Dividend Yield Chasing
The yield trap: why a 12% dividend usually signals a dying company and a looming cut.
The Core Pitfall
Investors blindly chasing high dividend yields often fall into value traps, buying deteriorating businesses just before they slash their payouts.
Why It Happens
A high yield is often the mathematical result of a collapsed stock price, not a generous management team.
⚠️ Key Warning
Total return matters. A 10% yield is useless if the stock price drops 30%.
How to Protect Yourself
- Recognize the trap: Understand the mechanics before you invest.
- Risk Management: Always size positions according to maximum potential loss.
- Stay Disciplined: Stick to your long-term plan and ignore market noise.