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  • Royal Dutch Shell Changes Rules, So Now What? [View article]
    Good info Mike, I was wondering why RDS.B was jumped up vs. RDS.A 10 days ago. I was surprised RDS.B fell on the announcement because it makes the B shares as more attractive. This market action shows that even if you got the news about 10 days before the market, it would have been difficult to profit from it!

    I too dislike when news forces you to make changes to your portfolio. Now you are at the whim of Mr. Market and he is already playing you starting 10 days ago. This usually angers me and I choose to invest in a different company that is not being affected by the news. Then after the dust settles on the original company, I may look for a good entry point.

    Good luck dealing with Mr. Market on this news.
    May 23, 2014. 09:29 AM | 2 Likes Like |Link to Comment
  • My 2014 Investment Plan And Screening Method [View instapost]
    Thanks Atif_OC for your comment. Quality is very subjective and will lead people in many different directions. The "Single Best Investment" suggests a quality stock could be rated as low as BBB+ but leans toward A or above ratings. Some may want to use a lower rating to get more choices. But I was satisfied with the portfolio I could create with the AA rated stocks, plus one A rated stock.
    May 21, 2014. 07:14 PM | Likes Like |Link to Comment
  • My 2014 Investment Plan And Screening Method [View instapost]
    How can one not like the intersection of quality, growth and yield?
    May 21, 2014. 05:06 PM | Likes Like |Link to Comment
  • My 2014 Investment Plan And Screening Method [View instapost]
    My wife delegates all investing decisions to me, but controls the checkbook. She's on board with the Dividend Growth plan.
    May 21, 2014. 05:05 PM | 1 Like Like |Link to Comment
  • My 2014 Investment Plan And Screening Method [View instapost]
    I would say the best buys are the ones trading at the highest discount to their average dividend yields. That would be in order XOM, KO, CVX, PEP, PFE, and GE. Overall, I think GE will be a top performer based on its current price, growth potential and current yield, even though its not at a discount to its average yield. I don't know if that helps, I like them all.
    May 21, 2014. 05:00 PM | Likes Like |Link to Comment
  • Dividend Growth Investing: Creating Your Own Dividend By Selling Shares (Part 1) [View article]
    If anyone is trying to withdraw more than the dividends from their portfolio, they need to get Peter Lynch's book "Beating the Street" and review Table 3-2 on page 54. It gives you a plan to begin withdrawing 7% of a DGI portfolio until the dividend catches up and gives you an inflation increase.

    I explained this plan in a comment to another article which can be read here:
    http://seekingalpha.co...
    May 21, 2014. 08:47 AM | 1 Like Like |Link to Comment
  • My 2014 Investment Plan And Screening Method [View instapost]
    Z, Thank you for your comment. I've become sort of a "perma-bull" since starting DGI. There is always something to buy that meets my "high total return" requirement. I'm glad you have found my criteria helpful in your thought process.
    May 21, 2014. 08:28 AM | 2 Likes Like |Link to Comment
  • My 2014 Investment Plan And Screening Method [View instapost]
    Mike, I owned most of these stocks too before moving up to the AA bond level. This year I wanted to up the "quality" of my positions. When I did this, I started noticing that most of my portfolio was at the AA level. Then I decided to test the idea of only owning AA level stocks. I was happy with the results of the portfolio constructed with AA stocks. I only had to sell a couple of positions to move my quality up to AA.

    I also noticed that most of the stocks had an average yield of 3.3%! Wow, I can live on that! The weighted average dividend yield on my stock portfolio right now is 3.34%. The growth rate averages 9% (calculated from above comment with adjusted PEP, PFE and GE). 3.3 plus 9 equals 12.3! This AA rated portfolio can be bought right now at above the Chowder rule with a 3.3% yield. What's not to like? Why hold any cash? I'd drop a million dollars into this group of stocks today if I won the lottery. If I could get my wife's money out of her 401(k), I'd buy all of these stocks this morning.
    May 21, 2014. 08:22 AM | 3 Likes Like |Link to Comment
  • My 2014 Investment Plan And Screening Method [View instapost]
    Not sure I understand the question, but with FAST Graphs, you would need to display a "7 year" graph to see a 5 year dividend growth rate. I did this for MCD and saw 14%. When I look at Seeking Alpha's I see 11.5%. FAST Graphs says "average", Seeking Alpha uses growth rate. That would explain the difference.

