Ong Kang Wei

Dividend growth investing, growth at reasonable price, long-term horizon
Ong Kang Wei
Dividend growth investing, growth at reasonable price, long-term horizon
Contributor since: 2012
Thanks for the comments people, I will look into your suggestions.
All the best!
Kang Wei
Hi Dividend Sleuth,
Thanks for the comment and for the compliments!
All the best!
Kang Wei
Hi zgb,
Thanks for the recommendation. After some research, I think it's quite a good dividend payer and fund overall. I would have preferred more dividend and trading history, but I still like it quite a bit.
I'm considering adding it to my dividend portfolio. Thanks again.
All the best!
Kang Wei
Hi zgb,
Thanks for the comment. I'll check BWG out and tell you what I think later.
All the best!
Kang Wei
Hi Bingo,
Thanks for the feedback.
Honestly, I don't think the stocks in my portfolio are "boring" to me. I see these positions as a part ownership in these companies that make so many products. When I think of this fact, I feel proud to be a shareholder that I forget about the boring price action. Anyway, the compounding over time is my ultimate aim, so I don't really care about price action.
I have also set aside some funds for those stocks you mentioned, as you have seen in the article. Any investment suggestions?
All the best!
Kang Wei
Hi sisaket,
Thanks for your input. I understand your concerns about the impact of political sentiment on these markets, but I believe that markets frequently get overextended in either direction due to the emotional turmoil that investors are put through. I want to take advantage of these over-extended declines through short-term trades.
In fact, the reason you mentioned is probably one of the largest reasons why I trade such markets, and not invest over the long term.
Regarding technical analysis, I used it above in the situation of EWZ, to find a good buying point on the long term trendline. Technicals can also be used intraday to find a good entry point, since we are talking about trading over here.
Hope this reply helps.
Kang Wei
Hi liongterm investor,
Thanks for reading and for commenting. More information on the put selling operations can br found in Part 1 (http://seekingalpha.co...). Do check that out.
Anyway, I've just started selling puts so I don't have much experience in it. I've sold T, GE and JNJ puts, all closed out for a small profit. I've no positions now. I sell puts based on both fundamentals and technicals. It needs to be a high quality business trading at a reasonable valuation. I then use technical analysis to ensure that prices are not going to fall significantly in the short term.
I don't need margin to do this. It has to be cash-secured though. This means a sum of money (which would be used to purchase the shares if the put was exercised) is tied up when you sell the put.
I try to have a yield of between 15% and 35% annualized. That sounds like a lot, but considering the limited opportunities that is present, effective yield may not be that much at the end of the year.
I limit myself to 1-2 exercised puts per year due to my relatively small account. I expect to keep the stock in my portfolio. I may or may not sell another more overvalued stock. I typically am not very keen to sell high-quality stocks but if I have to (due to reasons such as very low yield, high valuations, etc.), I will do so.
I hope this reply is helpful to you. Feel free to ask again if you don't understand anything.
All the best!
Kang Wei
Hi Jhalgren,
Thanks for commenting. The impact of falling oil prices, and a falling Canadian Dollar has definitely took a toll on BNS prices, but overall I think it's a fantastic stock to own over the long term.
All the best!
Kang Wei
Hi Get Rich Brothers,
Thanks for the input. I was not aware of such a fantastic growth streak. It definitely is one of the more stable financial companies, as proven by the fact that it is one of only 2 financial companies in my portfolio. Most financial companies, including previous dividend aristocrats like BAC, did not qualify for the portfolio given their horrible dividend payment history since the recession in 2008.
The main reason that BNS is a tier 2 stock is its 75% fall in price in the recession, and the fact that it halted dividend growth through 2008-2009. I know that this is remarkable for any financial stock, considering the performances of banks like BAC, JPM and C, but it was classified into the 2nd tier due to such more volatile qualities.
All the best!
Kang Wei
Hi sbally,
Thanks for the comment. Like go-4-it, I will also wait for a better entry price. It is one of the only portfolio positions that I don't have at the moment (as it is new in the portfolio).
Currently, there are definitely many headwinds for Caterpillar, including the weak oil prices, etc. As someone who thinks that oil prices will stay low, I expect Caterpillar's earnings to continue to be soft going forward. This is one reason why I've put off my buying. In addition, a cyclical company like this is more volatile than other stocks, and can/will overextend its run into either direction.
