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Investors shift focus to high-dividend stocks
Investors are being encouraged to put money into stocks with high dividend yields, creating a new investment trend.
Viet Nam's stock market is becoming more attractive to cash holders, including risk-averse investors, especially in the context that deposit interest rates at many banks have fallen to just 6-8 per cent per year.
Prices of shares which promise high dividends have risen significantly.
PetroVietnam General Services Corp (PET) has gained around 30 per cent since the beginning of this month, from VND17,000 (US$0.81) a share to VND22,000 ($1.05). According to analysts, one of the most important reason for the rise is the company promises to pay 15-18 per cent dividend.
Price of shares of Khanh Hoa Power Co (KHP) also jumped 20 per cent in one month, from VND10,000 a share to VND12,000. KPH has paid a dividend over 10 per cent in recent years.
Small stocks such as telecom equipment manufacturer Sacom Development and Investment (SAM), Hoang Quan Consulting Trading Service Real Estate Co (HQC) or Viet Nam Japan Medical Instrument Co (JVC) also promise investors high dividends if these companies accomplish their profit targets.
According to analysts of HCM City Securities Co, investment in the stocks with high dividend yields also brings about risks, particularly when the market sinks in a long downtrend.
Prices of shares will be adjusted down corresponding to the number of dividends issued while a downward trend will push share prices down further, which will adversely affect investors' investment profits.
Risk averse investors therefore usually invested in high-dividend stocks in the short term and they sold those shares as soon as share prices reach their expectations, analysts said.
However, there are many high-dividend shares with good liquidity and stable growth such as Phu My Fertiliser (DPM), Sucrerie De Bourbon Tay Ninh (SBT) or seafood processor Hung Vuong Corp (HVG).
Companies promising high dividends often have good earnings and stable growth. High dividends reflect the health of businesses, not just an information to support stock prices.
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