You can't say I didn't warn you…
In news that seems to have surprised many investors, today Telstra Corporation Ltd (ASX: TLS) slashed its dividend, something that sent its shares plunging as much as 10 per cent.
As far ago as February this year, I said I should sell my Telstra shares.
Back then, Telstra shares traded at $4.95. Today, after yet another shellacking, the Telstra share price trades at just $3.95.
Idiot me still owns them.
Why?
1) Inertia. I just didn't prioritise selling my Telstra shares. Idiot me.
2) Weighting. Courtesy of the appreciation of a number of other stocks in my portfolio, Telstra was quite a small holding. It's smaller now. Idiot me.
3) The attractive fully franked dividend yield. In this low interest rate environment, I managed to justify to myself that holding onto Telstra shares for the dividend was a better bet than leaving my money in the bank. Idiot me.
Wrong, wrong and wrong.
And today, I'm paying for it out of the hip pocket. And rightly so.
It's no use crying over spilt milk. The damage is done, and it's time to look ahead.
If you're anything like me, you're probably wondering where to turn to now to generate decent income from the stock market.
For me, the banks don't cut the mustard. They are growing at a snail's pace, have the threat of a royal commission hanging over them, and should house prices fall, might end up being much riskier investments than you might think.
The Woolworths Limited (ASX: WOW) share price has been on a bit of a roll, but since it has also slashed its dividend, the yield now a rather paltry 2.9 per cent.
Wesfarmers Ltd (ASX: WES) — owner of Coles, K-Mart, Officeworks and others — is an option. Today it hiked its full year dividend by a chunky 20 per cent, yet the market yawned, sending Wesfarmers shares up by just a few cents. At around $42, Wesfarmers shares trade on a fully franked dividend yield of 5.3%. Just don't expect fireworks.
