There may be a need for you to have a portion of your portfolio in what I call as Dividend Kings.
These are companies, that pay a dividend through thick and thin.
Here, the trick is to value the company for dividend growth or reduction over a suitably long period.
Also, one needs to have a sufficiently long period of dividends from which one can determine the variability of the dividends.
I am laying below the data for AEI Corporation.
With this data, one can estimate the payouts over 20 years.
Of course, the big assumption is that the company will survive for 20 years.
Plugging this into my model and using a discounting rate of SGS Yield with Inflation for the risk premium, i estimate the fair value of AEI Corporation to be 10.6 cents.
The share is currently trading at 11.9 cents.
Will it come down to 10.6 cents or below ?
I am prepared to wait.
This is a link to the company