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  • Investors Should Not Be Complacent About Dividend Champions [View article]
    I liked your article, because you had some valid points. Investors should not purchase dividend stocks blindly, but only if the business fundamentals and the valuation made sense.

    However, even if investors blindly purchased all dividend achievers, they would have done slightly better than the market. Not all dividend achievers are a buy however. Investors who have a head on their shoulders can research company, buy it if its a good buy and sell it if it is a good sell (dividend cut). Investors are essentially managing their own portfolio, and being in charge of their own destiny, while saving on management fees, conflicts of interest and other shenanigans from the mutual funds industry.

    You have several factual errors. You say " In fact, only the 101 currently reigning “Dividend Champions” from an original list of perhaps 500-700 stocks promising “dividends for life” 25 years ago would have survived the test of time."

    There were approximately 84 dividend champions in 1991, while there were 362 dividend achievers.

    Another factual error is that Enron, Xerox were never dividend champions. Neither was Lehman - it was only a div achiever.

    Just because a company drops from the list, doesn't mean that it went to zero and investors lost everything. Some companies like Kellogg stopped raising dividends after a 44 year run, but maintained them, until it started raising distributions again several years ago. Many promising dividend growth stocks get bought out by larger competitors at a steep premium. Very few actually "go under".
    Sep 24 12:30 PM | 24 Likes Like |Link to Comment
  • The Importance of Dividend Investing [View article]
    Roger,

    Thanks for analysing my article. However there are some issues I wanted to point out. I am not sure if I didn't say things correctly or whether my article is being misinterpreted.


    First of all, I do think that this sample method should be about equally balanced -25% for each group. And yes the idea is that this is your total portfolio.

    Second the stocks in each group are just examples. I hold two MLPs in my portfolio, in addition to REITs and utilities. Those are good for current income. An investor should not stop there. They could own MO, PM, BP etc in the second tier.

    As far as rising interest rates and bonds, I realize that this could be an issue for the specific portion of the portfolio. But the bond allocation is to provide a cushion during a depression. I wrote this down clearly. The other portions of the portfolio would do well under longer term inflation. You won't win every year, but over a period of a few years you should do just fine.

    I also recommend diversification, and holding at least 30 individual securities. These days it is possible to have zero investment costs so this should not be an issue. I don't want to pay any fees to investment advisers or mutual fund companies.

    The major idea of the dividend investment strategy presented in my article was that one should spend only the income it throws off each year. Therefore if interest rates rise to 6% and the price goes down the dividend investor won't care AS long as total dividend income increases at least by the rate of inflation. So we are spending only income here, not principal.

    Also you should look into the portfolio in total, not just part by part. The reason for the four parts is that each does well under different conditions. If we get deflation bond part does well. During normal situations all portions should do well. During inflation the last 2 parts would do fine and even the second should do fine as well, since for MLPs they are able to increase fees for transporting energy by the rate of inflation. Reits should also do fine during inflation as well.

    Also I would advice that you look into my articles in total and not just read one article and believe that it has all the answers. Your comment does not take into consideration anything else i have written about over the past 2 years.
    "My idea of a diversified portfolio includes exposure to every big sector of the market with stocks of many different attributes so that there is at least some exposure to whatever is leading the market. "

    I also recommend diversification, and holding at least 30 individual securities. These days it is possible to have zero investment costs so this should not be an issue. I don't want to pay any fees to investment advisers or mutual fund companies.

    Also dividends could get cut, but for a diversified portfolio not all dividends would be cut. Foreign stocks could also be included, but then you are also exposing yourself to other risks. Most of the top companies on the S&P 500 by market cap already have a large portion of their earnings derived from foreign operations. By adding foreign stocks, you are increasing your taxes and you might be overdiversifying internationally..
    Apr 1 04:22 PM | 19 Likes Like |Link to Comment
  • Kinder Morgan's Dividend Payout Rate Is Unsustainable [View article]
    I would second the comments of the last four commenters. KMP is an MLP and as such is required to pay out most of its earnings. What is important for MLPs is distributable cash flow, not EPS.
    While KMP is big, it could still afford growing its distributions over time if it realizes efficiencies, acquires other pipelines and also as inflation adjustments raise the prices it charges companies to transport oil and nat gas.
    If the company cut its IDR( incentive distribution rights) to 25% rom 50%, the distributions growth could be better off as well.

    Could KMP cut its dividend? Sure it could. I doubt it would do it however, as this would enrage shareholders. Furthermore the pipelines are a boring business. Demand for nat gas and oil is not volatile at all - probably a one -two percent annual change in US demand in either direction is considered huge.

