Hong Kong, Hong Kong S.A.R., August 23, 2015 --(PR.com
)-- In their recent monthly economic issue, Meridian Capital Management, a Hong Kong based investment and advisory firm, explained how a slump in oil prices could boost income prospects by choosing the most popular oil and government bonds. “Energy prices have sharply declined in recent times and this is prompting the economy to return to the safe haven of government bonds and other reliable securities, leading to a rise in the yield of some alternative assets and the 10-year Treasuries are once again paying out more than a 6% rate of interest,” writes, Mr. Sebastian Malbry, Senior Market Analyst. His report states that when market conditions are wavering, alternative assets lose more money but this is where the difference in knowing and doing lies. The report recommends limiting the investment exposure in those assets in the range of 5%-25% of a portfolio, keeping in mind the maximisation of returns.
Bonds and Dividend Stocks as Investment Options:
While surveying market trends, it has been found that recognizing and capitalizing on the most popular bond and dividend paying stock alternatives is what can genuinely help investors during this phase. In the midst of a plethora of assets, apart from oil bonds, dividend stocks also have been identified as the most reliable way of enhancing one’s income prospects.
Safe Ways to Invest in Dividend Stocks:
An investor should seek out the companies that consistently raise their dividends. To avoid over paying it is essential to look for overseas dividend payers, where stocks are less inflated. It has been found that Preferred Stocks tend to offer high yields and have recently averaged a 6% yield. These shares can be traded like regular stocks, but are structurally like bonds as their payments are fixed over time. Hence, one can continue to reap the benefits of a reliable income.
Analysts from the firm also report that oil’s dramatic sell-off poses as good news for retirees looking to boost retirement income. The trick lies in identifying a company that would continue to pay their dividends even in critical situations. This is taken care by the payout ratio that is defined as the percentage of profits returned to shareholders in the form of dividends. Companies with lower payouts are more likely to be able to continue with their payments even when their profitability is affected. The report’s emphasis on the fact that dividend income is based on the number of shares one owns and not on the price of the stock, will also help retirees in buying stocks in a downward trend as the focus is on the generated income and not the short term price fluctuations of the stocks.
Mr. Malbry concludes the issue by stating that a drop in oil prices need not necessarily mean trouble but an opportunity to create new avenues for profits.
Meridian Capital Management is a Hong Kong based investment brokerage firm that helps investors to achieve their investment goals through strategic trading, competitive returns and tailored solutions.