Bob Wells

Long only, value, portfolio strategy, dividend investing
Bob Wells
Long only, value, portfolio strategy, dividend investing
Contributor since: 2012
Adam
Your to-do list is a keeper. The parallels to 2011 are relevant. I would suggest that those encountering rough seas for the first time. Look at the 2011 performance of each of their holdings - October is particularly telling.
Bob
Hilo
It's the difference in quarterly distributions that I would find troubling in the distribution stage. Take a look and you will see wide variations. How would you translate that to monthly income withdraws? Seems like you would need a year or more in cash and even then you would risk having to sell low.
I've never seen ETF investors discuss the "process" of making withdraws during retirement including the physical act of selling shares. The only thing I remember seeing is to hold two or three years of needed income. This would likely not work for most with modest portfolios.
Bob
Robert
Great opportunity to thank you for the work you have done
putting this together.
It has historical information on Dividend Growth stocks not available on other sites.
Thanks again
Bob
Chowder
I never had the opportunity to manage an equity portfolio prior to retirement. It was never an issue of confidence just one of opportunity. Raising three daughters, playing for three college educations and three weddings meant no taxable account.
As a federal employee I simply accepted the index funds that were available and invested the amount that was matched. I never really looked at my account until I was a year or so from retirement.
When I retired in late 2008 I was busy building a training consultant business and the travel associated with that. The cash account where I moved everything in 2007 was still paying a decent amount at first. By 2010 training budgets were cut to threads. I realized I needed to be active in managing my accounts after talking with our two company financial adviser.
I have written about the process of doing so in my articles here since 2011. The good, the bad and the ugly is all here.
As I start my 5th year as a DGI I do not regret my decision to do so. You, all the Daves and so many others have made
the transition possible even in the distribution stage.
Thanks to all
Bob
Dave:
As an investor who converted to DGI right after retirement let me be the first to say its a real learning process. One of the keys to success is buying the right stocks - those with investment grade credit of BBB and above and buying at a good value. Having a portfolio business plan to help guide you and the patience to follow its guidance.
I'm like a lot of folks and had everything in 401K's and true DG options were never available. I wish I had known I had an option to convert to an IRA at 59 1/2 even while I was still employed. This was never discussed in the financial seminars presented by either of our employers.
Those that are able will gain much from the experience of establishing a DG account prior to retirement.
Trust all is well my friend and that the fish are biting.
Bob
dan
Things have been a bit crazy in my world. Im sorry if I missed you. Morningstar and longrundata are my go to sites when it comes to backtesting. Robert Allan Schwartz has a site for further than 10 years.
Bob
Nicely done, DS. Always nice to have you walk us though your process of analysis. I like that your focus is on the future. Keep doing what you're doing good buddie!
Bob
as
Chowder had a great question above. If you could only have 40 of your current holdings for the next 5 years which would you chose?
Bob
dan
That's one area I've been examining.
Bob
Rich
Your right with dividend payers being avoided. I bought LMT when there was a fear of budget cuts. Walgreens when the economy in Europe was in the tank and Target after the problems in Canada.
Still haven't figured out when to buy and sell cyclicals.
Bob
as
The problem is often that stock price doesn't always follow growth projections.
Bob
Psycho...
I'm afraid you might be mistaking discussion with freak out.
Bob
Rich
I've recently examined sector ETFs for one of my daughters for use with her 401K. Since its inception the financial sector etf has overall been underperforming the index.
I don't believe this is a good area for retired investors which the exception of those who like to actively manage their holdings. Having said that I'm sure for some there is money to be made.
Bob
R&R&R
Interesting question. This is one that could benefit from some backtesting. It would be interesting to track price and dividend in tandum for the newly minted dividend payers. Would take so work but
the results could be enlightening.
Bob
Butterfly:
I agree that your statement about complacency is an important. chowder described me when he said 4+ years and still learning. For me it all stated in 2011 after my first 401K investments in the early 80's. For me matching funds started in 1987. I just invested in the S&P 500 and left it alone until 2007 when I was a year from retirement when I decided to reduce risk and went all cash still 4%.
Since 2011 I've made many mistakes along with some great decisions.
I've enjoyed the ride.
Bob
DS
Sobering to say the least. I suspect I will never invest again in a bank or other financial the exception being REITS that will soon be their own sector.
