How many expats are living from dividend stocks?

[Khaeng Mak]

24 minutes ago, BritManToo said:

6-8% available in Cambodian banks for 1 year fixed term USD (or Thai Baht) deposit accounts (-14% tax if you don't live there).

True that.  A few years ago when I first invested it was circa 11%.

[thaicurious]

10 hours ago, mike787 said:

Diversification.

Not sure if being funny or how your rentals trade up plan poster is example of diversification when it's just one category, because I'm pretty sure diversification doesn't refer to a variety of tenants.

 

I've not based retirement on diversification because I know so much about it but because I don't trust so much any one thing.

 

My combo platter:

Cash (including that I consider 800k baht Thai bank depo in duel role both for reducing visa hassle but also as hedge against unlikely but possible short term home country hyperinflation event.)

Index funds (weighted towards equities)

Rentals*

Pension starts in under 3 years

Social Security starts a year later

Also I'm a cheap bastard (some call it frugal) which I consider an important yet convenient component of financial planning, read: I hate shopping.

 

Comfortable with index funds weighted towards stocks because I view SS, pension and RE holding/income as effective bonds.

 

SS from USA. Currently known worst case scenario is a 23% reduction in 2034.** I plan to be dead by then, problem solved.

 

Pension looks solid from well funded, long-established Fortune 5.

 

*RE purposely well positioned (area doing even better than my studies had indicated probable) in one of the currently ranked best markets to own rentals for both income and equity growth. Immediate area is among the country's top economic performers, general area's population growth significantly outpaces national now and is projected to develop into one of the country's most populous areas so a significant isolated downturn highly unlikely.

 

Net on rentals alone pays enough for a comfy Chiang Mai lifestyle while savings & funds saves from smog. SS plus pension alone will pay Jomtien or Patong. The combo would pay Bangkok, maybe I'd try for a year but doubt I'd take to it.

 

Mostly vegetarian diet for about 30 years now, luvs luvs luvs Thai food--the only thing western I need is the occasional pizza--have never paid for sex (saving that for my 70/80s?), not a drinker, not a spender, so I must be boring but at least budget not a problem. I always think I'll be dead within five years anyway; never thought I'd live past 30. Life is full of surprises. Plan accordingly.

 

**https://www.fool.com/retirement/2018/06/06/2018-social-security-trustees-report-the-5-things.aspx

[wordchild]

22 hours ago, fletchsmile said:

Perhaps if you are an Australian.

 

As a non-Australian, one of the reasons I stopped investing in Aus shares was that dividend yields were higher than other countries, but I suffered 30% tax on the dividend. When someone is deducting 30% on dividends that pushes me towards lower yielding shares, and ultimately different markets.

eg Singapore REITs - I earn a higher dividend yield at an average of over 6% and they are tax and capital gains free

the withholding tax   that is applied depends on where you are considered to be resident, and the taxation agreements between that country and Australia. i know the rates are high for Thai residents, up to 30% as Fletch says. 

In my own case i invest through a Singapore broker and (even though i am Thai resident)  get the Aus/Sing agreed withholding rates, ie zero tax on fully franked dividends and then up to 15% on dividends that are not fully franked. Most of the big Aus dividend paying companies (eg all the big banks, miners, many telcos plus retailers) pay dividends that are fully franked , so no additional withholding tax on those dividends.

I used to be a Singapore resident and initially i thought i got the lower rates as a hangover from that. However when i queried this with the broker concerned they told me that ,effectively,  all of their customers were treated the same way for withholding taxes. All  customers have their stocks held by a local (singaporean) nominee and they do not provide separate holder residency information to the different tax authorities.

So if you want to invest in Australian dividend paying stocks as a Thai resident it sounds like you should use a Singapore broker.

[Pinot]

On 5/8/2019 at 9:45 PM, Thailand J said:

You did very well. You didn't miss the 10 yr US stock rally. Anyone could have made money in US stocks during the past 10 years by buying into almost any fund.

