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Dividend Growth Machine

 
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  • A Real Dividend Growth Machine: 2014 Review [View article]
    multigeninv: Thanks for your comment -- I hope your children find the article to be useful, too.
    Jan 14, 2015. 08:33 AM | Likes Like |Link to Comment
  • A Real Dividend Growth Machine: 2014 Review [View article]
    IZZKUBE: Thanks for your comment. I am aware that UTX paid more in dividends in 2014 than in 2013. My approach to recording dividend growth involves looking at when dividend increases take effect (i.e., the first quarter in which a higher dividend is actually paid). In the case of UTX, no dividend increase took effect in 2014, hence the comment in my review (but it's a technical point more than anything).
    Jan 14, 2015. 08:31 AM | Likes Like |Link to Comment
  • A Real Dividend Growth Machine: 2014 Review [View article]
    BlueOkie: Thanks for the feedback. To address your comments:

    1) I report yield on cost (YOC) mainly because some folks are interested in it. Personally, it doesn't influence my investment decisions.

    2) I have not written an article on Seeking Alpha with a detailed strategic plan, although there are guidelines I follow in my investing. I have considered writing a short series of articles about my dividend growth investing strategy, but it's difficult to find time for non-work-related writing during the academic year (I do quite a bit of writing as part of my day job).

    3) I casually monitor how my portfolio is doing relative to the S&P 500 index, but I don't have a set benchmark because my goal is not to beat the market. Instead, I find it more fruitful to focus on goals such as long-term dividend income (see my reply to a comment above about dividend income projections).

    4) I pay attention to diversification, but not to whether I'm under- or overweight various sectors compared with the S&P 500 index. I consider those weightings to be largely irrelevant to my investing goals.

    5) I agree that a more accurate picture of my investing performance will come during the next bear market. I also touched on this point in my reply to an earlier comment.

    6) I don't currently own any bonds, but when I consider them to be attractive investments (relative to alternatives), then they might find a place in my portfolio.

    Thanks for raising several interesting issues!
    Jan 14, 2015. 08:26 AM | 4 Likes Like |Link to Comment
  • A Real Dividend Growth Machine: 2014 Review [View article]
    Alex_P: Thanks for your comment. To answer your questions:

    1) The annualized total return I reported is based on the XIRR function in Excel, which takes as input: (a) starting portfolio value; (b) amounts of new capital invested; (c) ending portfolio value. (It can also take withdrawals as input, but no money has ever left my brokerage accounts.) The second input is very important because it means new capital is *not* treated as an investment gain. That said, the XIRR function does not accurately handle *when* new capital was invested during the year in its calculation. To get a more accurate return number, one would need to calculate a time-weighted return (there are a few different methods for doing that). I've done it in the past (though not for 2014 yet) and found that the time-weighted return tends to be close to the XIRR-calculated return.

    2) I plan to hold ROST. I consider the stock to be fully valued now, so I don't plan on buying more, but I have no intention of selling anytime soon. Getting a large unrealized capital gain in less than a year was nice, but I don't make sell decisions based on the size of my gains. I know some investors follow specific rules (e.g., "Sell X% of shares once the stock goes up Y%") but I do not follow such rules myself because I think they can potentially limit investment gains. On a related note, I generally do not sell a low-yielding stock that has appreciated in value in order to buy a higher-yielding stock. If the low-yielding stock is still a well-functioning part of my machine, then I leave it alone.
    Jan 14, 2015. 08:16 AM | 1 Like Like |Link to Comment
  • A Real Dividend Growth Machine: 2014 Review [View article]
    SDS: Thanks for the feedback. (You're right, I'm not married -- that definitely helps with saving money!) To address your comments:

    1) I agree that a one-year review (or my three-year history) is inadequate for accurately gauging my long-term investing performance. My plan is to continue these reviews over time, eventually providing a reasonable long-term view of how my portfolio has performed. For example, in Year 10, someone could look back at this Year 3 review and assess how things have progressed.

    2) I pay $7 for a standard transaction, regardless of investment amount or number of shares. To keep my transaction fees to no more than 0.5% of the total investment cost, that implies an average investment of at least $1,400. The ratio of 0.41% for 2014 indicates I actually averaged about $1,700 per investment, which seems reasonable. Note that I do not pay any transaction fee for occasional flexible dividend reinvestment.

