CDS vs CDG Which Offers More Value?

CDS (credit default swaps) and CDG (collateralized debt obligations) are both financial instruments used in the world of trading and investing. While both involve the buying and selling of debt securities, they differ in their structure and purpose. CDS are essentially insurance contracts on the default of a debt issuer, while CDG are securities backed by a pool of debt obligations that provide regular payments to investors. Understanding the nuances of these instruments is crucial for investors looking to navigate the complex world of financial markets.

CDS or CDG?

When comparing CDS and CDG, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between CDS and CDG.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. CDS has a dividend yield of 3.71%, while CDG has a dividend yield of 1.6%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. CDS reports a 5-year dividend growth of 8.45% year and a payout ratio of 0.00%. On the other hand, CDG reports a 5-year dividend growth of -6.89% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with CDS P/E ratio at 13.55 and CDG's P/E ratio at 17.42. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. CDS P/B ratio is 1.46 while CDG's P/B ratio is 1.20.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, CDS has seen a 5-year revenue growth of 0.06%, while CDG's is 0.10%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with CDS's ROE at 11.08% and CDG's ROE at 7.15%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are ¥1831.00 for CDS and ¥1250.00 for CDG. Over the past year, CDS's prices ranged from ¥1651.00 to ¥1931.00, with a yearly change of 16.96%. CDG's prices fluctuated between ¥1111.00 and ¥1679.00, with a yearly change of 51.13%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.