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  • Differing Outlooks On The Market [View article]
    I just purchased NSC and UNP a few weeks ago. I'm not looking to add to them yet.

    I'm not interested in UPS, don't know why, just not. ... Ha!
    Jul 6, 2015. 11:45 AM | 1 Like Like |Link to Comment
  • Measuring The Success Of Your Dividend Portfolio [View article]
    Here's how I look at it. I'm not saying it's the only way or the best way, but to me it is the better way.

    I started out by purchasing the companies known as Aristocrats. When you have a company that has grown the dividend for 25 years or more, I think that's a consistency that you can count on. You have a reliable track to run on.

    When an Aristocrat freezes the dividend, you know you have a problem. I owned CTL for a while and had some very handsome capital gains as well as a nice dividend. After 37 consecutive years of raising the dividend, they froze it. I didn't think twice, didn't try to analyze it, didn't try to justify it by saying they had been very good to me, I sold it as soon as the market opened. I locked in my gains and avoided the drop in share price that followed and the eventual dividend cut.

    Certainty turned into uncertainty and when it did, I improvised, adjusted and overcame.

    All we can do is deal with what we have while we have it. As long as certainty is in the picture, I chill. I know that uncertainty is lurking around the corner and I know that adjustments will have to be made. I'll make them, but in order to know what adjustments need to be made, I need to know where I stand with regard to my goals. Looking to replace employment income seems to be one of the easiest and efficient ways to measure progress, at least to me it is.

    Benchmarks and indexes are going to rise and fall like a roller coaster at an amusement park. One moment it seems you're ahead of schedule, the next moment you're fighting for the same ground twice.

    Tracking the income flow, and putting that income flow to work has me always moving forward, always showing positive inflows regardless of market conditions.

    It's hard for people today, after six years of a raging bull, to not think of the potential capital gains they might have had. If you knew you could get them, you would have made the moves six years ago. Most didn't. Let the market hit a significant drawdown, or trade sideways for a number of years like we did during the Lost Decade, and a whole different outlook will occur over total return. The total return that was created during the Lost Decade was the result of dividends and putting those dividends to work. Something to think about.

    Cap appreciation, or total return to some, only works in an up market. positive income or cash flows from dividends continue whether the market is up, down or going sideways. You always have a way of moving forward towards income replacement if you are measuring dividend growth.

    I told my 30 year old son to think of dividends as 'other people's money'. He contributes $500 per month and we are looking forward to him getting $500 per month in dividends. That will be $1,000 going to work each and every month, money that will be searching for companies selling at a discount to fair value.

    Then we look forward to his $500 monthly contributions being invested along with $1,000 per month in dividends, and as time goes on, more of that 'others people money' will be the major force in creating total return down the road, and down the road is where our focus is at, not on the short term.
    Jul 6, 2015. 09:44 AM | 7 Likes Like |Link to Comment
  • Measuring The Success Of Your Dividend Portfolio [View article]
    I track both. As long as the contributions are consistent from month to month or quarter to quarter, you can get a reasonable expectation on total income growth, which I do track.

    I also write down the dividend growth increases, what I refer to as organic growth, to see how the dividends are growing through company raises.

    You can measure whatever is most important to you.
    Jul 6, 2015. 09:13 AM | 2 Likes Like |Link to Comment
  • Measuring The Success Of Your Dividend Portfolio [View article]
    For those who don't know, as DVK says, Josh only has one portfolio now as he combined the two portfolio's because some companies belonged in both and it made sense to him that they weren't exclusive of each other. He thought that most dividend growth investors had both kinds of companies in their portfolio. High yield, low dividend growth and low yield, high dividend growth. It made sense to him to match his portfolio with the way most dividend growth investors invest.

    Josh will tell you that total return is one of his objectives. Since he sells newsletter subscriptions, he has no choice. Most people wouldn't subscribe if they can't get high total return. Josh has also been very quick to state that there will be years when his portfolio will not outperform the market, but he also insists on staying invested and look for companies selling at a discount to fair value. Like some of us, Josh states that total return will be there as long as one will be patient and stick to quality.

