Belgian buys 98% less stocks…so sad…learn about dividend investing !

On Saturday we buy always the financial newspaper De Tijd in a local newspaper shop. Here we reflect on two articles that we read in the newspaper of the 11^th of February. I think nobody does see the connection between the two articles and that’s why we reflect here on those two articles.

Article 1: Belgian buys 98% less stocks

As stated in our previous blog post Read about collective (stupid) behavior of the Belgian population, the National Bank of Belgium states the devastating impact of the speculation tax and higher taxes on dividend stocks. Who is stealing our money blog post talks about the taxes increases during the past years. As you can read in the official graph, investments of Belgian families in stocks of companies dropped from 30 billion euro during the period 2009-2012 to 0,5 billion euro during the period 2013-2017. Also investments in funds dropped 70%.

This is really VERY SAD NEWS !! This makes me sad and angry on the government as they demonstrate again their lack on financial literacy. They have been able to kill any appetite for families to invest diligently in the stock market.

I hope that the Belgian government is “proud” of what they have done in the past years…it makes me sad. Do they want to keep all Belgian middle class poor?

We will keep on executing our Portfolio strategy from our Finance strategy and keep on investing in the stock market diligently the way we have been doing the past years.

The best way to see our performance is to review Our Dividend Income page. Results speak for themselves….

Article 2: What gives you a real treat, is a high dividend (Dutch : wat je echt verwent, is een stevig dividend)

In the same newspaper of the 11^th of February, the journalist Serge Mampaey starts his article with exactly the same quote of John D. Rockefeller as on my homepage.

The only thing that gives me pleasure, is to see my dividends coming in.

That was a pleasant surprise. Rockefeller understood the power of dividends to increase his net worth and build his wealth. His fortune is estimated to be 350 billion dollar.

Now that the companies on the BEL20 start to report out their balance sheets and profits, it’s interesting to follow the net dividend return. The average dividend return of the BEL20 stocks is 3,88% and after the (again) increased tax there’s a net return of 2,72% left. This is fine if you are happy with such a return on your investment in a Belgian company and want to invest close to your home and in your home country. It is little higher than the 2,65% inflation rate in January 2017 but still very little return according to us.

The journalist reviews the company results and dividend increases for several companies in Belgium. We can only conclude when we review the table in the article that the gross dividend payout is a yearly dividend payment of max 2% except for the company Lotus Bakeries who keeps on growing organically.

What most people in Belgium don’t realize is that companies in the US and Canada pay a monthly and quarterly dividend compared to European stocks. The second key important information is that in other countries you can find stocks and ETF’s with a dividend return of 10% and more. So when the journalist uses “high” dividend, I wouldn’t quote 2% dividend a high return. We have a different definition of a HIGH dividend. We have an ETF in our portfolio that gives us 22%. That is what we call HIGH dividend payouts.

Since 2013 we are also invested in an ETF that pays us more than 15%. We are still invested in this high paying dividend ETF and doubled our position during the past 3 years. You can double your wealth in 5 years if you calculate the compound interest on such an investment.

We can only give you ONE IMPORTANT ADVICE :

CALCULATE THE NET CASH FLOW RETURN ON YOUR INVESTMENT. Do the math that you learned in high school…

Good luck with your personal finance strategy. I want to end with a quote of Margeret Thatcher.