I invest in US Index funds. Here is how S&P 500 compare to ETY, ETJ, CHY, UTF HYB  in the last 10 years, dividends included . UTF is impressive, others are not so .

 

 

 

 

Using an Index fund is the best and easiest way to invest for people. Using CEFs is a little more complicated but it does produce a nice chunk of change every month. I don't know if the chart shows dividends reinvested, usually not. Using an Index ETF you also have to sell shares to pull money out. I just get a pile of dividend money at the end of every month and the CEFs appreciate. There is risk because of the leverage but there is risk in everything in investing. I do play defense with the type of CEFs I use. They are options based for the most part which make money in an up...and down market. ETJ is particularly defensive and pays 10% a month for example. It's not going up much in a rising market but you're going to get that 10% at the end of every month.

[fletchsmile]

On 5/9/2019 at 12:51 PM, TallGuyJohninBKK said:

 

The dividends are nice... But if you're owning those kinds of investments, you'd better be prepared and able to withstand substantial price variations/declines when the markets go bad.... meaning.... bigger drops than the markets at large.

 

Look at what happened to ETY in 2009 and again in 2012.... It fell substantially in price in 2009, and never has recovered in the decade ever since anywhere close to its prior values.

 

 

 

Have to say I'm not that familiar with the investment as it's a very US centric product. But:

 

Looks very much like the chart above is only the market price of the investment. i.e excludes any distribution amounts.

 

To look at whether it makes sense or not someone really needs to look at total return, i.e capital + income.

 

Given such a high distribution yield (over 8%) it is no surprise that the share/unit price has fallen in value

 

Out of interest I just did a quick google. As expected:

 

http://www.schwab.wallst.com/Prospect/Research/etfs/summary.asp?symbol=ETY

 

It has an annualised total return of 6.3% p.a. since launch in 2006 = that combines income + capital loss

 

So yes you're right it is volatile, and someone needs to understand that capital risk. But to understand fully someone needs to look at total return. That high distribution yield is being achieved but with some of it effectively coming from capital (losses)

 

Not my cup of tea. But:

 

6.3% p.a. total return might suit some retirees wanting income, if they understand part of that is being funded out of capital, so that over time the capital value is decreasing. To an extent as long as the dividends keep rolling in, and an investor accepts capital decreases over time, then even the wide variations in price might be acceptable. 

 

[fletchsmile]

On 5/8/2019 at 1:40 PM, Pinot said:

I'm an American who lives off 50% Social Security and dividend income. Dividends are generated from CEFs, paying in the range of 6-12%. I own no stocks and won't ever buy any single stocks, simply too risky from say a "Black Swan" event and no one can pick individual stocks and beat the market. 

 

CEFs use leverage to generate higher returns. I have considerably more money now than when I arrived in LOS 10 years ago despite living off the dividends. The CEFs I own also appreciate in value. I own about 15 of them. I'll give you my top five to give you an idea and then you can do your own research at Cefconnect.com

 

ETY, ETJ, CHY, UTF, HYB

 

I'm surprised the subject was opened and I'm the only one doing this. I've never made less than 12% a year and get paid dividends monthly. I think of it as the "Income Factory" approach. 

 

If you have questions you can message me. It's an easy way to generate money. If you're sitting in cash, you're losing. Real estate is a pain in the neck, ties up your money and you need someone running it for you. 

 

My 2 cents.

I suspect you bought some time after the GFC. Hence, your returns of 12% p,a.  

 

This doesn't really reflect a full market cycle though. Post GFC has been largely a bull market where most people made good money in most funds.

 

As Tallguy pointed out, for ETY if you go back to launch in 2006, which actually then includes a significant downturn so is a more complete cycle, the picture looks different.

 

By no means as bad as the capital only decrease in price since launch, but annualised total returns are a more modest 6.3% p.a.