    It is only those with short term views that don't understand that dividend growth investing is total return investing and that most dividend growth companies outperform the market over longer time frames. Although we don't know when total return will show up, it will show up whether we want it to or not. While we wait, we continue to get pay raises.
    Jul 6, 2015. 08:48 AM | 6 Likes Like |Link to Comment
  • Measuring The Success Of Your Dividend Portfolio [View article]
    Logic? Sounds more like crazy thinking to me based on what happened to my portfolio during the Great Recession.

    I saw my total return take a hit with my portfolio down a little over 30% in value. However, my dividend income stream continued to rise and it was with those dividends that I was able to buy companies who also saw their total return number drop, some by 50% or more.

    Share price down, dividend income up, what's not to like?

    Now here's logic, at least how it happened to me in the real world of investing. Owning high quality companies and ignoring price action, in others words total return, and investing the dividends which continued to grow is what eventually created even higher total return.

    There was no emotion to it, it was all common sense.
    Jul 6, 2015. 08:31 AM | 6 Likes Like |Link to Comment
  • Measuring The Success Of Your Dividend Portfolio [View article]
    The KRFT shares that I sold were in the taxable account. The tax man and me have an arrangement. I told him to guarantee me profits and I guarantee I'll give my fair share to him. He doesn't tell me how to do my job, I don't tell him how to do his.

    I had to pay a 'success tax' when I sold some of my shares. So what! What's the alternative?
    Jul 6, 2015. 12:02 AM | 7 Likes Like |Link to Comment
  • Seeking Alpha Contributors And Commenters Pick The Best Dividend Growers For The Next 5 Years [View article]
    >>> I am waiting for Women World Cup Soccer .... it should be a big deal!!! <<<

    USA scored 4 goals in the first 16 minutes of the game. It was a huge deal!

    USA! ... USA! ... USA!
    Jul 5, 2015. 11:49 PM | 3 Likes Like |Link to Comment
  • Measuring The Success Of Your Dividend Portfolio [View article]
    @Paul ... >>> A good DG investor who now has an income stream that more than offsets their income needs" is going to have, before long, an income stream that way more than offsets their needs. That's because the dividends are going to grow faster than inflation. So, when the retiree dies he will have an estate much larger than he started his retirement with. <<<

    I don't see it that way Paul, although I can see how you came to that conclusion. As I look around and read the comments of those who have more than they need, they are funding education for grand kids, paying for family vacations, contributing to favorite charities, and I'm sure many other things as well.

    I don't share the buys and sells of my personal portfolio because my value to some people on SA is in showing young people how to get started and those who are starting out new with this strategy.

    I've been harvesting shares with some very handsome capital gains to fund housing projects and family trips. I wouldn't be able to do this without the reliable dividend stream in place first that meets my income needs.

    I want all income needs met by dividends and anything after that is gravy and I will sell positions that provide some very handsome cap gains.

    Total return for me is a secondary objective because I can afford for it to be. I don't have to take unnecessary risks. I don't have to worry about market performance and the reason for that is, I have enough to do what I wish to do. Any selling I do is an option, not a necessity to pay the bills and that means more to me than some benchmark. I don't need that pressure. Objectives have been secured!
    Jul 5, 2015. 03:33 PM | 9 Likes Like |Link to Comment
  • Measuring The Success Of Your Dividend Portfolio [View article]
    Dave, I hope I answered the selling question in the comment above to Paul.
    Jul 5, 2015. 02:07 PM | 4 Likes Like |Link to Comment
  • Measuring The Success Of Your Dividend Portfolio [View article]
    >>> Like recently KRFT went from the mid 60s to high 80s. You have the choice to do nothing, or sell and put that money into a now-higher yielding stock. <<<

    Or in my case, I sold off enough shares to pay for the new multi-level deck we planned on building this year and enough to pay for our London and Paris trip later this year.

    The beauty of it is that the selling was an option, not a necessity. We could have funded our projects with other sources, but didn't need to thanks to Warren Buffett. I now call the deck the Buffett Deck. ... Ha!
    Jul 5, 2015. 11:24 AM | 7 Likes Like |Link to Comment
  • Measuring The Success Of Your Dividend Portfolio [View article]
    @Neurology ... I don't see anything wrong with your approach given your age. In fact, I agree with it.