Thanks for posting this my friend,
Bob
nice group of articles Bill
Thanks
Bob
Placebo
I'd like the source of that quote and would love to add that to my assessment of dividend cuts.
Thanks
Bob
David/Psyco
18 stocks on the CCCs cut their dividend in 2015. 14 had junk bond credit. None had BBB+ credit or above.
High investment grade credit matters. Period.
Bob
as
I agree that investors should resist having too much in any one sector or any one position. I use a 5% position cap and a 20% sector cap in any one defense sector. I do like to play defense and keep more than 50% in defensive sectors.
I consider REITS with investment grade credit as being defensive based on performance in the last recession. Brad Thomas just wrote about the thirty or so with this distinction.
Etfs like HDV have too much invested in single positions like
XOM for my taste. Others have a lot in positions with histories of dividend cuts.
Bob
as
That's the point I don't want 20% in the energy sector. Sector wise I much prefer being over weight in the defensive sectors. I also don't like banks and insurance which again is over weight in most etfs. I don't like materials and I'm underweight industrials and consumer discretion. I like my portfolio beta around .7.
I still working on it.
Bob
as
I agree its better than some. My biggest problem is weight with 17% of the holdings in just two stocks - XOM and CVX. I find for me at least its important to keep weight under control.
I've thought of sector etfs along with certain stocks I consider good for the next 20 plus years like T, VZ and LMT.
Thanks
Bob
rich
Great comment. You have been an important part of my transition to SDI starting back in 2011. My wife and I had retired and had met with our 401K advisers and were uncomfortable with there recommendations and what they said was a probability of running out of money in a 25 year retirement.
I built a DG portfolio designed to produce 4% income from the start. The past five years have been a real learning process. I've been more active than some and have trimmed from some of my winners as you suggest.
My concern is the issue of managing the portfolio for my wife should something happen to me. I'm not impressed with any of the dividend etfs currently available.
Thanks for all the guidance over the years. It is much appreciated my friend.
Bob
Michael
There is a lot more than mindset in the issue of selling shares. There is costs. There is the issue of selling during an extended market.
DGI retirees don't have those issues. My dividends are transferred to my checking account the first of the month.
Bob
chowder
You might remember I tested the chowder rule building a portfolio starting January of 2008 using the CCC list from that date. The metric held up real well.
http://seekingalpha.co...
Bob
Placebo
DVK is now in the distribution stage of retirement like me, DC, chowder and others. A DGI portfolio like his is simple since no shares need to be sold for retirement income. I simply have a set amount from collective dividends transferred to my checking account the first of each month.
With ETFs the retired investor needs to decide when to sell shares for income since only about half their income comes from distributions. If you sold each month there would be additional costs. There is also the issue of selling low.
What are your suggestions for how to approach the selling of shares from ETFs necessary for the retiree's retirement income?
Bob
5+
Welcome back and great interview. High yield in this environment is best when accompanied with investment grade credit of BBB or higher to help guard against dividend cuts.
Bob
Robert
I'm long RDS.B as well. Really have never followed BBL. The cuts in Energy so far have all been in companies BBB - and below. We will have to see what happens in the months ahead.
Bob
Placebo
Individual credit ratings are having a very real effect in today's Energy sector in both performance and probability of dividend cuts.
Bob
Placebo
I have thought long and hard about this because of the need to consider my wife should something happen to me. I think sector ETFs would be a better fit than all the current Dividend ETFs with their high concentration of financials and tech and low concentration of utilities.
Another key issue is the actual distribution of income. Since I'm not selling stock shares for income, I don't have to worry about the effects of selling low. With ETFs this could be a big problem during a long bear market. Right now income distribution is automatic. The first of the month the requested amount is transferred to our checking account.
Maybe those retirees drawing income during retirement from ETFs will be so kind as to describe the process they use for obtaining necessary income.
Bob
Placebo...
So far the industry hasn't given this DG investor the ETF he wants. Almost all have betas of around 1.0. Much more financial and tech than I'm happy with. Most are cap weighted. Few key on investment grade credit and pay 4% plus yield.
Believe me I'm waiting.
Bob
j812
RAS has a suggestion to consider. Make sure the holding has BBB+ credit rating. Real important! Really....
Bob