 

So while 12% is quite a nice return, a big part of that is timing and buying just after the GFC crash. When the next crash comes along, if you're still holdings, expect that 12% p.a to drop significantly. 12% p.a. isn't really a realistic long term expectation.

 

Yes it has been an easy way to make money in a bull market, and sitting in cash would have lost out.

 

Give a 10 year+ bull market, some form of significant correction is to be expected in the next few years, so while you may have done well because of timing, anyone investing now really has to think very carefully. Don't expect that 12% p.a. mentioned to continue indefinitely. The piper will be along to be paid his share.

 

Also to remember that 6.3% annualised since 2006 is in USD terms. USD has lost around 12% in value since 2006, and about 20% over 15 years.

 

So don't forget the currency risk

 

So someone buying it at launch, and living in Thailand, would be looking at realistically more like 5% p.a. in THB terms

 

Agree with you direct real estate can be a pain LOL

[TallGuyJohninBKK]

38 minutes ago, fletchsmile said:

Have to say I'm not that familiar with the investment as it's a very US centric product. But:

 

Looks very much like the chart above is only the market price of the investment. i.e excludes any distribution amounts.

 

To look at whether it makes sense or not someone really needs to look at total return, i.e capital + income.

 

Given such a high distribution yield (over 8%) it is no surprise that the share/unit price has fallen in value

 

Out of interest I just did a quick google. As expected:

 

http://www.schwab.wallst.com/Prospect/Research/etfs/summary.asp?symbol=ETY

 

It has an annualised total return of 6.3% p.a. since launch in 2006 = that combines income + capital loss

 

So yes you're right it is volatile, and someone needs to understand that capital risk. But to understand fully someone needs to look at total return. That high distribution yield is being achieved but with some of it effectively coming from capital (losses)

 

 

Yes, the stock chart I posted above was just it's price, not it's total return charting. And I noted, those kinds of investments do pay healthy dividends.... and that I in fact own a couple of similar issues in small amounts for their dividend payments.

 

If the investor can remain in the holding for the long term and the dividend doesn't get cut... that's fine.

 

But a lot of folks, especially in retirement, sell down their holdings in part to fund their retirements.  And that investor really wouldn't be in a good place if they were doing that and their CEF investment just lost half of its value or more very quickly because of some periodic market downturn.

 

It's great to talk about the healthy dividends of CEFs, but any conscious investor also needs to be aware and informed of the higher loss of principal risks that exist in those kinds of holdings. And that's especially true for a retirement age person where their portfolio is generally advised to trend toward being loss averse.

 

 

[claynlr]

I will retire soon and live off dividend income and SS. Not planning to sell stocks (4% rule for example) so hopefully ride through a downturn in the market. Div growth at the present for my portfolio is over 8% so a nice raise every year if it stays there. I use a service to track my portfolio, Simply Safe Dividends, that has a dividend safety score element among many other things. They have a free trial if you guys want to check it out.

[fletchsmile]

2 hours ago, Benroon said:

This one does drive you nuts I agree - I know I have enough cash in investments to buy most new cars on the planet (Ronaldo's £9m Bugatti apart) - but without knowing my departure date would be a loon to do it.

 

If however I knew that date I would be purring around in a bespoke Aston Martin right now stressing myself into an early grave that the mobile squid carts were scratching up against the side of it !! 

Just go for it. Aston Martin's start at around THB 14 mn in Thailand. Or you could go back to the US. Pick one up for USD a couple of hundred K, and then come to Thailand for holidays. Difference in price would pay for regular 1st class seats.

 

 

 

[Percy P]

On 5/8/2019 at 11:03 AM, Rod the Sod said:

Just as well, because when the bottom drops out of your market or the company crashes, the paper you hold in your hand can double for toilet paper. Ever tried wiping your arse with a bunch of keys? (don't take personally like most do, only meant as a light hearted comment with an inner meaning....;-)

The same goes with a PC or a news paper,can't wipe your bum with a PC

[Percy P]

On 5/10/2019 at 9:49 PM, fletchsmile said:

Just go for it. Aston Martin's start at around THB 14 mn in Thailand. Or you could go back to the US. Pick one up for USD a couple of hundred K, and then come to Thailand for holidays. Difference in price would pay for regular 1st class seats.