    The following link can take you to a real time portfolio of a 30 year old person.

    http://bit.ly/rBJkXG

    The strategy we employed was to build the foundation first by establishing about 30 blue chip positions to get the dividend stream off to a fast start and then allow compounding to get started. These early years are essential to the compounding process.

    Once he had about 30 higher yielding dividend growth positions, we went with companies that you speak of. He owns shares in MA. He owns shares in ROST which is doing better than I anticipated, and he owns shares in companies that don't pay dividends at all. BWLD and ULTA were the most recent purchases.

    So, although we consider ourselves primarily dividend growth investors, we don't preclude other types of investments from being added to our portfolios.

    My only rule was to build the foundation first.
    Jul 5, 2015. 11:12 AM | 8 Likes Like |Link to Comment
  • Measuring The Success Of Your Dividend Portfolio [View article]
    Paul, it dropped 57%, peak to valley between 2007 and 2009. I think the point you are trying to make is a valid one. My comment to hahaha, although was an important one, was made with the intention of providing a little humor. I couldn't resist the name he/she goes by on SA. I hope he/she doesn't take offense to it.

    Of those who consider total return a higher priority than most dividend growth investors, you do seem to have a better common sense grasp of the concept than a lot of the critics, or at least the explanation of your approach to harvesting gains resonates with me better than others.

    In the distribution phase, as you are, over a 2 year period you are drawing down your withdrawals over time and locking in profits as you go along, thus you are not in a position where you would take the full impact of a significant drawdown.

    My point though is that if one has time to build an income stream that more than offsets their income needs, they don't have to worry about selling to generate cash, and any selling they decide to do is an option and not a necessity. That alone provides a lot of peace of mind for people and that peace of mind is worth more than the stress of worrying about what the market is doing or going to do.

    As I read the comments in various articles, there is a lot of worry going on with people over interest rates, a market correction, valuations, etc. A person in the distribution phase, who is drawing enough dividend income to meet their needs doesn't need to worry about all of those things. As long as they invested in high quality companies with sound dividend policies, their income will continue to flow and grow just as it did during the Great Recession.

    The dividend growth investor who owns companies solid enough to continue paying and raising the dividend is going to get high total return whether they want it or not, provided they allow themselves the time to let it happen. It's why we don't focus on total return in the shorter time frames.
    Jul 5, 2015. 10:49 AM | 17 Likes Like |Link to Comment
  • Measuring The Success Of Your Dividend Portfolio [View article]
    >>> You can always sell everything and buy something different with the same total value. <<<

    You mean same total depressed value like when the market drops 50% or more?

    I have only one thing to say about that ... hahaha.
    Jul 5, 2015. 06:33 AM | 38 Likes Like |Link to Comment
  • Measuring The Success Of Your Dividend Portfolio [View article]
    I believe that a portfolio that provides a steady and growing stream of dividend income is the best way to finance a secure retirement without having to worry about the fluctuation of stock prices.

    Most investors ask, "What's my account's current value?" A dividend growth investor asks, "How much dividend income did my portfolio generate?"

    Most investors ask, "How much was my account up or down this year? A dividend growth investor asks, "How much did my account's income grow this year?"

    Most investors ask, "Where is the stock market going this year?" Dividend growth investors don't try to predict short-term swings in the market.

    A dividend growth investor doesn't focus on capital appreciation, because we never know when it will show up. A dividend growth investor is more concerned with the safety of the dividend and its potential for growth. A dividend growth investor understands that if a company is solid enough to continue paying and raising the dividend, capital appreciation will follow.
    Jul 5, 2015. 05:24 AM | 63 Likes Like |Link to Comment
  • Seeking Alpha Contributors And Commenters Pick The Best Dividend Growers For The Next 5 Years [View article]
    Yes, that part of your comment is accurate. I forget which one myself because I don't check on my positions that often. If I feel I have to micro manage them, it means I took on too much risk.
    Jul 5, 2015. 05:09 AM | 2 Likes Like |Link to Comment
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