    KMP is superior to PWE, since if PWE does not keep buying new exploration properties, it would earn nothing once it depletes its resources. furthermore PWE would lose its canroy status in 2011, after which its dividends would be much lower than today, since now it distributes most of its cash flow to unitholders.
    KMP could go on as long as energy from oil and gas is needed in the US. KMP has stable and growing distributions, while PWE has volatile and shrinking distributions, dependend ot the prices of volatile commodities.

    As an income investor I prefer stable and growing distributions, and a stable income stream.
    Jul 28 09:00 AM | 19 Likes Like |Link to Comment
  • Dividend Stocks to Avoid [View article]
    Historically dividend cutters have underperformed the stock market and dividend grower and initiators have outperformed the stock market on average. As a dividend growth investor I buy stocks that keep growing their dividends and sell stocks that cut or eliminate their dividends. Why would I keep on hoping that GE would someday increase its dividends and waste my money at a company that doesn't deliver rising income for me when I could allocate my money at a company that delivers results?

    When GE starts delivering positive dividend growth I would once again consider initiating a position in the stock. The company might be a great buy at current levels, but your guess about future stock performance is as good as mine... I do hope sincerely however that you make money on your investments however.

    Best Regards,

    Dividend Growth Investor


    On Apr 21 10:58 AM sthpawil wrote:

    > I consider buying GE back when it was below $7 an incredibly smart
    > move on my part. In a few years when the dividend returns to its
    > normal level, the ROI will be huge since my cost basis is so low.
    > Between that and my capital gains, I don't see how anyone with an
    > ounce of common sense can make the argument that one should avoid
    > these stocks. Articles like this are very short sited and proof that
    > so called "experts" are people too and they make mistakes just like
    > the rest of us.
    Apr 21 12:51 PM | 17 Likes Like |Link to Comment
  • What Happens When You Sell An MLP? [View article]
    For the two years i have owned OKS and EPD, the UBTI has been negative in both years.

    I am not certain why investors are so afraid of MLPs. If your tax adviser cannot handle them then you need to fire them. I guess investors who are not comfortable with MLPs because of the extra tax paperwork, create an inefficiency in the market that can be exploited by others.
    Apr 30 09:53 PM | 12 Likes Like |Link to Comment
  • Dividends Matter a Lot, But Not More Than Proper Diversification [View article]
    David,

    There is a reason why I do not respond to articles like this one.

    First, I think that anyone that writes negative things about dividend investing, and calls me and my strategy stupid, without offering any idea about their own strategy, is not worth my time. Roger Nusbaum writes about a lot of interesting ideas to research. But I do not know what he invests his client's funds in. So if he has no skin in the game, I do not listen to him.

    Second, the reason why Roger writes these types of articles is because he wants to generate controversy, and therefore more traffic to his site.

    Third, as a financial adviser himself, he feels threatened that do it yourselfes dividend investors would invest on their own. Investing is not as difficult as financial advisers would make you believe it is. Actually, most financial advisers earn money when they sell you financial products or they earn money based off the amount of assets they manage for you. So it is no surprise that investment advisers ( who do not deliver much in value anyways) see the emergence of investors who want to do it on their own, fire their advisers, and live off the dividend stream, rather than rely on selling off 4% of their dividend portfolio ( which is similar to cutting off the tree branch you are sitting on).

    Fourth, Based on one article that Roger wrote in response to an article I wrote last year" Living Off dividends in retirement", I realized that he does not understand dividend growth investing. I also realized that he does not understand asset allocation. In my article I had written how it is a good idea for investors who are retired to have a 25% allocation to fixed income. Roger Nusbaum, of all people, wrote in my article rebuttal strongly against bonds. Obviously this adviser has no idea what he is talking about - bonds are a great diversifier, and in certain market periods ( aka great depression or last 2 decades in japan or last 11 years in the US) have proven to be worthwhile investments.
    Jun 14 09:25 PM | 12 Likes Like |Link to Comment
  • Sleep at Night Investments: Utility Preferred Shares [View article]
    Denis,

    That's an awesome article. I liked the depth of it. I am looking forward to reading more articles from you.

    Dividend Growth Investor
    Apr 27 08:00 PM | 11 Likes Like |Link to Comment
  • 14 Dividend Stocks With Dividend Growth Potential [View article]
    Thanks for all the comments. As a side note, the dividend growth in the table above is the Ten Year Average Dividend Growth per Year.
    Jul 14 08:31 PM | 11 Likes Like |Link to Comment
  • Why Stocks That Raise Dividends Trounce the Market [View article]
    This truly is an outstanding article, which clearly points out why dividends rock.