Despite all these, it undoubtedly pays good (and growing!) dividends, and is one of the strongest companies (with a whole lot of brand recognition) in its industry, and will be one of the stocks that would thrive in a bull market and do well in the long term.
Thus, although I would not go all in now, I might take a nibble at these prices. I think there might be more downside both technically and fundamentally in the short term, but in the long term, CAT looks like a great income+growth stock to me.
I hope this helps!
Kang Wei
Hi mkemac,
I don't know about you, but I personally think that it is better if I write in bite sized pieces, both for me and the readers.
All the best!
Kang Wei
Hi snoopy,
Thanks for reading and for your comment.
Originally, my rationale for re-balancing my portfolio was to fuel the extra income or returns generated from the put selling operations (found in Part 1) and the higher risk segments back into the main dividend portfolio. The dividend portfolio is and always will be my priority. Since I will expect higher returns given the risk I'm taking in the other segments of the portfolio, I am expecting these portions of the portfolio to grow faster overall.
After reading some comments here, I am considering changing this to an annual re-balance, since it definitely is more viable in terms of time and commissions spent.
Thanks for the comment once again!
Kang Wei
Hi swissfrank,
Thanks for reading and for the comment.
My rationale for re-balancing my portfolio was to fuel the extra income or returns generated from the put selling operations and the higher risk segments back into the main dividend portfolio. Since I will expect higher returns given the risk I'm taking in the other segments of the portfolio, I am expecting these portions of the portfolio to grow faster overall.
But your question really set me thinking- what if the high-risk segment doesn't turn out as expected and I lose money. I think that I will have to reconsider the viability of the high risk segment in that case, and either improve it, or drop it from my portfolio.
Anyway, thanks for the question, and I hope my reply helped.
All the best!
Kang Wei
Hi Mantraviz,
Thanks for your comment. I have just started selling puts so I don't have much experience to speak of. I have recently sold some T, GE and JNJ puts at levels where prices look attractive technically (and fundamentally, but mainly technically). All the puts I sold are currently down at the moment. I'm obviously hoping it stays like that.
Like yours, my strategy is to sell puts plus-minus 30 days away. I'm fine with things as short as a day or two, if there is opportunity, or if the options decline too much. I'm glad to hear that the strategy has worked well for you.
All the best & Good luck!
Kang Wei
Hi surfgeezer,
Thanks for your valuable input. You really make things very clear for all of us.
All the best!
Kang Wei
Hi surfgeezer,
Thanks for your input. I agree with you on that one. I'd experienced, first hand, how you lose money at the leveraged rate. Selling puts are a much safer trade in my opinion. Plus, you boost your income.
All the best!
Kang Wei
Hi GMWoo,
Thanks for the input. It is much appreciated. I will be researching more about covered calls as well as LEAPs.
All the best!
Kang Wei
Hi Moneymadam, Thanks for commenting. I haven't sold covered calls before but I definitely will try in the near future when I accumulate more shares. I know how it works, and I know that it is effective, but $2500 is currently a full position for me. Due to this, not many holdings are above 100 shares. Thanks for the suggestion anyway.
All the best!Kang Wei
Hi hardog,
Thanks very much for the input. I think I meant to say that I was the underwriter, insuring the stocks for others who bought to put (at a price where I'm perfectly willing to buy the shares at). The message might have got lost due to my phrasing.
Nevertheless, I do get what you mean, since I'm not insuring the stocks for myself.
Thanks and all the best!
Kang Wei
Hey Daryl,
Thanks for commenting once again. Wow, what a coincidence! We sure do think alike. :) Yup, maybe we should meet someday too.
All the best!
Kang Wei
Hi SMJTrust,
Thanks for reading and for the wonderful sharing on your AAPL options. You sure are very lucky to have such awesome performance- I was actually buying options before I started dividend investing 2 years ago, but the results were disappointing, so I moved on to dividend investing- a more stable investing method.
Now that most of my portfolio are relatively stable, I am trying out such new, low-risk strategies as you saw in the article. As time passes, I may also consider LEAPS like the ones you bought.
Anyway, Best of luck in your future investments.
Kang Wei
Hi wallycool,
Thanks for reading and for the comment. It's much appreciated
All the best!
Kang Wei
Hi Craig,
Thanks for pointing that out. I meant to say it usually is a large negative to me, given that I am normally particular about dividend growth. But in this case, the fact that it will be paying more both now and in the future offsets a large part of this concern.
Kang Wei
Hi Craig,
Thanks for your comment. I did also mention that "Although it does not grow its dividends, I see this issue as a matter of paying more dividends both now and into the future, instead of paying less now and growing it into the future." in the article.
