David Crosetti

Value, dividend investing, growth at reasonable price, portfolio strategy
David Crosetti
Value, dividend investing, growth at reasonable price, portfolio strategy
Contributor since: 2011
PA:
Can you tell me the stock that I need to buy that will be worth more in 25 years than they are today?
Would some of those stocks pay dividends and perhaps have a less than 25 year history of increasing dividends?
Maybe you can elaborate on your choice of investments for the rest of us?
That would be appreciated.
Dick:
This computer that I'm using has a mind of it's own. The best thing I did with it was to drop Internet Explorer and go to Google instead. Loads faster and less brain freezes.
I hate computers, but need one.
You can go to ssa.gov
and take a look at your SS Benefits and all your "choices"
One thing is that Medicare. That caught me by surprise and was the result of a one time windflall from the sale of a house. I am hoping that it will adjust next year
It's still pretty complicated.
I have absolutely no idea as to what just happened here with the multiple posting.
I am sorry.
I think it's relative to the purchase amount. Some people (me) get all hung up on price. I bought some PFE the other day and kept changing my limit order. I wanted to save .30 a share as the price was declining.
Then I thought to myself, "What are you doing?"
I bought 200 shares at $29.50 vs the $29.25 that I had originally set as a limit order. I'm thinking, "Dude, are you really concerned about $50 when you are locking in a 4% yield point on the stock?"
So I pulled the trigger and bought PFE. It might go up, it might go down in the next 12 months. I don't really care. My goal is to add the income to my stream and if PFE becomes attractive to me at some point in the future, I can always buy more.
When I started buying KO back in 1984 I didn't spend much time thinking about the price. We bought it in our 401k (I worked at Coke) and just added to our position every paycheck.
Build a portfolio of core holdings. Don't let one become so large that it becomes a problem with a major correction. Spread out the positions in your portfolio and get $1500 of this, $1500 of that, and $1500 of something else.
Stick with quality, market leadership, a dividend growth rate in excess of inflation (I target 6% or better annually) and most important of all, if you can't explain what a company does and how they do it, then don't buy it.
I think it's relative to the purchase amount. Some people (me) get all hung up on price. I bought some PFE the other day and kept changing my limit order. I wanted to save .30 a share as the price was declining.
Then I thought to myself, "What are you doing?"
I bought 200 shares at $29.50 vs the $29.25 that I had originally set as a limit order. I'm thinking, "Dude, are you really concerned about $50 when you are locking in a 4% yield point on the stock?"
So I pulled the trigger and bought PFE. It might go up, it might go down in the next 12 months. I don't really care. My goal is to add the income to my stream and if PFE becomes attractive to me at some point in the future, I can always buy more.
When I started buying KO back in 1984 I didn't spend much time thinking about the price. We bought it in our 401k (I worked at Coke) and just added to our position every paycheck.
Build a portfolio of core holdings. Don't let one become so large that it becomes a problem with a major correction. Spread out the positions in your portfolio and get $1500 of this, $1500 of that, and $1500 of something else.
Stick with quality, market leadership, a dividend growth rate in excess of inflation (I target 6% or better annually) and most important of all, if you can't explain what a company does and how they do it, then don't buy it.
I think it's relative to the purchase amount. Some people (me) get all hung up on price. I bought some PFE the other day and kept changing my limit order. I wanted to save .30 a share as the price was declining.
Then I thought to myself, "What are you doing?"
I bought 200 shares at $29.50 vs the $29.25 that I had originally set as a limit order. I'm thinking, "Dude, are you really concerned about $50 when you are locking in a 4% yield point on the stock?"
So I pulled the trigger and bought PFE. It might go up, it might go down in the next 12 months. I don't really care. My goal is to add the income to my stream and if PFE becomes attractive to me at some point in the future, I can always buy more.
When I started buying KO back in 1984 I didn't spend much time thinking about the price. We bought it in our 401k (I worked at Coke) and just added to our position every paycheck.
Build a portfolio of core holdings. Don't let one become so large that it becomes a problem with a major correction. Spread out the positions in your portfolio and get $1500 of this, $1500 of that, and $1500 of something else.
