It’s only human to enjoy having a flutter now and again. My preferred pursuit is low-stakes Texas Hold ‘em where the costs are low and the action’s quick.
Obviously the idea of winning a life-changing pot is an appealing one but, in reality, it’s just a pipe dream. The risks of losing a whopping great wad of cash is, for me at least, unacceptably high and outweigh the pull of making a great big win.
Don’t lose your shirt
Investment in financial markets might seem a little less crude but ultimately involve the same assessment of risk and reward. And some asset classes seem little more than an expensive gamble.
Take Bitcoin, for example. The popularity of the virtual asset has surged over the summer, reflecting central bank rate cuts which have fanned fears over the worth of paper currencies and supercharged demand for alternative assets like cryptocurrencies.
However, prices remain extremely volatile and Bitcoin, for one, has lost more than $3,000 of its value from the 2019 peaks above $13,800 hit as recently as late June. At the moment, making money from these new-age assets remains largely the result of good luck rather than sound judgement and, with questions remaining unresolved over who owns and values these assets, there’s still a large chance they will end up virtually worthless.
8.7% dividend yields
I’m sure my comments will upset swathes of crypto investors who believe in the legitimacy of the asset class and its long-term potential in this increasingly digital world. I understand why they believe, even if I don’t share their faith. They could quite rightly point to recent volatility across share markets, waves which recently saw the FTSE 100 lose a whopping 8% of its value in just two-and-a-half weeks, to illustrate how no asset provides a guarantee of making rich returns.
I’d agree up to a point, though. Global stock markets have proven to be great wealth creators for centuries now, while the likes of Bitcoin have been around for a blink of an eye. And following that aforementioned share sell-off, there’s a wealth of Footsie dividend heroes worth buying right now. Shares which — unlike the cryptocurrencies — I feel will definitely provide some stunning returns in the years ahead.
Take ITV, for example. The vast sums it’s ploughing in its ITV Studios global production division makes it an exciting contender for long-term earnings growth, as does the steps it’s taken to embrace online media. This particular share deals on a forward P/E ratio of 8.4 times and boasts a monster dividend yield of 7.2%.
Or how about Aviva? It’s one of the biggest providers of general and life insurance and pension products in the UK, is a share which trades on a corresponding earnings multiple of 5.9 times, and carries a showstopping 8.7% payout yield too.
In short, there’s no shortage of dirt-cheap dividend stars to load up on today. So forget about high-risk Bitcoin, I say, and go create some serious returns through stock investing instead.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2019