    Here's a chart that shows the performance of dividend payers, increasers, cutters and eliminators versus the S&P 500 untill 2005.

    www.dividendgrowthinve...

    I think that what you wrote below summarizes why dividend growth stocks rock:

    "First, it takes an outstanding business to increase dividends for decades, and outstanding businesses are often outstanding long-term investments. Weak businesses simply can’t and don’t raise dividends for decades."

    I am in the process of writing some articles about dividend growth investing.. Stay tuned for updates...
    Mar 12 10:49 AM | 11 Likes Like |Link to Comment
  • 7 Dividend Stocks to Prove Buy-and-Hold Isn't Dead [View article]
    Buy and hold is not dead. It never was and never will. Any advisor that recommends that you switch in and out of stocks frequently is only after your money either in terms of selling you subscription services, charging you money for handling your investments or charging you for trades ( brokers).

    One should however implement a sound buy and hold strategy that works for them and this strategy should include sound diversification, dollar cost averaging and selective dividend reinvestment. Consistent Dividend growth should be supported by sustainable earnings growth over time as well.

    Buy and hold investors should also have an exit plan in case things don't go as expected. For me, when a company which has raised distributions for over a decade starts cutting dividends I exit the position and moce my business in more promising candidates.
    Nov 11 04:57 PM | 11 Likes Like |Link to Comment
  • Abbott Laboratories: Dividend Stock Analysis [View article]
    GoldenRetiree,

    The article should have said that I plan on adding to ABT on dips. However I also plan on adding to JNJ on dips.

    I do agree that for long-term owners, both stocks are a good buy and hold, particularly in a diversified dividend portfoliio.
    Feb 11 08:28 PM | 10 Likes Like |Link to Comment
  • 33 Dividend Champions to Consider [View article]
    Thanks everyone for the comments. I just noticed that in my third criteria I failed to note that the dividend payout ratio criteria was set to be less than 60%.

    You should definitely thank David Fish for creating and updating the thorough spreadsheet monthly. I would really be interested in how the Dividend Champions have performed over the past few years.
    Aug 12 01:27 PM | 10 Likes Like |Link to Comment
  • The 'Four Percent Rule' for Dividend Investing in Retirement [View article]
    Dave,

    Thanks for clarifying what some readers might have found confusing about the four percent withdrawal strategy.

    I do not advice selling stocks in order to generate income to live off of. My idea is to only spend the 3-4% starter yield and then adjust your spending for inflation each year. I do believe that dividend stocks can not only provide income in retirement, but also can provide dividend growth which offsets the eroding power of inflation.

    I do view dividend stocks as equities and do not differentiate between dividend stocks and stocks per se. Some investors believe that my strategy's weakness is that I would never own and therefore enjoy the huge gains of companies like AAPL, MSFT or GOOG. The truth is that picking the next AAPL, MSFT and GOOG is pretty darn impossible. Most investors are simply left holding stocks which go nowhere for decades, while paying no dividend in the process thus killing investor's capital silently.

    Between 1974 and 2000 Nasdaq composite and Dow Jones Industrials had similar total returns. While Dow stocks are not growing as fast as Nasdaq stocks, they are selling at low P/E's and pay dividends.
    Mar 31 07:55 PM | 10 Likes Like |Link to Comment
  • Seven Dividend Aristocrats That Buffett Owns [View article]
    Thanks for being an avid reader. So far this month I have added/INITIATED to my positions in 10 stocks: CL, MO,NNN, D, MCD,JNJ, PG, KO ,PEP, KMB. I am planning on additng to my positions in ABT, ADP, CB, CLX, EMR, WMT, CVX, MKC, SYY, PM, O, DEO, UL, UVV.

    Of course this is what I am doing, and it should not be seen as a recommendation to buy/sell securities.
    Feb 24 11:30 AM | 10 Likes Like |Link to Comment
  • Best Investments for Rising Oil? High Dividend Energy Stocks [View article]
    Cliff,

    While I am a big fan of most pipeline MLPs, they won't necessarily earn higher profits if prices of oil and gas increase. They earn their money from transporting oil and gas. Very few of them have any exploration and production per se.

    I do however like the stability in their distributions, as well as the distribution growth potential in some of the largest pipelines.

    Best Regards,

    Dividend Growth Investor
    Jun 8 10:32 AM | 10 Likes Like |Link to Comment
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