Stick with quality, market leadership, a dividend growth rate in excess of inflation (I target 6% or better annually) and most important of all, if you can't explain what a company does and how they do it, then don't buy it.
I think it's relative to the purchase amount. Some people (me) get all hung up on price. I bought some PFE the other day and kept changing my limit order. I wanted to save .30 a share as the price was declining.
Then I thought to myself, "What are you doing?"
I bought 200 shares at $29.50 vs the $29.25 that I had originally set as a limit order. I'm thinking, "Dude, are you really concerned about $50 when you are locking in a 4% yield point on the stock?"
So I pulled the trigger and bought PFE. It might go up, it might go down in the next 12 months. I don't really care. My goal is to add the income to my stream and if PFE becomes attractive to me at some point in the future, I can always buy more.
When I started buying KO back in 1984 I didn't spend much time thinking about the price. We bought it in our 401k (I worked at Coke) and just added to our position every paycheck.
Build a portfolio of core holdings. Don't let one become so large that it becomes a problem with a major correction. Spread out the positions in your portfolio and get $1500 of this, $1500 of that, and $1500 of something else.
Stick with quality, market leadership, a dividend growth rate in excess of inflation (I target 6% or better annually) and most important of all, if you can't explain what a company does and how they do it, then don't buy it.
Poker:
You are correct and I am wrong. They raised my insurance premium, which reduced my benefit.
Either way, it sucks.
Z:
Kind of stating the obvious, don't you think?
KMI was not a dividend growth stock. It was an MLP that became a "stock" and as such, it had barely a 5 year track record of increasing dividends. A lot of people jumped on that bandwagon but when I think of DG stocks, I tend to focus on 10 plus years of increasing dividends and longer for what I consider core holdings.
I use Y-Charts to examine this metric.
What I do is look at the CCC list that David Fish publishes every month for annual dividend growth rates. What I focus on is consistent levels of dividend growth. I like companies like KO, for example, that seem to raise the dividend by around 8% every year.
Then I chart the price and the dividend and look at 1-5-10 year charts.
But this is only one part of the search for investment opportunities. Although my own methodology is a lot more simple than most other people.
I'm sure that a lot of people would find my stock selection process to be extremely flawed. But then again, I've never claimed to be the brightest bulb on the tree.
Christine:
You have to admit it. Most people don't think the dividend thing all the way through.
In order for companies to increase dividends every year, they have to increase earnings (simplification and not pure accounting lingo).
Companies like KO, PG, KMB, CL, JNJ etc have increased dividends every year for over 25 years. How? They are great businesses. (Simplification once again).
If a company pays a dividend of $1.32 a share and the current price of the stock is $42 a share, then the company has a yield of 3.14%.
If the company increases the dividend by 8% a year over the next 5 years, then at the end of the period, the dividend will be $1.80 a share. (1.32 x 108% etc)
If the stock is still priced at $42 a share, the yield would be 4.3%.
Probably not going to happen, because the price of the stock would be changing with earnings/fundamentals.
So in order to maintain a balanced 3% yield point, the stock would be priced around $60 a share.
From my perspective, if the stock was priced at $42 and paying a $1.80 dividend, yielding 4.3% vs the "normal" 3%, I would see an indication that tells me to think about making a purchase of additional shares.
Bill:
The math is in the number of shares that you hold, relative to the current dividend.
Look at what 100 shares of JNJ would be worth today, if bought in 1984.
100 shares of JNJ would be 1600 shares today, with a value of $165,456. That's because of the stock splits since 1984.
If you invested the dividends back into JNJ, your share count would be 2509 shares with a value of $259,482.
Now, that says that since 1984 you never bought another block of shares of JNJ. Just the original 100 shares, left alone. The income from those 2509 shares would be $7527 a year.
Think if you added an additional 100 shares every 5 years over the last 30 years and how much you'd have and how much income you'd have.
Will it repeat? Well that's a little like asking "why would I buy a lottery ticket when the odds are stacked against me?"
Well you would have a 100% chance of not winning the lottery if you didn't have a ticket.
B:
No problem. Just get started and let time take care of the rest. Stay away from stuff you don't understand. Bottlers, like COKE are not where I'd go, but hey, that's just me.
