Interesting thread this in the sense that the old adage "different strokes for different folks" I can't recall ever reinvesting dividends received on a given counter back into that same counter, other than some 20 years ago it was quite fashionable for a number of companies offering you an option to take your dividend in shares. However the companies soon learnt that it was a nightmare to control the share register and if a shareholder wished to sell out of a counter it was more difficult to sell odd lots rather than lots of 100's or 1000's.
I get about R 50,000 per annum in dividends and I use these funds to but additional shares or augment an existing holding of a particular counter. This methodology may not work for many, but it has worked for me, and, I have been involved in the JSE since 1967
So the reality is that you need to work out a play that suites your requirements - in my case dividend yields play little part in my particular investing strategy, I am more interested in capital growth over an extended period, the dividend is merely a bi product of that growth.
Further with dividends the first you know of when a dividend is going to be reduced or passed is when the sens comes out which is a bi annual event, so the share price could stagnate and it has an impact on the dividend, you have to then make a decision stay with the company and take the lesser dividend, and live with the stagnated price or sell out of the counter. It also seems that those companies which do reduce their dividends, it takes ages for them to get back to previous dividend payments so you could take strain on both fronts - lack of capital growth and slow or dismal dividend returns
Just my opinion on this matter
gcr, seeing as you have been in the market for so long, and from your comments, do you think you have been better off chasing capital growth instead of dividends? Thus, did you have specific growth margins for your portfolio, ie 15-20% growth p.a over three years and then cycle the underperforming shares out?
My buying of shares has never been based on dividend returns, only capital appreciation. Dividends earned are dropped into my trading account and then I buy shares which have either done well over the years, or if there is a counter that I wished to buy. The "better" shares will generally show reasonable capital growth and the dividend will increment with their better results. Also in the early days I used to commit 5% to higher risk shares - speculative if you like, however today 5% is too large a sum of funds so I now only commit 2% to these type of shares. In 2005 when I went on retirement I dabbled in installment shares, which limited losses but also achieved slower growth, but at least I could have a wider spread of shares in my portfolio. In those years I also used to sell off 80% of my holdings in a particular counter when the price had appreciated by 35%. These days those shares which have done exceptionally well for me - ADI, AVI, CLS, CSB, MRP, STXIND, WHL I still keep in my portfolio and add every now and again. Some shares CML, MSM, PIK, TAS have been disappointing over the last year or so but I do think they are big enough to return to their higher levels in the next 2 years so I hold them and buy up more every now and again
My objective is to have a portfolio value of R x millions by 2020 and currently I am 66% there so I am on track to achieve this objective. I currently have 2 speculative counters in my Portfolio AET and NUT the former is costing me money because I expect it to be liquidated so I will lose R 21,000, the latter is giving me a profit of R 14,850 but it fluctuates dropping to 1 cent every now and again (like yesterday) and has been as high as 4 cents last year but there is little likelihood that I could dump my holding on the market and they would probably be sold piecemeal so I am holding them.
So the way I operate in the market is different to some of the forum members - but you also need to have cast iron balls in this market. In 2007/8 my portfolio dropped by about R 600,000 in a month, which has now been fully recovered and then some. The last "crash" my portfolio dropped about R 225,000 in a week, but as of today I am about R 100,000 shy of my all time high for my portfolio
I am not a trader so don't sit with the same type of angst that they would and generally keep away from speculative shares and new listings
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Then work a strategy around your stop losses as it seems that these are the hindrances to you making money. The spikes I am almost sure are as a result of traders selling "at best" rather than at a fixed price - this will invariably take out tight stop losses