    Here are the Seeking Alpha growth rates for my stocks, MCD 11.5%, XOM 9.2, CVX 8.8, PG 8.0, KO 7.5, UL 7.0, JNJ 7.0, PEP 5.7, PFE 8.5 (3 year), GE 14.6 (3 year).

    Another point about growth rate, I would buy XOM with a 2.7% yield because of its 9.2% growth rate. This calculates to a "Chowder Rule" of 11.9% which meets my 10 to 11% high total return level. PEP is low right now with a 5.7% growth rate on Seeking Alpha, but its 5 year growth rate jumps to 8.2% with its latest increase.

    Therefore, you need to consider the whole formula High Yield + High Growth, not just the individual pieces. As long as the total is above 10% , I wouldn't get too hung up on the 3% and 7% levels. But with a low yielder, I want to see a high total return number. I wouldn't put a low yielder in with only a 10% total return. I also wouldn't own 10 stocks with a yield below 3% because I need to pay my bills, but one or two high growth rate stocks with lower yields may make the cut.
    May 21, 2014. 08:07 AM | 1 Like Like |Link to Comment
  • Dividend Growth Investing: Creating Your Own Dividend By Selling Shares (Part 1) [View article]
    Ok! I posted up an instablog that explains my 2014 investment strategy and stock selection screen that leads directly to 10 of the stocks in my portfolio. Give it a read.
    May 20, 2014. 07:25 PM | 2 Likes Like |Link to Comment
  • Dividend Growth Investing: Creating Your Own Dividend By Selling Shares (Part 1) [View article]
    BIB, Yes, I intentionally took dividends out at end of year, because they are earned and spent throughout the year versus up front. Dividends are accounted for in my calculation because my returns are "total return" including price appreciation and dividends.
    May 20, 2014. 06:02 PM | Likes Like |Link to Comment
  • Dividend Growth Investing: Creating Your Own Dividend By Selling Shares (Part 1) [View article]
    After further review, I see what happened to the high-yield portfolio. In 2000, many of these positions were not high yield at all. The overvaluation in 2000 was extreme. GE was selling for 38 times earnings with a 1.2% dividend yield. MCD was selling for 26 times earnings with a 0.65% dividend yield. ADP was selling for 42 times earnings with a 0.62% dividend yield. MRK was selling for 30 times earnings with a 1.4% dividend yield.

    What this exercise proves is that you don't want to retire on a portfolio with a 2 to 3% EARNINGS yield and think it can survive a 4% withdrawal rate, agreeing with David's S&P 500 example. These stocks were strong enough to maintain the $1 million portfolio value under that tough condition.

    Just think how well the high yield portfolio can do starting from its current yield and P/E. Right now the high yielders have an 18.5 P/e or a 5.4% earnings yield and an average 3.23% dividend yield. I believe a 4% withdrawal rate against these stocks will look much better in the next 14 years than the last 14 years because of the beginning price differential. If you only withdraw the 3.23% current yield with dividend increases, your heirs will be remembering you for generations! My grandson will be saying "I'm sure glad Papa was invested in CVX, PFE, KO, PG, RDS.b, JNJ, PEP, UL, XOM, GE and MCD in 2014!"
    May 20, 2014. 01:53 PM | 1 Like Like |Link to Comment
  • Dividend Growth Investing: Creating Your Own Dividend By Selling Shares (Part 1) [View article]
    I double checked the numbers a found a couple of typos in the returns the biggest being 24% vs 2.4% for 2013 in the high yield portfolio. But, there still is a big difference in the totals. Here are the revised numbers.

    Low Yield
    2000 $1,000,000.00 -22.3% $40,000.00
    2001 $737,000.00 13.2% $41,600.00
    2002 $792,684.00 -3.3% $43,264.00
    2003 $723,261.43 36.6% $44,994.56
    2004 $942,980.55 31.0% $46,794.34
    2005 $1,188,510.18 16.9% $48,666.12
    2006 $1,340,702.28 31.9% $50,612.76
    2007 $1,717,773.55 39.5% $52,637.27
    2008 $2,343,656.83 -25.2% $54,742.76
    2009 $1,698,312.55 58.2% $56,932.47
    2010 $2,629,797.98 16.7% $59,209.77
    2011 $3,009,764.47 11.9% $61,578.16
    2012 $3,306,348.28 18.8% $64,041.29
    2013 $3,863,900.47 29.8% $66,602.94
    2014 $4,948,739.87 -0.7% $69,267.06