Wed:
You arent the only one that missed your increase. Doesn't happen often. Think of it as a fixed annuity.
Mine went down, because of a house sale and adjusted gross income levels that pushed me to a "means test."
Reb:
The stocks that I own have worked out well. But they were set in motion back in 1984.
The KO stock was purchased in the company 401k plan, so every two weeks I would add to my position.
The secret to this is not my being brilliant or "special." It's time in the market. My initial share count for KO was 400 shares by the end of 1986. We were introducing great products like Diet Coke, Sprite, Cherry Coke, etc and the company was getting it's distribution system together with massive synergies of geography.
Dividends were always reinvested back into additional shares and a number of stock splits, beginning in 1987, for me, is what turned the wheel.
Start small. Add more. Reinvest dividends. Don't sell unless disaster strikes. Buy quality. Buy companies that you'd like to go to work for. Don't worry about being right with your purchases, just get close and let time take care of the rest.
I am not very disciplined at all. Quite the contrary. I like nice things--like cars and boats.
Bill:
Not when you are drawing it. Mine actually got adjusted downward because I sold a house in California and the profit was counted as a capital gain, raising my adjusted gross income. So my benefit declined by $100 a month.
I owned 400 shares of KO stock by the end of 1986. I worked for the company and the shares were available to us through our 401k plan.
The stock split 3:1 in 1987; it split again 2:1 in 1990. 1992, 1996 and most recently in 2012.
All along the way, dividends were being reinvested back into additional shares of KO stock.
Do the math.
Same is pretty much true with the other 4 large holdings in my portfolio. JNJ, PG, CL, and KMB. All with multiple splits over the years, dividends reinvested and additional shares purchased with new money as the prices for these companies reflected a value.
KO pays a dividend of $1.32 a share, right now which is a yield of a bit over 3% annualized. The Dividend Growth Rate has been around 8% a year for the last 10 years. That's significantly ahead of the underlying rate of inflation.
Your numbers are a bit off. If you had 2.4 million dollars worth of KO at $42 a share that would mean you owned 57,145 shares of KO, not 15000.
15000 shares of KO at $42 would be worth $630k
The other stocks also have stout DGR's and there in lies the secret of DGI. Hard to believe, but welcome to the real world.
413:
I started in 1984, but I didn't know it was DGI at the time. I worked for Coca-Cola (my first real job) and we could buy company stock in our 401k plan. So I did.
My buddies worked at PG, KMB, CL, JNJ, and other food companies and we would hang out on Fridays and talk shop. So I started investing in their companies and we all did pretty much the same.
Back in those days, broker commissions were steep, so we didn't trade a lot. We bought and held. In my 401k plan, there was no "cost" for buying KO stock or the various funds that were offered.
I made it a habit to reinvest dividends along the way, made it a habit to add additional shares when I had money to invest (but after a while I pretty much stopped adding to these 5 companies and started adding stuff like MCD, WMT, LOW, WAG (Walgeens) TGT, ABT, MO, RAI, LMT, and letting those stocks run along.
I bought more when they were down in price and bought less when they were up. I usually focused on fundamentals, but the icing for me was the yield point relative to the historic yield point. So, for example, when KO traded with a yield point of 3.5% or better, that signaled a "buy" for me. At 3.75% it represented a screaming buy.
Ive always taken the approach that I don't have to be "right" when I buy a particular stock, in terms of the price I pay. I just need to be close. I'm not buying to sell next week or next month. It's like when I was in the Army and we actually threw hand grenades. You didn't have to hit your target. You just had to get close and let the grenade do the work for you
Same thing.
To many people worry about a couple of dollars and don't take action. Is KO a better buy at $40 or $38? In the long run, does it matter all that much? I mean, how many shares are you buying? If I'm buying 50 shares, not a big deal. Most people aren't making 1000 share purchases at $40 a share.
It seems to me that if I were focused on what my portfolio was "worth" vs. the income that my portfolio is producing through annually increasing dividends, that I might be a bit concerned about the market doldrums.
However, the original goal of setting up my portfolio was to create an income stream that would allow me to supplement my Social Security and unlike Social Security, increase year over year as I needed more money.