 

 

 

 

On 5/10/2019 at 7:17 PM, Benroon said:

If you're not experienced that's a wise choice. The downside being you will miss the big success stories, Amazon, Google, etc - however if you pick a decent wealth manager they will buy them as part of a balanced portfolio that you and I probably haven't got the skills, and certainly won't have the multi million pound software to find. Not only that but they are also skilled in shielding your money from headwinds we haven't got the knowledge to see coming. (Obviously with Trump about they're a bit easier to spot for the layman)

 

I switched from self investing to managed about 5 years ago and my only regret is not doing it decades earlier!

You take your choice .I bought shares in BP(Oil) some years ago. Yearly dividend is more than I paid for the whole stock.The stock has increased in value 1000%or more and it's income tax, capital gains tax free . Same goes with Shell oil.

[wordchild]

5 hours ago, Percy P said:

 

You take your choice .I bought shares in BP(Oil) some years ago. Yearly dividend is more than I paid for the whole stock.The stock has increased in value 1000%or more and it's income tax, capital gains tax free . Same goes with Shell oil.

You must have bought it a really really long time ago! It’s got a pretty good dividend yield these days, but the medium/longish term share price performance has been pretty dull. BP had a higher share price than the current one 20 years ago!

[Thailand J]

Dividend distribution is nothing but a pre planed stock partial selling. On ex-dividend day your stock price is reduced at market opening at the same amount equal to the dividend you will receive on the dividend payout day. The difference is the tax reporting. Most REIT dividends are taxed as ordinary income, ouch. Qualified dividends and long term capital gain may be taxed the same rate.

 

Why high dividend stocks? Less dividend less tax to pay..i can always opt to sell at anytime i wanted, free from the scheduled monthly or quarterly dividend distributions, including those times when the market was down...at the worst times to cash out.

 

High dividend paying stocks not necessarily out perform the broad market in total return ( dividend + price change), some do, some don't.

 

S&P 500 pays dividends too, about 1.7 to 2 %. Out of 505 stocks in S&p500, only 80 to 90 do not pay dividends. ProShares S&P 500 Dividend Aristocrats ETF, NOBL invest in 56 high dividend stocks. NOBL only selects companies from the S&P 500 that have increased their dividends for at least 25 consecutive years .Here's how NOBL total return compare to SPY since it's inception, both are winners.

 

 

 

 

 

 

 

 

[Naam]

On 5/9/2019 at 12:16 PM, fletchsmile said:

I live off my investment returns on my portfolio.

 

Part is dividends, but part is also take-out from capital returns: eg on investments that don't pay divs etc

since 29 years we live off our investment returns (bonds only), spend ~25% and reinvest 75%.

 

iron rule was: never touch the capital even though the last shirt has no pockets. however at age 69 and 76 we have started to make our heirs happy.

[Destiny1990]

On 5/7/2019 at 11:07 AM, macahoom said:

 

Can I ask how you money is now invested?

Based on the content of his posting I wouldn’t be surprised if his new financial adviser her name is Mamasan.

 

[Percy P]

14 hours ago, wordchild said:

You must have bought it a really really long time ago! It’s got a pretty good dividend yield these days, but the medium/longish term share price performance has been pretty dull. BP had a higher share price than the current one 20 years ago!

Since they were privatised from a state run company(nationalised eara) 

[Thailand J]

You did very well. Probably you've bought BP in the 1970's when it was $1 +. I have a friend who bought Disney stocks way back then. She said she could get into the theme park for free once a year with her Disney stock certificate.

