As we all know, Football Index will be posting a new dividend table today which will see an increase in dividend payouts.
Since it was announced that there would be a dividend increase, we have seen a huge amount of movement in the top end of the market with many of the highest priced players on the platform rising a considerable amount in price.
We have also seen a dominant market trend towards strong-performing young, Premier League players.
Below are some of the most noticeable increases which have taken place over the last 30 days in young, Premier Leauge players.
Bukayo Saka £3.51 > £4.85 +38%.17
Phil Foden £5.79 > £8.27 +42.83%
Christian Pulisic £2.59 > £3.76 + 45.17%
Mason Greenwood £5.96 > £9.82 + 64.76%
We have also seen a number of proven dividend winners increase considerable amounts recently.
Below are some of the most noticeable increases which have taken place over the last 30 days in a few in-form dividend winners and Neymar because his dividend returns have been huge again this season.
Bruno Fernandes > £10.24 > £11.45 +11.81%
Neymar £8.53 > £9.83 +15.24%
Paolo Dybala £3.92 > £5.41 +38.01%
Juan Cuadrado £0.49 > £0.70 +42.85%
Focus on value
In the short term, there are plenty of opportunities to buy into players and make quick profits as player's prices accelerate upwards for a number of reasons. However, as explained in the Timing Is Key post, 'The more enthusiastic traders grow about a player and the faster the player rises in price without a substantial change in their chances of earning dividends longer term, the riskier a player often becomes.'
During the last dividend increase we saw a dominant market trend towards strong PB performers and many rose to the point where they were no longer value.
Between one month before the last dividend increase and one month after (A total of just two months) the players with the top 10 highest PB averages on Football Index increased a phenomenal 62.63%. This was due to the strong trend, hype and FOMO leading to gigantic rises.
Those same players have dropped an average of 21.29% in price since one month after the dividend increase (Back in November 2019).
This shows the extent to which trends impact the market and so as always it is worth attempting to focus on value instead of simply buying into whoever the crowd buys into (Unless you can execute the trade in the short term for a profit).
% changes around the last dividend increase
The spreadsheet below includes the price movements during the period of time around the last dividend increase for both the top 25 players highest priced players (one month prior to the dividend increase) and also the 10 players that had the highest PB averages (one month prior to the dividend increase). *Data was sourced using Index Edge.
The day of the last dividend increase was 18/10/19 and in the spreadsheet, red indicates a drop in price from the last date and green indicates an increase in price from the previous date.
Players which have mostly green rows consistently grew in price around the last dividend increase whilst those with mostly red rows mostly dropped in price.
There are a lot of interesting insights which we can take away from these price movements around the last dividend increase and below are just a few.
Risers around the last dividend increase
Neymar's price grew from £7.26 on 18/09/19 to £7.47 on 17/10/19 as anticipation of a large dividend increase grew and then on the day of the announcement he increased a considerable 6.29% following the news of the 57% dividend increase. *Neymar is likely to rise even further today if there is a considerable dividend increase.
Lionel Messi and Kevin De Bruyne also increased over 5% on the day of the last announcement.
However, the main risers had already taken place one month before the dividend increase Messi, De Bruyne, TAA, Havertz, Depay and Odegaard all rose over 10% in the month prior to the dividend increase. One month later and many of the same players continued to grow in price.
As mentioned above, we saw players with high PB scores increase massive amounts during the last dividend increase and this can be viewed under the Top 10 PB average tab. This was also partly due to recency bias and traders using a small sample size when analysing player's suitability to the new performance matrix at the start of the season.
Decreases around the last dividend increase
The only 4 players (From the top 25) to drop one month after the last dividend increase were Callum Hudson-Odoi, Mason Greenwood, Tammy Abraham and Mason Mount. All four of these players have one thing in common; they are young and English.
These players had all risen considerably prior to the last dividend increase, but the focus on short term dividends and PB players in particular led to many of these players dropping in price as the rush to get onto high PB scoring players commenced.
Due to the current strong momentum behind young English players at the moment, it is unlikely we will see similar drops in the short term.
However, it is definetely worth pointing out that some of the recent rises in young, English players will not continue forever and those who do not perform as well as is now expected could drop in price.
The analysis on the price movements during the last dividend increase shows an important message which is that the players with a lot of sentiment/hype around them during a dividend increase tend to increase in price the most.
However, as can be seen by the drop in the players with the top 10 PB averages since, momentum and trends can lead to players becoming over-valued.
The market has shifted and evolved considerably since the last dividend increase and younger players are now being focused on even more. However, there is a strong chance that some will drop in price over the upcoming months.
If this blog teaches us one thing it is simply to make our own trading decisions and not let the tide of opinions overwhelm us into making poor choices to chase quick, short term profits. Or at least if this strategy of buying into shorter term holds is going to be used, to be fully aware of the risks involved which is evident in the price movements from the last dividend increase (It can be very profitable to buy in and out of players quickly if timed right).
Overall, I expect there to be a considerable increase in dividends and I fully expect many players to rise in price over the upcoming weeks. Choosing which ones are actually value and which ones are rising due to hype will be the difference between longer term profits/losses.
Very good times are coming and today could be the day that propels us closer to that one billion pound market cap which is starting to appear possible.
Onwards and Upwards!