I've always been inclined toward blue chip companies and haven't taken a lot of flyers on the next best capital gains play, over the years.
Slow, steady, reinvesting dividends. Now I have an income that exceeds my Social Security benefit. That's just from one holding, Coca-Cola. I have 29 others. Most were bought a long time ago and I've added more shares to the core group over the years, when they appeared to be priced at a value.
Nothing fancy. No great stock picking. I'm no genius. Find companies that are quality companies with market dominance in what they do. Invest regularly. Don't get all wound up if you bought something for $30 and it drops to $25.
You're planning to hold the stock for a long time--not just a couple of days.
Works for me.
Chowder:
Most will overlook your comment, but there in lies the crux of dividend growth investing.
If a company increases their dividend by 6-8% a year (annually) and the starting point is a 3% yield, then how in the world can KO, JNJ, KMB, CL, and PG (for example) not be yielding 10 or 11%?
Because price of the stock follows the dividend increases to keep things "balanced."
Now, when you find an opportunity to purchase one of these companies at a price where the yield point is in excess of the historic yield point, then you have a significant opportunity to lock in some very nice income and potential capital gains, depending on your own particular strategy.
KMI and VNR were not DGI stocks by conventional wisdom/definition.
I don't know why people seem to think that anyone could consider KMI a DGI stock with a 5 year track record of increasing dividends.
Fringe.
The first edition of Miller's book was published in 1999. That seems like yesterday, but it was 17 years ago.
I know that it was updated in 2006, but things change.
It's not the bible, for crying out loud. It's a great book with some good ideas. But, what you are suggesting is that we had all better take Miller's advice "as written" and not deviate from his plan.
When I first bought JNJ it was back in 1984. While JNJ is not increasing the dividend by 10% a year, these days, it still has been a very profitable investment for me and many others.
That doesn't mean that JNJ is a great investment today or that it will be tomorrow. It has been and will price itself accordingly and that's when you should consider buying some.
Let's not make this that complicated.
DVK:
One of my favorite country songs goes:
"But here in the real world....................
I recently took a trip to the Custer National Monument. I spent a couple of days there, getting the physical location into my mind, along with the mental picture I had from reading so many books about the battle.
It became extremely obvious why Custer and his men all died in the battle when you look at the terrain, the tactics employed, and the numerical superiority of the Indians over the cavalry.
You can read all about it, but until you see it and walk it, you will never really understand it.
Just Sayin
H:
I have a taxable account that I've written about and shared on SA.
The dividends paid by the companies in that portfolio go directly into my checking account at Schwab. The portfolio has not been added to and nothing has been sold, since 2011.
Everything in the portfolio has remained "as is." There are currently 15 positions in the portfolio.
The total investment in the portfolio was $300k. It was invested as three $100k CD's matured over a three year period beginning in 2009.
The portfolio dividend income has been increasing by 8% a year since 2011 and the value of the portfolio is just shy of $550k, today. Since 2011, I've taken $88k in dividends
So while what you are saying makes sense from an accounting point of view, I choose to live in the real world and the experience I've had is totally inconsistent with what you are suggesting.
Q:
You asked a question.
I gave you an answer.
I can't help it if you don't like my answer.
Get over it.
It's really quite easy.
All you have to do is close your mind and stick to preconceived notions without doing any actual digging into the subject matter.
Happens all the time and is quite evident on most of these forums.
Michael:
A source for that would be appreciated.
I didn't realize that dividend investors own the entire group of dividend paying stocks in the SP 500 Index.
Wouldn't the stocks that you own, actually be a better gauge to compare against the non-dividend stocks in the Index?
Or is this another strawman?
Oftentimes, quality wins over quantity, Larry.
Plato wrote a lot of books, but The Republic is the one that we know him by.................
What's the matter, Larry? Did you get your feelings hurt that you weren't surveyed?
Neither was I, but to be honest with you, I'm to busy with being retired to even think about taking surveys.
Dale:
Compounding has little to do with "buying" more stock.
It has everything to do with getting paid "interest on interest."
In the DGI community, compounding is getting income on income.
Check out this article and it will explain it to you--if you read the article.
http://seekingalpha.co...