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David Crosetti

 
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  • Why Total Income Growth Is More Important Than Dividend Growth [View article]
    G:

    Didn't mean to come off snarky, but reading my comment.................

    Puts would be the way that I'd be approaching any oil purchases.

    Dave
    Jan 29, 2015. 09:18 PM | Likes Like |Link to Comment
  • Why Total Income Growth Is More Important Than Dividend Growth [View article]
    G:

    News flash. It's going lower.

    It's almost a "compelling buy" but not yet. My issue with the company is that it is a traditionally "low paying" dividend stock. Recently, during a period of irrational exuberance, they raised the dividend by a bunch.

    I'm not sure that it's stainable and if they reduce the dividend (which would be the prudent thing to do) then the stock might get hit and go lower.

    I'm sure that someone has enjoyed the ride from $118 down to $57 in the last 7 months.

    There will be a time to buy HP, just not now, in my humble opinion.

    Dave

    Dave
    Jan 29, 2015. 06:01 PM | Likes Like |Link to Comment
  • Why Total Income Growth Is More Important Than Dividend Growth [View article]
    Rog:

    I'm glad!

    Like you, I don't get the enthusiasm for the markets right now. I think we need to get through the first quarter and then assess where we want to go and how we want to get there.

    It scares me that so many people seem to be throwing any sense of caution to the wind.

    They say that "everyone is a genius" in bull markets. I have been a "genius" for the last 5 years and looking at my performance spreadsheet, I get all warm and fuzzy about how well my portfolio has grown. I also get warm and fuzzy about how my income continues to grow.

    But there is no reasonable rationale for me to be buying stocks right now. In fact, we did a trim on all of my portfolios (retirement, taxable, and Roth accounts in December to raise a little cash and to lock in some of the tremendous gains that we've enjoyed during the bull.

    But, the redfish are waiting and there will be plenty of time to add stocks in the coming months. I'm doing what most people seem to hate. I'm doing nothing.

    Retirement is a blast.

    Dave
    Jan 29, 2015. 03:38 PM | 1 Like Like |Link to Comment
  • Why Total Income Growth Is More Important Than Dividend Growth [View article]
    DD:

    My comment was generic in it's direction and not a reflection on anyone here. I find that as the markets unfold, there are a number of people who are coming to some very interesting, if flawed notions about dividend growth investing.

    On the surface, it would appear that what they are saying makes sense. But, when you start to peel the onion....................

    When you compare the actual performance of JNJ vs. VZ over the last 5, 10, 15 and 20 years, you just might find (as I have) that JNJ was the better investment, not only from an income growth perspective, but from the total return side as well.

    While VZ pays a larger dividend per share, JNJ has appreciated more than VZ. While both companies have had stock splits over the last 15 years, JNJ has split more than VZ and today, you would own more shares of JNJ than VZ held over the last 15 years. With dividends reinvested, the difference between the two is even greater.

    With your share count today, the JNJ with a smaller dividend would be giving you more income than VZ with the higher dividend. Go figure. It has to do with performance of the stock and the shares owned.

    But......................

    There is a time to buy stocks and there is a time to go fishing and just let the dividends come in every quarter.

    There seems to be this notion that "if I'm not buying, then I'm dying."

    In my opinion, not buying is just fine and dandy. I especially love all the articles about oil and gas that were written about 12 months ago. What tales of expectation were told! Stocks highlighted in multiple articles were HP, ESV, PSX etc. etc.

    What happened? They were overvalued then and expectations got ahead of reality. Now, people are writing about how "the oil stocks are the values of a lifetime!"

    This morning I read an article about how HP is worth buying now. After all, the dividend is HUGE and the stock has taken such a beating that the price represents a tremendous value.

    Reality time. HP is down 8% today..............who...

    So, I'm picking up some shrimp for bait, taking the boat out, and working the tide to catch a limit of redfish, today. That way, what I can be sure of, is that tonight we are going to be eating seafood.

    Dave
    Jan 29, 2015. 11:03 AM | 8 Likes Like |Link to Comment
  • Southern Company: Taking A Pass On This Quality Utility Name [View article]
    I had a rather significant holding with PCG (Pacific Gas and Electric). When I was younger, the stock had a tendency to trade in a range (price) and I would buy at the low and sell at the high. Then the pattern stopped.

    However, I digress.

    I owned the stock from an inheritance. It was like watching paint dry, but the dividend checks were nice.

    The stock's price has gone from $40 to $59 in the last 12 months. The yield has "fallen" to 3.10%. But the price appreciation has popped 47% in 12 months.

    Utility stocks have been rocking over the last 12-18 months. For those who bought at the lows, holding seems to be a good idea here.

    As for PCG, I'm looking at trimming a bit as the dividend is not increasing. But, utilities, right now are a bit over bought.

