
I find it very useful to distill my true medium term yield in this way because it drills down into the real essence of the medium to long term investment case.
The net investment at $6.00, looking at the yield for FY21 and beyond is thus $6.00 less the 24 cent fully imputed dividend due in December = $5.76.
My assessment as recently shared is I think they can pay fully imputed dividends in the foreseeable future at ~ 50 cents per annum so for FY21 and beyond my forward yield calculation is as follows. 50 cents fully imputed = 50 / 0.72 = 69.44 cps gross inclusive of imputation credits. My net purchase price above after adding back the cum dividend part of the purchase price at $6 is $5.76.
The gross yield to me for FY21 and beyond is thus 69.44 / 576 = 12.06% Gross Yield.
Whether you think my approach is technically correct or not, that's how I do my dividend hunting and I will stick with it because I know it works :)