Kasikorn Securities (KS) recommends investing in high-dividend stocks to hedge against volatility in 2022, including infrastructure funds and electricity power plant stocks, which tend to generate consistent returns.
KS research released a top 10 for dividend stocks expected to offer the highest payouts this year, including Jasmine Broadband Internet Infrastructure Fund (JASIF), Amata B.Grimm Power Plant Infrastructure Fund (ABPIF), TPI Polene Power Plc and Bualuang Office Leasehold Real Estate Investment Trust (B-WORK).
The brokerage said high-dividend stocks can offer a good hedge against market volatility as they provide relatively stable returns with a high yield of 7-9.4%.
Analysts recommend investing in dividend stocks from January to April, which is the period when listed companies announce their operating results and dividend payments.
Therdsak Thaveeteeratham, executive vice-president of Asia Plus Securities, said investors should purchase dividend stocks before their ex-dividend (XD) date otherwise they will not receive the dividends for another two months.
He recommends buying stocks two months before their XD date and then offloading the shares a few days before the date.
Using this strategy, investors can gain good returns from dividend stock arbitrage, said Mr Therdsak.
For a stock that pays a dividend once a year, buying the stock two months in advance of the XD date can generate up to 11.7% in returns, he said.
The maximum return drops to 6.37% if the purchase is made one month before the date, falling to 2.31% and 0.5% if the purchase is made two weeks and one week, respectively, before the date, said Mr Therdsak.
For stocks paying dividends twice a year, buying the stock two months in advance of the XD date can generate up to 7.81% in returns, he said.
The maximum return drops to 4.29%, 2.25% and 0.86% if the purchase is made one month, two weeks and one week, respectively, before the date, said Mr Therdsak.
Piyapat Patarapuvadol, a strategist at Yuanta Securities, agreed investors should purchase dividend stocks one or two months before the XD date to capture optimal returns.
Mongkol Puangpetra, executive vice-president at KTBST Securities, said investors should look for stocks with a history of consistent dividend payments that have high potential for growth in the long term.