    Dave
    Jan 29, 2015. 10:45 AM | Likes Like |Link to Comment
  • Why Total Income Growth Is More Important Than Dividend Growth [View article]
    DYM:

    I have to agree with you. I did the same thing that you did, looking at 15 years and the results are similar to yours.

    What I think is happening here is that some people are way overthinking this whole notion of DGI. What I tend to do is look for stocks with a history of dividend increases, but my focus is on the relative value of the company at the time of my purchase.

    If I have a stock with a 2.5% yield and a DGR of 8% over a long period, then I know that the stock is going to be increasing my income every year by 8%.

    Kind of like my job. If I get X in salary and they give me a 3% raise, I'm pleased. If they give me an 8% raise, I'm buying the first round of beers at the watering hole.

    Dave
    Jan 29, 2015. 09:33 AM | 6 Likes Like |Link to Comment
  • How Much 'Extra' Income Are You Getting If You Reinvest Dividends? [View article]
    Chip:

    I don't know who you are using as a broker, but I don't know of any of the major brokerage houses that charge a commission to reinvest your dividends back into the security that paid it to you.

    Now, on the other hand, if you accumulate dividends as cash and then make a purchase of stock in another company, you are likely going to be paying a commission for that purchase.

    You really have to do the math on this concept. On the surface, it seems like a bad idea. However in the long haul, the enhancement of not only income, but total returns with reinvested dividends is staggering.

    Here's a site to plug in various companies and time frames and make the comparisons.

    http://bit.ly/Hyaf5H
    Jan 28, 2015. 11:19 AM | 4 Likes Like |Link to Comment
  • How Much 'Extra' Return Are You Getting If You Reinvest Dividends? [View article]
    Hilo:

    I was not referring to my results, but the results that the web site shows when you look at the performance of companies where dividends were reinvested and where they were not reinvested.

    The reinvestment numbers makes it hard for me to understand why someone would not reinvest dividends back into the stocks they own. Not only to increase the income (more shares), but to increase their total return as well.

    Dave
    Jan 27, 2015. 07:14 PM | 1 Like Like |Link to Comment
  • Preferred Stock Dividend Growth [View article]
    DD:

    Lot's of financials and utilities issue preferreds as well.

    Dave
    Jan 27, 2015. 07:09 PM | Likes Like |Link to Comment
  • How Much 'Extra' Return Are You Getting If You Reinvest Dividends? [View article]
    Hilo:

    I own 30 stocks in my retirement portfolio. JNJ happens to be one of them.

    I've stated before that I rebalance my portfolio once or twice a year, depending on what the market is doing and how the individual stocks are doing.

    My five largest holdings are KO, PG, JNJ, CL, and KMB. The reason that they are my largest holdings is simple. I've owned them longer than any of my other companies and have reinvested dividends and have enjoyed a number of stock splits as well with these five.

    The next group of 5 are also large holdings because they were purchased back in the 1990's and held, with dividends reinvested and again, some stock splits.

    Of the 10 oldest holdings, I have not been buying additional shares with new money--only through reinvesting dividends. So in the case of the example with JNJ of 100 shares growing to 2300 shares, I think I've illustrated my situation very well.

    Do I need two or three hundred more shares of JNJ? Maybe, maybe not. I haven't bought any additional shares since the initial purchases were made back in the middle 1980's.

    So, there are an additional 20 companies in the portfolio that have a shorter holding period than the 10 largest and these stocks were bought at different times right up through 2012.

    There have been stocks that I've bought that were capital gains plays. I wrote an article a while back talking about SWY, CA, WU, SPLS, and NSC. The only company out of that group that I still hold in NSC. The others were sold with capital gains in a tax deferred account (my retirement portfolio).

    So the portfolio is an actively managed portfolio and while some stocks come and go, the core stocks are dripped.

    The results over a long period of time end up with those additional 800 shares of JNJ. It ends up with additional shares of KO, PG, CL, and KMB that are rather large positions mostly created by reinvesting dividends and holding the companies.

    My goal was to have an income level that would sustain my retirement years and allow me to leave the portfolio to my wife, who will use the dividends to do exactly the same thing.

    If you go to the website I mentioned in an earlier comment, you can run scenarios on just about any stock/index you want with a look at how you would have fared with dividends reinvested vs. taking the dividends and pooling them.

    Regardless, the example I gave for JNJ results in a larger income stream, through reinvesting the dividends as opposed to not having reinvested. The total return numbers for both situations also are displayed at the site.

    In my opinion, reinvesting dividends is what makes the compounding effect work. If someone choses to not reinvest the dividends, that's their prerogative.

    The results of reinvesting speak for themselves.

    Dave
    Jan 27, 2015. 05:07 PM | 5 Likes Like |Link to Comment
  • How Much 'Extra' Return Are You Getting If You Reinvest Dividends? [View article]
    PTI:

    Let's face it, if you own 200 shares of JNJ, you are going to get your dividends every quarter. Whether you reinvest them in additional shares of JNJ or accumulate them and use the accumulation to purchase other companies that are "priced at a bargain", the dividends will keep coming.

