Last week, I wrote an article about building my portfolio via Dividend Growth Investing. A few days after Seeking Alpha published it, I received this email from a former work colleague:
I sent your most recent column to my broker. Here is what he said: "I really like the idea. It looks like his portfolio is very strong and similar in principle to our DSIP program. DSIP stands for Diversified Stock Investment Program, and the goal is to find solid blue-chip companies with not only good dividends but those that have dividends that have been rising over the past years. We can discuss this further if you have any interest."
In replying to my colleague, I told him I am perfectly capable of "finding" my own dividend-growing blue chips, thank you.
Now, some of you might employ brokers, and I respect your choices. Some of you might even be brokers, and I don't want to take bread off your tables. Still, I need not pay anybody else to tell me that 3M Company (MMM) and Genuine Parts Company (GPC) have been growing dividends annually for more than a half-century ... that The Coca-Cola Company (KO) is even more delightful when washing down McDonald's Corporation (MCD) ... that Waste Management (WM) will never run out of waste to manage and Procter & Gamble Co. (PG) is far less of a gamble than most.
Once upon a time, we needed a broker to buy individual stocks. As long as we were paying him a princely sum, we expected advice from him. Nowadays, we need only an online brokerage to invest in stocks. A trade costs little more than a venti latte.
Advice? I get all the advice I need while doing my own research, which is widely available online. I decide whether price/earnings ratio is more important than free cash flow or whether a fast-growing mid-yielder is more favorable than a slow-growing high-yielder. It's my money. Why shouldn't I do the due diligence? Why shouldn't I be responsible for my own financial future? I wouldn't let an outsider tell me how to raise my kids; why should I let an outsider tell me how to raise my personal wealth?
What if I want confirmation that the fundamentals behind my choices are sound? What if I want the pros and cons of MLPs and REITs? What if I want to know the tax implications of investing in foreign companies? Well, that's what communities such as Seeking Alpha are all about. And as much as I learn from the many fine authors here, I think I learn even more from the comments after every article. (I use other sites, too, but I like SA most.)
As much as I value others' input, final decisions must be mine alone. For example, many fellow Seeking Alphites have offered compelling reasons to buy offshore deepwater drilling company Seadrill Limited (SDRL). They cite its robust dividend yield and its potential for major growth. Then again, Seadrill has not been a long-term dividend grower, it has debt up the wazoo, its beta is more than double what I fancy and its share price rides a roller coaster.
So while I am interested enough to consider Seadrill, and I understand why many are high on it, the fact that it doesn't fit my basic portfolio guidelines makes it a speculative play in my mind. If the price is right, I may take a little bite; if the price is wrong, well, so long. Either way, the decision will be mine based upon my own research and my own comfort level.
As earnings season shifts into overdrive, I will be looking closely at the quarterly reports released by the many quality, dividend-growing companies on my wish list. Will any of those companies temporarily fall out of favor, resulting in declining share prices and opportunities to scoop up bargains?
If Exxon Mobil Corp. (XOM) disappoints and its price plummets 10 percent or 15 percent, it still will be a company well worth owning. Not only will we be able to get quality on sale, we will be able to lock in a dividend yield north of 3 percent for the first time in eons.
OK, that probably won't happen. But if it does, we certainly won't need a broker to "find" Exxon Mobil for us ... or to tell us that the company at $75 is a screaming buy.
Additional disclosure: I also might initiate a long position in any of the other companies named in this article over the next 72 hours.
