Equity investing is among the riskiest an investor can face. The risk of incurring large losses, in fact, is not negligible and must be taken into consideration before including equities in one’s asset allocation.
So, can you invest in stocks for a monthly income? The answer is yes, but it is very risky. If only for the fact that any listed share could potentially be at risk of bankruptcy.
Let’s start by saying that in the case of an equity investment, speaking of monthly income could be improper. What must be considered is the average monthly return. Even in the case of shares with a high yield dividend, in fact, the payment is made on an annual basis, in some cases twice a year, so the average monthly yield must always be calculated.
Consider, therefore, the LUVE stock, whose characteristic is that of having a probability of 72% that the one-year return is positive. Furthermore, the average annual return is 18%.
Not bad for a stock that looking at the levels of market multiples reported in specialized magazines turns out to be very underestimated. For example, the price-to-earnings ratio is 10.4x, compared with the industry average of 33.5x. We are, therefore, in the presence of an undervaluation of about 70%. This level is confirmed by the Price to Book ratio. The ratio between price and turnover, which is equal to 0.8, also expresses an undervaluation of over 50% when compared with the average for the reference sector.
Is it possible to invest in stocks to have a monthly income?
The title LUVE (MILLUVE) closed the session on 19 September down by 1.12% compared to the previous session, at € 22.05.
The current trend is bearish and there are no more obstacles along the path that leads to the most probable target in the 20.98 euro area (I price target). On this level, the short-term future of LUVE could be decided. Holding this level, in fact, could favor an upward restart towards the 25 euro area.
Otherwise the descent could continue towards the bearish targets indicated in the figure.
One of the best shares of Piazza Affari is in the balance between rise and fall