At my early stage of investing that's the number thing I do check which made me lose alot of potential growth stocks I should have made alot of money from
Cool, just consider a good growing stock and buy and hold, I no longer consider its dividend payout ratio rather I check that their earnings per sha
Exactly! This is where many investors get it wrong they focus on the amount instead of the return.
Yield alone can be misleading—what really counts is sustainability and growth. A smaller dividend on a strong, growing company can outperform a flashy high-yield stock over time. Consistency, earnings strength, and long-term growth are what separate smart picks from risky ones.
Dividend numbers alone are shallow signals. What truly matters is how much they earn relative to the price you pay, because that tells you the efficiency of capital return.
It's all about the dividend yield, not just the dividend amount. A ₦2 dividend on a ₦20 stock might seem small, but it's actually a 10% yield significantly higher than a ₦10 dividend on a ₦500 stock, which only gives you a 2% yield. Yield gives you a better understanding of how much return you're getting relative to the price of the stock, so always look at it in that context when comparing dividends.
I totally get that. It's easy to get caught up in focusing on the dividend amount, especially when you're just starting out. But over time, you realize that it's the overall return (yield) that matters more in terms of sustainable growth. Some high-growth stocks might not pay much in dividends, but their appreciation can far outpace the yield from dividend-heavy stocks. It's all about finding that balance between growth and income that aligns with your investment goals. Live and learn!
Exactly. The magic of compounding is real. That ₦2 dividend, when reinvested, can grow exponentially over time. It’s a slow build, but the returns can become massive as the compounding effect takes hold. And for dividend investors, you're spot on—understanding the payout ratio and the consistency of dividends is crucial. A reliable dividend stream adds stability to your portfolio while letting compounding do its thing. Whether you're focusing on growth or income, both strategies can work well when approached smartly!
Ah swear, it's really a big lesson learnt, there's so many things we keep on learning on this investing journey
That’s a solid approach. Focusing on earnings per share (EPS) helps you understand the company’s profitability and growth potential, which is more important in the long run. A growing stock with solid earnings is likely to continue increasing its value over time, with or without big dividends. As you said, buying and holding these stocks allows you to benefit from both price appreciation and the potential for dividends to increase as the company grows. It’s all about selecting businesses with strong fundamentals that can sustain and grow over the long term.
