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Shares: Regular dividend annuity or high returns?

At the beginning of investing in stocks, you should decide whether to buy stocks in order to receive a regular annuity from dividends or whether you just want to value your free funds well.

If you want to get a regular annuity from your invested money, it is advisable to buy such shares that pay dividends. In the Czech Republic, these are mainly securities of Philip Morris and Telefónica O2, which have the best P / E ratio. You can also add other titles to your portfolio, such as shares of ČEZ, Fortuny or Komerční banka.

However, in the case of capital appreciation, the above dividend shares are not appropriate. Their value does not increase much over time. Rather, they only cover inflation.

“Dividend shares are generally not the most suitable, because they are usually shares of companies that are no longer able to increase sales and profits in the long run, or just plus or minus inflation,” said Jan Traxler, CEO of FINEZ Investment Management. According to Traxler, even dividend shares can sometimes surprise. These are mainly shares of such companies that have problems. “Such shares then offer a potentially higher capital appreciation and a high dividend. However, the potential for higher returns is matched by higher risk, because a rise in the share price will only come if the company gets out of trouble. A beautiful example is currently Nokia, RWE or Veolia, “added Traxler.

Share premium affects stock prices

Share premium may make the acquisition of shares more expensive. Especially when he buys them as a complete share, for example in a volume of ten or 20 percent or more.

Build a global equity portfolio

Jan Traxler also recommends that the investor build his equity portfolio from a global perspective. Not investing only in Czech shares is one crucial importance. You never know what the future holds.

From a short-term point of view, therefore, titles that are traded in the Czech Republic are suitable. The plus is that these are quality stocks with a high dividend yield and the investor does not have to worry about currency risk.

“If you want to invest in the long run, you have to take into account seemingly non-existent risks. Where is your guarantee that we will be able to do business freely in the Czech Republic in 20 years?” Said Traxler.