Aside from that, I agree with you on all other counts, DNP is definitely one of the few CEFs that pay consistent distributions despite tough times.
All the best!
Kang Wei
Hi Johnny,
Thanks for the comment. I agree with you on all counts
All the best!
Kang Wei
Hi Realtoi,
Thanks so much for your valuable input. It is definitely a great pick for any DGI portfolio. I didn't know that there's such a discount.
All the best!
Kang Wei
Hi txwoodworker,
Thanks for bringing that up. I will make the amendments shortly. I am aware of the return of capital that DNP pays out to maintain distributions. DNP is and has been leveraged, but I think it is one of the better funds out there, since it has maintained dividends through the last 2 recessions. I try to find funds like these to reduce my risk of a loss of income.
All the best!
Kang Wei
Hi dolson,
Thanks for the comment. In case you are wondering, DNP generates this income mainly through its income stocks, but when there is a shortfall of cash, it uses three avenues to maintain the distribution. One, issuance of preferred shares and common shares. Two, using return of capital, which is simply returning you a portion of your invested capital- technically not dividends. Three, capital gains on stocks within their portfolio.
I recently started to add funds to my portfolio for the reason that you stated- they have high yields and some pay pretty consistently, very much like the high quality stocks that pay consistent, growing dividends I am always in search of. For a retired person mainly focused on income, investing in higher-yielding funds instead of individual stocks can be a viable option.
But one pitfall of investing in funds, in my opinion, is that you do not have control over your portfolio. Many managers trade a lot- average turnover is quite high for some funds. As the famous quote goes, your portfolio is just like a bar of soap, the more you handle it, the smaller it gets. You cannot control turnover. There is also an expense ratio that one has to take note of. These expenses are taking a bite off your returns and income. Many funds also do not have a long enough history for my liking. Three, four years of constant dividends is not enough to prove anything to me. I want to see it go through one recession and yet increase (or at least maintain its dividends), which is truly rare for funds.
Hence, I would not recommend throwing in the towel entirely even for retired investors. A balance between fantastic, stable stocks and quality funds like DNP will be most optimal in my opinion.
I hope this reply helped.
All the best!
Kang Wei
Hi In&Out,
Thanks for the comment. Congratulations on the fabulous performance with DNP over the past years. I agree with you that track record and consistent dividend payouts are what matters most about high yielding funds. I will also wait a bit more for the rights offering before buying, as you and Bigtank have mentioned.
Thanks and all the best!
Kang Wei
Hi 57seagull,
Thanks for the comments.
Your 1st comment: I'm not familiar with preferred shares, but FFC looks great based on the dividends and the numbers. Do you have any advice on this?
Your 2nd comment: As I replied to another commenter above, "'m not particularly worried about a dividend decrease due to the resilience it has shown over the past 2 recessions. No matter whether it was during a bull market when dividends decreased greatly (2000, 2007), or a bear market (2001-3, 2008-9), dividends has been held steady.

Besides this, history shows that they have always used return of capital or long term capital gains to make up for any shortfall in terms of the dividend. They have also issued some preferred shares a while ago."
I also want to add that management have "skin in the game", since there is heavy insider ownership and buying in this fund. I hope this helps.
Thanks and all the best!
Kang Wei
Hi Nicholas,
Thanks for the comment and the suggestions. For BNS, I illustrated why I bought it over here: (http://seekingalpha.co...). I was attracted by its high yield, consistent dividend growth and international exposure. If I were to pick another, I would pick TD Bank given its dividend growth. I'm not sure about BMO/CM in depth, but their dividend growth performance during the recession was just less outstanding than BNS/TD in my opinion. All are great banks nevertheless.
HQH, HQL and HTGC may also not be the best choices for me since they decreased their dividends during the recession of 2008-2009. One key principle when I'm investing is income growth, so I want to see all stocks increase/maintain their dividends through at least one recession. These stocks didn't pass this test.
STK looks interesting to me- steady dividend and high yield. I'll do more research on this. Thanks again!
All the best!
Kang Wei
Hi turk617,
Thanks for the comment and for the recommendation. BUI has a high yield, but I found that dividends had actually decreased in 2013 and 2014. Because of this, I lost interest. But it is a great fund in other aspects- it has a low expense ratio (1.10%) and a great portfolio of utilities and infrastructure stocks.
Thanks again!
Kang Wei