Is It [Low D]?

Includes: JNJ, KO, LO, MO, O
by: David Van Knapp

Has your portfolio become lifeless? Maybe you need more dividends. The warning signs are often subtle. Take this simple quiz, then we'll talk.

1. Is your income feeling inadequate? ___Yes ___No

2. Have you lost interest in investing? ___Yes ___No

3. Has your portfolio lost strength and endurance? ___Yes ___No

4. Have you noticed a recent decrease in the pleasure you get from your portfolio? ___Yes ___No

5. Does your portfolio lack energy? ___Yes ___No

6. Are you sad and/or grumpy? ___Yes ___No

7. Do you mock others' methods of investing, yet feel frustrated by your own? ___Yes ___No

8. Has your portfolio lost some of its old trajectory? ___Yes ___No

9. Is your portfolio based on the best academic studies, yet failing to provide true enjoyment? ___Yes ___No

10. Do you feel drained by fees and expenses with little to show in return? ___Yes ___No

Before you can solve a problem, you must admit that you have it. If you answered Yes to 5 or more of the questions, you may be suffering from Low D. We can help you Get in the Game and take charge of your wealth.

Staying financially fit may require a lifestyle change. If you have incorporated the best ETFs into your investment routine, or if you have based your investments on the best peer-reviewed academic studies, and yet still suffer from income inadequacy, it may be time for a change.

The more general term for inadequate income, which includes Low D, is hypo-incomism. As an investor, you may tend to shy away from investigating your financial health, because you're afraid of receiving bad news.

But it is important to be honest with yourself if you are suffering from the symptoms of hypo-incomism. Your answers to the questions above may point to that.

One of the problems with Low D is that it is not always recognized by financial professionals. Their training does not expose them to the concepts involved, and it may make them insensitive to your suffering. They may not test for it, and they may be unfamiliar with treatment options.

But you do not need to wait for the professionals to catch up. The great news is, you don't need a prescription to treat Low D.

You can do it yourself. It is best if you have a strategy and understand what your financial goals are, but you do not need anyone's permission to treat your symptoms. You can Get in the Game and take charge of your own financial freedom.

There are several different treatment options available for investors with low levels of income.

  • Get a job that pays a lot more. You will get more income and be happier. Of course, this option may not be available to you, especially if you are of a certain age.
  • Become a Kept Person. This works, but once again, the opportunities are not numerous.
  • Buy "High D" mutual funds or ETFs. While these exist and can help treat some of the symptoms of hypo-incomism, research has found that generally they over-promise and under-deliver. Plus they tend to be expensive, often skimming some of your income off the top before delivering the rest to you.
  • Invest in "DG" stocks directly.

"DG" stands for Dividend Growth. What are some of the proven DG stocks?

  • There are Dividend Champions like Altria (NYSE:MO), Clorox (NYSE:CLX), Coca-Cola (NYSE:KO), and Johnson & Johnson (NYSE:JNJ). All of these have been delivering strong, growing D to satisfied users for more than two decades. They are sort of the generic treatment option for Low D.
  • There are Dividend Contenders such as Realty Income (NYSE:O), General Mills (NYSE:GIS), and Microsoft (NASDAQ:MSFT). These are newer, perhaps more exciting DG enterprises. They have been delivering growing D to investors for 10 years or more.
  • Finally there are Dividend Challengers. These are newer treatments, but they have been providing growing income for 5 years or more. Examples are Baxter International (NYSE:BAX), Holly Energy Partners (NYSE:HEP), and Lorillard (NYSE:LO). Often their "kick" is a little greater than available from the other two categories.

DG helps:

  • Maintain adequate income, directly countering hypo-incomism.
  • Increase portfolio strength and endurance, especially against the debilitating effects of inflation.
  • Augment your self-esteem as you learn to do something new and exciting on your own.
  • Reduce that feeling of being drained by questionable or hidden fees and expenses.
  • Sleep better.

Before embarking on a DG regimen, think deeply about your own financial goals. Perhaps you don't care about income, in which case the symptoms of hypo-incomism may not bother you one bit. In that case, do not seek treatment, you are doing fine.

If you do decide to address the symptoms of Low D, make sure to set forth a plan. Write it down. Your plan should encompass both your financial goals and choices of treatment. Once underway, you should monitor your progress and adjust dosage as needed. If you don't already perform an annual financial checkup, this is the time to start.

Important Safety Information

  • Self-treatment is not for everyone. Be sure you understand your own situation, and the risks of self-treatment, before you invest in anything.
  • DG treatments can result in too much income, turning hypo-incomism into hyper-incomism. This condition has not been highly studied. Potential dangers are unknown.
  • No peer-reviewed academic study has endorsed any of the treatment options described above. You're on your own, pal.
  • Your portfolio may become dangerously over-weighted with income-producing stocks. All of them may cut or eliminate their dividends at the same time, leaving you even deeper in hypo-incomism. Be sure to diversify, although this can be hard, because there are only about 500 stocks in all sectors to choose from. Be aware of the risks of stock-picking or holding fewer than 10,000 stocks in your portfolio.
  • DG treatments may cause you to become enthused about investing and meeting your financial goals. This may in turn lead casual observers, and even some professionals, to think you have become irrational, or to call you names like zealot or true believer, or to say that you display religious intensity and have a closed mind. You will have to learn to deal with this, because it is unlikely to stop any time soon.
  • Because most professionals have not studied Low D, they may mock you or say that your goals are not the right goals, or that they are incorrect or invalid. Your focus on income instead of total returns will be criticized. Or they may offer different treatment suggestions like, "Just sell a few shares."
  • You should consider the views of professionals, as well as the views expressed herein, very carefully. Compare and contrast. Give peer-reviewed academic studies the respect that they deserve.

Disclosure: I am long JNJ, KO, O, LO, MO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.