    High Yield
    2000 $1,000,000.00 13.7% $40,000.00
    2001 $1,097,000.00 -9.6% $41,600.00
    2002 $950,088.00 -15.8% $43,264.00
    2003 $756,710.10 17.7% $44,994.56
    2004 $845,653.22 6.5% $46,794.34
    2005 $853,826.34 4.2% $48,666.12
    2006 $841,020.93 17.6% $50,612.76
    2007 $938,427.85 16.9% $52,637.27
    2008 $1,044,384.89 -21.9% $54,742.76
    2009 $760,921.84 10.8% $56,932.47
    2010 $786,168.92 12.7% $59,209.77
    2011 $826,802.60 15.9% $61,578.16
    2012 $896,686.06 9.2% $64,041.29
    2013 $915,139.88 24.0% $66,602.94
    2014 $1,068,170.52 4.9% $69,267.06
    May 20, 2014. 01:11 PM | 1 Like Like |Link to Comment
  • Dividend Growth Investing: Creating Your Own Dividend By Selling Shares (Part 1) [View article]
    An article? Nah, I have more fun dropping pity comments in on your articles. But these comments do make me think. I would have never thought that the low yielding AA rated stocks would outperform the high yielding ones by that margin since 1/1/2000. Hmmm?
    May 20, 2014. 12:56 PM | 1 Like Like |Link to Comment
  • Dividend Growth Investing: Creating Your Own Dividend By Selling Shares (Part 1) [View article]
    So this article had me thinking . . . (Isn't that really the reason we read articles and comment?)

    Lately, I've been using credit rating to make my first cut of stocks and found all the stocks rated AA in the S&P 500 index. There are 24 stocks that are AA rated in the S&P 500. So I broke the 24 stocks into two groups, high yield and low yield based on their average yield for the past 5 years.

    The high yield stocks are KO, PEP, ADP, JNJ, GE, CVX, PG, MCD, PFE, MRK, LLY, RDS.B. That sure looks a lot like my portfolio.

    The low yield stocks are AMZN, AAPL, BEN, GWW, IBM, CL, WMT, XOM, MMM, MSFT. Looks to me like many no yield growth stocks.

    So let's run the $1 million beginning in 2000 scenario withdrawing 4% increasing 4% annually from each of these portfolios and see what happens . . .

    The low yield portfolio ends up with a balance of $4.6 million and the high yield portfolio ends up with a balance of $0.8 million. The "make your own dividend" plan significantly outperformed in this scenario, but both portfolios succeeded in providing the required income. Maybe the "make your own dividend" plan is not so bad if you use high quality stocks? Remember, I did not choose these stocks, they chose themselves by being AA rated.

    Here are the raw numbers:

    Low Yield
    year balance total return withdrawal
    2000 $1,000,000.00 -22.3% $40,000.00
    2001 $737,000.00 13.2% $41,600.00
    2002 $792,684.00 -3.3% $43,264.00
    2003 $723,261.43 36.6% $44,994.56
    2004 $942,980.55 31.0% $46,794.34
    2005 $1,188,510.18 16.9% $48,666.12
    2006 $1,340,702.28 31.9% $50,612.76
    2007 $1,717,773.55 39.5% $52,637.27
    2008 $2,343,656.83 -25.2% $54,742.76
    2009 $1,698,312.55 58.2% $56,932.47
    2010 $2,629,797.98 16.7% $59,209.77
    2011 $3,009,764.47 11.9% $61,578.16
    2012 $3,306,348.28 11.8% $64,041.29
    2013 $3,632,456.09 28.8% $66,602.94
    2014 $4,612,000.50 -0.7% $69,267.06

    High Yield
    year balance total return withdrawal
    2000 $1,000,000.00 13.7% $40,000.00
    2001 $1,097,000.00 -9.6% $41,600.00
    2002 $950,088.00 -15.8% $43,264.00
    2003 $756,710.10 17.7% $44,994.56
    2004 $845,653.22 6.5% $46,794.34
    2005 $853,826.34 4.2% $48,666.12
    2006 $841,020.93 17.6% $50,612.76
    2007 $938,427.85 16.9% $52,637.27
    2008 $1,044,384.89 -21.9% $54,742.76
    2009 $760,921.84 10.8% $56,932.47
    2010 $786,168.92 12.7% $59,209.77
    2011 $826,802.60 15.9% $61,578.16
    2012 $896,686.06 9.2% $64,041.29
    2013 $915,139.88 2.4% $66,602.94
    2014 $870,500.30 4.9% $69,267.06
    May 20, 2014. 09:35 AM | 1 Like Like |Link to Comment
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