    The difference is that reinvesting dividends (and I do with a portfolio of 30 companies) the "miracle of compounding" begins to work for you.

    Every time my 30 stocks have dividends reinvested, I end up owning more shares of the underlying holdings. Those additional shares result in an increase in my dividend checks over time (more shares, more dividend income).

    We can play the "what if" game all day, but if you go to a site like this one:

    http://bit.ly/Hyaf5H

    You can take a look at any stock/index you are interested in and compare reinvesting vs. not reinvesting over different time periods.

    When we look at JNJ again, a purchase of 100 shares in 1985 would have grown to 2431 shares today with dividends reinvested and stock splits along the way.

    Now, without dividends reinvested, the 100 shares would have grown, with splits, to 1600 shares today. The reinvested dividends gave an investor an additional 831 shares of JNJ stock.

    While dividends would have been paid (but not reinvested) over the years, the income from dividends would have been less with the non drip shares vs. the dripped shares.

    Now, in my taxable account, I don't reinvest dividends. I spend them for things I want that are outside of my budget. But in the tax deferred account, I reinvest in the same company.

    I don't know that an additional 831 shares of JNJ with reinvesting has any value to you, but it sure does to me.

    The whole idea of DGI is built around this notion of reinvesting dividends to take advantage of the compounding effect, directly to your individual holdings.

    But, it seems as time goes on, like many other things, the concept gets rationalized out of favor as people overthink the whole notion of DGI.

    Dave
    Jan 27, 2015. 11:38 AM | 9 Likes Like |Link to Comment
  • How Much 'Extra' Return Are You Getting If You Reinvest Dividends? [View article]
    Fox:

    Let's say that you happen to own 200 shares of JNJ. You can pick whatever number of shares you like. The dividend is $2.80 a share. The closing price of the stock today was $102 and change.

    The price fluctuates over the course of a year, but just for giggles, let's assume that the stock stayed at $102 a share. Your 200 shares would earn you $560 in dividends over the year. If you reinvested the dividends back into the stock you would pick up an additional 5.49 shares this year.

    I don't imagine that those extra shares are going to impact your holding a whole lot, do you?

    But, over 10-15-20 years, the end result is staggering. Not just for JNJ, but just about every blue chip stock there is out there.

    Just for giggles, what are some of the undervalued stocks out there right now that you would be investing your $140 per quarter JNJ dividends in and how many shares of that stock can you purchase with $140 a quarter?

    Dave
    Jan 26, 2015. 08:45 PM | 9 Likes Like |Link to Comment
  • Use Social Security Benefits To Enhance Portfolio Returns [View article]
    I wish the Social Security issue was as simple as some people seem to think. Unfortunately, the decision needs to be based on a lot more than "how much the monthly benefit will be" at any given age.

    Much more complicated and if you really want to maximize the SS benefit, it is a great idea to sit down with an advisor who specializes in SS, rather than making a mistake.

    Just Sayin.
    Jan 26, 2015. 02:51 PM | 1 Like Like |Link to Comment
  • How Much 'Extra' Return Are You Getting If You Reinvest Dividends? [View article]
    Personally, I can't understand why someone would not reinvest dividends back into the stocks that they own, especially in a tax deferred retirement account.

    When you consider a couple of stalwart (core) DG stocks and their performance with dividends reinvested and without dividends reinvested, the results are quite interesting.

    Using JNJ as an example (since it was used in the article), if you look at the 10 year history for JNJ with and without reinvesting dividends, you have a picture that looks this:

    JNJ without dividends reinvested: Average Annual Total Return: 6.84%
    JNJ with the dividends reinvested: Average Annual Total Return: 8.04%

    A $10k investment without dividends reinvested is worth $19456.77 today.

    A $10k investment with dividends reinvested is worth $21770.58 today.

    Without reinvesting dividends, a $10k investment bought 159 shares back 10 years ago. With the current dividend of $2.80 a share is providing $445.20 annually in dividends.

    With dividends reinvested, a $10k investment bought the same 159 shares 10 years ago, but that holding has grown to 213 shares today and at the same $2.80 a share is providing $596.40 annually in dividends.

    Dave
    Jan 26, 2015. 02:47 PM | 28 Likes Like |Link to Comment
  • Project $3 Million Dividend Results - Objectives [View article]
    Michael:

    Can you give us an example of a stock that paid 4% that has doubled over the last year?

    It's difficult to take a hypothetical situation seriously. Let's get some real examples so that we can all benefit.

    Even in the stocks paying a 3% yield, I haven't found any that doubled over the last 12 months.

    Help me out.

    Dave
    Jan 23, 2015. 05:50 PM | 5 Likes Like |Link to Comment
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