    3) 43 transactions might seem high, but consider the following: (a) I had a large chunk of non-invested cash (about $10K) in my Roth IRA at the start of the year; (b) I was investing an average of $3,333 in new capital each month and selectively reinvesting all dividends on top of that; (c) about 9 of those transactions can be attributed to sales and subsequent reinvestment of the proceeds. Overall, I am not concerned by the number of transactions, especially given that the vast majority were decent-sized purchases.
    Jan 14, 2015. 08:00 AM | 4 Likes Like |Link to Comment
  • A Real Dividend Growth Machine: 2014 Review [View article]
    Smarty_Pants: Thank you for the kind feedback, I appreciate it.

    Regarding goals, about two years ago -- when I was investing less money due to having a much lower salary -- I calculated fairly conservative long-term projections for my dividend income and portfolio value. One of the more interesting observations was that I was on track to reach $10,000 in annual dividend income in my 10th year of dividend growth investing (age 40). Thus, I set a goal of reaching "$10K in dividends in 10 years."

    Revisiting the projection more recently and using updated numbers (particularly with respect to new capital investment), I found that I'm now on track to reach the $10K dividend milestone in Year 8 -- two years ahead of the original projection.

    I actually consider that to be a short-term goal. A longer-term goal would be to attain a level of inflation-adjusted dividend income that would allow me to be completely financially independent (i.e., retire). If I were to set that goal at $30K (after tax) in today's dollars, then I would reach it in Year 22 (age 52).

    Unlike Chowder, I don't really have a portfolio value goal. Of course, I want to see my portfolio appreciate in value over time, but given that it's highly dependent on Mr. Market, it's difficult to be confident about such a goal. That said, my projections do suggest a retirement-age portfolio value in the ballpark of Chowder's goal for his son's portfolio.
    Jan 14, 2015. 07:44 AM | 6 Likes Like |Link to Comment
  • A Real Dividend Growth Machine: 2014 Review [View article]
    Hardog: It's important to be modest, given that my returns have come during a bull market. It will be interesting to see how my portfolio holds up in a bear market. I have noticed that it tends to fall less than the S&P 500 index on days when the market experiences large dips, which suggests that my downside risk is not as great as that of the broader market.
    Jan 14, 2015. 07:22 AM | 2 Likes Like |Link to Comment
  • A Real Dividend Growth Machine: 2014 Review [View article]
    Miz: Thank you very much, and a happy new year to you, too!
    Jan 12, 2015. 06:32 PM | 1 Like Like |Link to Comment
  • A Real Dividend Growth Machine: 2014 Review [View article]
    alphainvestor9: Thanks, and yes, the annualized returns I cited include dividends.
    Jan 12, 2015. 06:30 PM | 1 Like Like |Link to Comment
  • A Real Dividend Growth Machine: 2014 Review [View article]
    heglimp: Thank you for the kind words -- all the best with your own investing.
    Jan 12, 2015. 06:29 PM | 1 Like Like |Link to Comment
  • A Real Dividend Growth Machine: 2014 Review [View article]
    Sum: Thanks, I'm happy to share my progress with others.
    Jan 12, 2015. 06:28 PM | Likes Like |Link to Comment
  • A Real Dividend Growth Machine: 2014 Review [View article]
    earlguss: You're welcome -- thanks for reading!
    Jan 12, 2015. 06:28 PM | Likes Like |Link to Comment
  • A Real Dividend Growth Machine: 2014 Review [View article]
    wes: Building ROST into my largest position was one of my best investing decisions in 2014. It's hard to go wrong with a high-quality stock that was trading at or below fair value earlier in the year. I consider ROST to be one of my best "dual-goal" investments, combining reliable dividend growth with high total return potential.
    Jan 12, 2015. 06:28 PM | 3 Likes Like |Link to Comment
  • A Real Dividend Growth Machine: 2014 Review [View article]
    DJ: Thanks, it's always nice to have a new follower. If my investing performance in 2015 is similar to that of 2014, then I'll be satisfied.
    Jan 12, 2015. 06:24 PM | Likes Like |Link to Comment
  • A Real Dividend Growth Machine: 2014 Review [View article]
    David: Thanks for the feedback. I hope to keep saving at a good rate for the foreseeable future; even if that changes for some reason, at least I'll benefit from what I've already saved and invested. I'm looking forward to my dividend income stream building up as the years go by...
    Jan 12, 2015. 06:23 PM | 1 Like Like |Link to Comment
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