With interest rates rising globally impacting growth companies with higher borrowing costs, lower spending in general populations due to higher basic costs of living - mortgage/rent, food / energy - are value companies finally getting seen for the value they offer?
On the flip side - if you are in the UK, why buy an investment trust or company paying a say 5% yield when you can earn more than that in the bank? Then that said MNG has a 9% yield, LGEN 8%, and even UKW with its 5% yield and targeted 8-10% total return is trading at a 5% discount.
All generate good cashflows - are any (or others) a better value investment in the current market / outlook?
With interest rates rising globally […] are value companies finally getting seen for the value they offer?
Value companies have already gone up since last year.
why buy an investment trust or company paying a say 5% yield when you can earn more than that in the bank?
Because the 5% is for short term bonds, who knows how interest rates might change 1, 3, or 5 years later?
Then that said MNG has a 9% yield, LGEN 8%, and even UKW with its 5% yield
Remember that when a company pays a dividend, its share price falls by the amount of the dividend that was paid. Dividends are not free money - so a company paying 0% or 5% dividend should not matter to you, all else equal.
This is not the same as yield gained by bonds. A bond coupon is an interest payment.
My opinion is that if you’d like to invest in value stocks, do so for the long term. Do not jump in and out based on changes in the economy, as you’ll more likely under-perform since you’ll be chasing returns.
If you are interested, Vanguard FTSE All-World High Dividend is a very good fund that contains both value (cheap) and profitable companies.
You are talking about a total return strategy, and yes I agree with this in general. What I’m saying is that dividends give you additional cash flow without having to trade in the market, and dividend companies are generally ignored when looking at long term growth potential(as most wouldn’t compound the impact of reinvesting dividend to review track record if that is what you are using as a basis to invest). These companies mentioned have a relatively stable moat and have historically proven to maintain a strong cashflow record, hence the dividend levels although not entirely risk free, are relatively stable. And yes it is treated as a dividend not interest payment unlike bonds.
You would hope that LGEN would gain in Price appreciation or do BuyBacks.
They compare themselves to BlackRock but never tend to try and grow their Share Price, so the biggest risk with LGEN is a static or falling SP with the Dividend growing slowly.
I buy them for security but I am aware that they may not grow for many years as I build it up.
