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Unique opportunities for dividend investors

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Baris ERKAYA

Sure, there may be those who call the fall in the stock market a disaster. But for true investors, not stock market traders, these dips are actually a rare opportunity. For those who make long-term investments, whose goal is to gain financial independence, who expect a dividend yield from their shares, who want to become an ever-larger shareholder of one of Turkey’s giant companies instead of facing momentary fluctuations …

LOSS OF PRICES OVER 20 PERCENTAGE

After losing 12% from its all-time high, the BIST-100 index has regained a third of its loss, with sessions that won’t feel like horror movie scenes. During this sharp decline in the index, the shares of companies such as Ereğli Demir Çelik, İskenderun Demir Çelik, Tofaş Oto Fabrika, Enka İnşaat, Eczacıbaşı İlaç, Ford Otosan and Turkcell fell between 17% and 26%. For example, Ereğli Demir Çelik alone has lost nearly a quarter of its market value.

Of course, the decline in steel stocks on a global basis has a dimension that is reflected in stocks such as Ereğli Demir Çelik and İsdemir. But what do these falls in stock prices mean for those who are currently buying these stocks for future prospects or dividends?

Conversely, this decline in the stock market has created a very serious opportunity for dividend investors. Also in the Dividend 25 index, the average depreciation of 25 stocks was 17%. This has created an opportunity for dividend investors to buy what they want at hard-to-find prices. In some stocks, this opportunity creates the opportunity to buy more than 30 percent less.

IS THERE SOMETHING THAT MADE YOUR EXPECTATIONS STOP?

From now on, the most important point that dividend investors should pay attention to is: is there a possibility of a deterioration in the dividend amount that the planned investment stock will pay out in the medium and long term? This term we are talking about is not three or five months. At least 5-10 years.

If the company is facing the threat of fundamental technological change, if expectations about the future of the company’s product have completely changed, if the company’s position in the industry has weakened and strong new competitors have emerged, if there is a general downward trend in the profit margins of the sector in which the company is located, so perhaps with the dividend in hand, perhaps it is necessary to say goodbye and find new ones. But if no such major changes are expected, then the best title is the one you are most familiar with.

REVIEW OPPORTUNITY IN THE DIVIDENDS PORTFOLIO

The advantage of the Dividend 25 Index is that it includes companies from different sectors with a dividend tradition. There are also stocks in the real estate, automotive, construction, pharmaceutical, technology, energy or food sectors. Perhaps it is best to diversify the dividend portfolio on a sector basis during these downturns. Experts suggest that this period should be assessed in this way. Especially companies with a high cash generation capacity such as food, holding and retail are indicated as companies that should be watched in this regard.

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