 

I put my retirement money into index funds in 2007, which was the worst time ever. This is how S&P 500 index compared to BP and Shell since. Not that S&P is the best investment but it's what I have and what everyone knows. This is total return, considered dividend reinvested.

 

2009 The broad market took a big blow from the housing market collapse.

2010 BP was soaked by the oil spill.

2015 BP and Shell both had a terrible year when oil price dropped to $40.

 

All 3 investments are up significantly  since 2016, hope the up trend continues.

 

 

[fletchsmile]

On 5/18/2019 at 12:14 AM, Thailand J said:

Dividend distribution is nothing but a pre planed stock partial selling. .... The difference is the tax reporting. Most REIT dividends are taxed as ordinary income, ouch. Qualified dividends and long term capital gain may be taxed the same rate.

 

 

If you're American maybe. Most of the world isn't though ????

 

Fortunately I'm not. My investments are largely in tax free wrappers = no tax reporting, or favourable tax jurisdictions like Singapore, again no reporting. 

 

Here in Thailand, I'm not taxed on worldwide income either.

 

Distributions on Singapore REITs are tax free for me. Your ouch is for the baseball bat the US revenue department hits you with on US and other REITs ???? I just collect a nice 6%+ tax free distribution on my SG REITS, with a little capital growth over time. Nice thing about SGD is that it moves more closely in line with THB than USD does, so helping reduce FX risk vs FCY for someone living in Thailand. Obviously I hold more than SG REITS though.

 

Capital gains? No thank you. I pay none in Thailand, none in Singapore because of the investments I choose in each country, and none in my "home" country as they're in tax free vehicles ????

[Destiny1990]

Not a fan of paper assets.

Every year they let a monkey select stocks and than an human real expert but the monkey usually does a better job selecting the winners.

[scoutman360]

On ‎5‎/‎7‎/‎2019 at 6:49 PM, HNWI said:

Ark ETFs are a good call for the lazy investors.

I would like to understand your logic. ETF's are just a mutual fund that can be traded daily on the fly, just like a regular stock. Lazy investors should stick to regular mutual funds, IMHO.

[SpokaneAl]

Not a fan of paper assets.
Every year they let a monkey select stocks and than an human real expert but the monkey usually does a better job selecting the winners.

One year, no matter who or how an investment is chosen, does not success nor failure make. Basic asset allocation with no load mutual funds over several decades has worked very well for us.


Sent from my iPad using Tapatalk

[scoutman360]

4 hours ago, Destiny1990 said:

Not a fan of paper assets.

Every year they let a monkey select stocks and than an human real expert but the monkey usually does a better job selecting the winners.

I once saw a TV show where they had monkeys chose a stock, children chose stocks, and professionals chose stocks. I remember that the children chose companies that they liked, such as Disney. The bottom line was that the professionals came in last for stock performance... LOL

[scoutman360]

On ‎5‎/‎18‎/‎2019 at 8:10 PM, Thailand J said:

You did very well. Probably you've bought BP in the 1970's when it was $1 +. I have a friend who bought Disney stocks way back then. She said she could get into the theme park for free once a year with her Disney stock certificate.

 

I put my retirement money into index funds in 2007, which was the worst time ever. This is how S&P 500 index compared to BP and Shell since. Not that S&P is the best investment but it's what I have and what everyone knows. This is total return, considered dividend reinvested.

 

2009 The broad market took a big blow from the housing market collapse.

2010 BP was soaked by the oil spill.

2015 BP and Shell both had a terrible year when oil price dropped to $40.

  

All 3 investments are up significantly  since 2016, hope the up trend continues.

 

 

I like this graph because is just shows that everything goes up and down together, no matter where you invest. But it also confirms what so many professionals say, just buy the S&P500, and you will do better than all the people trying to gamble with their money.

[Percy P]

9 hours ago, fletchsmile said:

If you're American maybe. Most of the world isn't though ????

