My aunt and her sad trading experience with Chip Eng Seng Corporation Limited

Many years ago, my aunt called to ask for tips in the Singapore stock market.

She specifically asked for a stock to buy.

I mentioned that Chip Eng Seng Corporation Limited was trading at a very good price.

It was just over 31 cents at that time.  That was after the ex-dividend date.  Chip Eng Seng Corporation Limited paid 3 cents dividend at that time.

My aunt took my advice and bought the stock, unlike many of my friends who asked for advice and never acted on it.

After a while, the share price went up to 38 cents.

My aunt called again.  She asked if that was a good price to sell.  I asked her to hold to the stock.

Chip Eng Seng Corporate Limited was, and still is, a main contractor in Singapore to take on public housing projects.  It has a good track history and a consistent dividend payout.

My aunt could have 10% dividend yield every year.

Sadly she was induced by the chance to cash out at a profit of more than 20%.  She sold the stock.

She said that she is not greedy, and happy with 20% profit.

Why do I say that it is a sad experience when she made a profit?

Chip Eng Seng Corporation Limited share price reached a high of 97 cents a couple of years later, and the dividend payout increased to 4 cents.  There was a year when they declared a special dividend of 2 cents. 

In that year, the total dividend was 6 cents.  Based on her buying price of 31 cents years ago, the dividend was 20%. 

Can you imagine how much my aunt had lost out?  She could have made much more if she hold on the stock.  In fact, by collecting dividend year after year, she would have recouped her capital by now.

Since the company is a strong player in the construction industry with many government projects, the risk is low.