Is Value Investing Back From The Dead?

It seems value investing has staged a remarkable turnaround in recent times. It’s kind of like what happened to John Travolta’s career after he did Pulp Fiction.

I originally started thinking about this when I came across the performance figures for the Vanguard Global Value Equity Active ETF (ASX Code VVLU).

55 percent! The year-to-date and 1-year figures are very impressive (although the 3-year figures leave a little to be desired). The benchmark, in this case, is the FTSE Developed All-Cap in Australian dollars Index - that's a bunch of companies mostly listed on stock exchanges that aren't in Australia.

As I was perusing these figures, I wondered whether value investing’s long-awaited day in the sun had finally arrived after having been maligned by stock market investors the world over for what seemed like an eternity.

Which Australian Bank Pays The Best Dividends?

Australian Banks have long been popular investments among Aussie investors. One of the reasons has been the fact they have been among the best paying dividend shares.

Below is a table of the 6 largest banks listed on the ASX. They are ordered according to which bank pays the best dividends. All of the distributions paid by  shares listed in the table below are fully franked.

ASX Code	Company Name	Current Price	Dividend Yield	Annual Growth Rate	Payout Ratio
NAB	National Australia Bank	$33.49	5.9%	6.8%	80%
BEN	Bendigo and Adelaide Bank	$11.73	5.3%	9.5%	76%
ANZ	ANZ Banking Group	$33.49	5.2%	12.6%	70%
BOQ	Bank of Queensland	$12.00	5.2%	3.6%	90%
WBC	Westpac	$34.42	5.2%	13.7%	78%
CBA	Commanwealth Bank	$81.59	4.7%	12.4%	75%

As you can see the National Australia Bank is a clear leader in terms of yield, but there are a number of other factors to consider.

Why I Don't Like Dividend Reinvestment Plans

In my last post I discussed dividend reinvestment plans.  I know they are popular with some investors - in fact a quick search on Google yielded a number a websites devoted entirely to dividend reinvestment.  And while I can understand the attraction for some investors, DRPs are not for me.

So in this post I will discuss some of the disadvantages that I see with these plans.

To recap, a DRP allows existing shareholders to increase their holding by forgoing their cash dividend payments in exchange for new shares in the company.  There is no brokerage payable and to top it off, the shares are sometimes issued at a discount to the current market price.

So what's not to like?

What Is A Dividend Reinvestment Plan?

Dividend reinvestment plans (or DRPs) offer investors a way to gradually increase their stake in a company.  Instead of receiving a cash dividend payment, investors receive an equivalent amount in the form of new shares in the company.

You Don't Have To Participate

Dividend reinvestment plans are voluntary.  By default you will not participate in the DRP and will instead receive all of your dividends in cash.

If you would like to participate in a company's DRP, you will need to notify the company.  They will normally send out the forms not long after you buy your initial shares in the company, or in the lead up to a dividend payment.

Highest Dividend Paying Shares - The Micro-Caps

Earlier this year I looked at the ASX100 from an income investor's point of view in Highest Dividend Paying Stocks In The ASX100.  Then I gave the Small Caps a going over in Best Dividend Paying Shares - The Small Caps.

Today we're going to look at Micro Caps.  For the purposes of this exercise, I'm going to define Micro Cap stocks as anything outside the ASX 300 (ie. anything outside the largest 300 companies listed on the Australian stock exchange).

So in this first table, you'll find the top 10 dividend payers.

Best Dividend Paying Shares - The Small Caps

It's time for another 'best dividend stocks' type of post. Last time, in Highest Dividend Paying Stocks In The ASX100, I did just as the title suggests. I scoured the ASX100 looking for shares with the best income potential. While I stressed in that article that more investigative work would need to be done to whittle the list down to a handful of suitable investment candidates, I found the exercise useful and so did a number of readers.

Today's top dividend shares are all small caps. I have used the stocks which make up the S&P ASX Small Ordinaries index as a place to start my search. So based on historic dividend yield alone, I came up with the following list.

Dividend Investing For Beginners

A well constructed portfolio of high dividend paying stocks is a great foundation upon which to build a strategy to achieve financial independence. It is the passive income derived from such a portfolio which grants us our financial freedom. There is no point in being asset-rich if we are cash-flow poor. In this article I'll discuss how stock market beginners can get started with dividend investing.

What Are Dividends?

They are payments made out of earnings from a company to its shareholders. What is paid is the portion of profits which a company doesn't need in order to maintain and grow the business. It is the reward which shareholders receive in return for providing capital to the business. Along with capital gains, it is how an investor profits from buying shares.