 

Fortunately I'm not. My investments are largely in tax free wrappers = no tax reporting, or favourable tax jurisdictions like Singapore, again no reporting. 

 

Here in Thailand, I'm not taxed on worldwide income either.

 

Distributions on Singapore REITs are tax free for me. Your ouch is for the baseball bat the US revenue department hits you with on US and other REITs ???? I just collect a nice 6%+ tax free distribution on my SG REITS, with a little capital growth over time. Nice thing about SGD is that it moves more closely in line with THB than USD does, so helping reduce FX risk vs FCY for someone living in Thailand. Obviously I hold more than SG REITS though.

 

Capital gains? No thank you. I pay none in Thailand, none in Singapore because of the investments I choose in each country, and none in my "home" country as they're in tax free vehicles ????

Well planned.

[fletchsmile]

17 hours ago, Destiny1990 said:

Not a fan of paper assets.

Every year they let a monkey select stocks and than an human real expert but the monkey usually does a better job selecting the winners.

Sounds like the company you keep ????

 

If you're picking average investments at random and/or most funds at random and/or you've no idea what you are doing you're probably right ???? 

[Number 6]

Before I retired early I squirrelled away everything in 401k, IRA and Roth so I wouldn't have to deal with reporting other than cash here fbar. I'm 90% out of the market, waiting for the big tank and have been for a few years. I'm losing upside but no got out mid 2006 and didn't lose a cent 2008-2010. It's a totally rigged system. I'd never want to hold volatile shares in US. Market can tank while I'm sleeping. As for stop orders, it's one thing to sell at X but someone needs to buy it. Very well could go to Z.

 

I always love when the market blows up, some brokerage loses their ass on hfts then the money master's announce a do-over for the day.

[Destiny1990]

4 hours ago, fletchsmile said:

Sounds like the company you keep ????

 

If you're picking average investments at random and/or most funds at random and/or you've no idea what you are doing you're probably right ???? 

I know some folks never loosing on the stock exchange market.

Those folks are called financial advisors.

They will advise other people which stocks to buy with their own money and get a commission regardless of its performance..

[fletchsmile]

4 hours ago, Destiny1990 said:

I know some folks never loosing on the stock exchange market.

Those folks are called financial advisors.

They will advise other people which stocks to buy with their own money and get a commission regardless of its performance..

Average financial advisor in Thailand? = a strong case indeed for the monkeys. 

 

(Though to be fair there are a few OK ones)

[alfieconn]

On 5/10/2019 at 11:59 AM, Benroon said:

Of course its not the right thing - you've made the worst possible choice.

 

Cash in the bank is LOSING you cash with inflation - unless you're with some obscure Iraqi start up bank. I don't know how old you are but unless you've been given a terminal diagnosis, there has never been a sustained period where equities have lost you money. So if you can lock away cash to make capital gains and then live off the dividends that's a very wise choice. Unless you're investing in Peruvian emerald mines there is no reason at all that equities should be 'scary'. Periodic crashes don't lose you a bean unless you then panic sell and crystalize it.

 

Property has always been a good investment too (I have it) but if you are from the UK and now live here, then since 2015 that has been a poor decision too. Anyone living here on rent from those properties are likely to see a significant portion of that if not all, wiped out by a looming CGT tax bill when they come to sell.

 

Equities is where you need to be - it has never failed in the long term. If however it is only short time windows you want to invest in, a casino would be a better option than a bank !

I would love that scenario !

[KittenKong]

On 5/20/2019 at 12:28 AM, scoutman360 said:

I would like to understand your logic. ETF's are just a mutual fund that can be traded daily on the fly, just like a regular stock. Lazy investors should stick to regular mutual funds, IMHO.

ETFs usually have lower ongoing management fees than funds. Sometimes much lower. That particularly applies to index-trackers.

 

I am lazy and I have very little faith in the abilities of fund managers, so I generally just buy index-tracking ETFs.