RE: This Weeks Winner27 Aug 2022 10:45
"That’s all well & good mate until a company cuts their dividend."
I understand what you're saying and you're not wrong in that respect, as I found with my Lloyds and BT shares during the pandemic, but the dividend payouts are a buffer and dividend cuts should be expected under certain circumstances. Growth stocks are the most at risk in recessionary and inflationary periods, they are priced on future growth and projected revenue increases, but any growth goes out of the window when the money taps are turned down or off.
Something else, the market doesn't apply logic to its pricing of stocks which was evident during the pandemic. I added to all my holdings during the pandemic, and brought my average cost per share down for all three; BT was my most memorable, I bought an extra £35,000 worth in two tranches at 106p and 112p. Before the pandemic our annual dividends were around £13,000, with the extra shares we've added during the pandemic we're now on target for dividends of £21,000 for the current financial year. What was the market thinking, pushing BT's price down to under £1 during the pandemic? Telecoms were one of the few resilient sectors during the pandemic, yet the market hammered them more than some badly affected sectors. I think the market treatment of the Telecom sector, during the pandemic, proves that the market is either gaming the sector, or has no idea how to value the stocks. I thought Telecom stocks were cheap before the pandemic, and dirt cheap during and since the pandemic, so I'll just keep steadily adding to my holdings until I no longer see value. I can live with dividend cuts if it protects the companies I'm invested in, as I said dividends grow my holdings in the good times and act as a buffer in downturns; That said, I see Telecoms as one of the most resilient sectors on the planet.
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