A Real Dividend Growth Machine: Q1 2013 Review [View article]
Water Buffalo: Thanks for your comment. It definitely helps to be single when it comes to savings, so I'll try to take advantage of my current status as long as I can! :)
Your portfolio looks pretty good. The key is to come up with a strategy and allocation that is well-suited to you, and it seems like you've done that.
A Real Dividend Growth Machine: Q1 2013 Review [View article]
Market Daily: I don't DRIP in my Roth because my brokerage (Scottrade) doesn't actually provide that option, but I prefer selective dividend reinvestment anyway. If I were to make my annual contribution in quarterly installments (e.g., $1,375 every 3 months), then I could reinvest my accumulated dividends by combining them with new capital.
That said, I am not opposed to DRIPs. In my opinion, any form of dividend reinvestment is better than none. As for recommendations, I think a DRIP would work well for stocks that tend to stay fairly valued most of the time (or occasionally become undervalued).
A Real Dividend Growth Machine: Q1 2013 Review [View article]
Realtoi: Thanks! I don't give much thought to becoming a millionaire, but if I stick to this path, then I wouldn't be surprised to find myself there one day.
A Real Dividend Growth Machine: Q1 2013 Review [View article]
chuckleh: Thanks for your comment. Selling a stock can temporarily reduce dividend income, but using the proceeds to buy another stock can make up for that. For example, soon after I sold ADM I bought VFC (both of which have similar yields), so the net change in my dividends was negligible. Also note that if the proceeds are used to buy a higher-yielding stock relative to what was sold, then dividends will actually increase after the pair of transactions.
A Real Dividend Growth Machine: Q1 2013 Review [View article]
tunaman: I'm not sure I understand your comment. Note that many companies, including several that I own (e.g., CVX, JNJ, KO, MCD, PG) have done well for decades under different Fed policies, so I don't think the success/failure of their businesses hinges on the Fed.
A Real Dividend Growth Machine: Q1 2013 Review [View article]
Reed: Thanks for your comment. A mix of dividend growth investing and index investing can work well for many people. Every investor needs to find the approach that works best for himself, and it sounds like you've been able to do that.
A Real Dividend Growth Machine: Q1 2013 Review [View article]
Cliff: Thanks for your comment. I am open to investment in international stocks, provided they fit with my investing strategy. For example, I currently own three foreign-based dividend growth stocks: Canadian National Railway (CNI), Swiss-based Novartis (NVS), and UK-based Vodafone (VOD). The dividends I get paid from them fluctuate with the relevant exchange rates and I don't mind the foreign tax withholding for CNI and NVS (I just claim it when I file my tax return). However, I don't make any effort to allocate a certain percentage of my portfolio to foreign stocks.
A Real Dividend Growth Machine: Q1 2013 Review [View article]
kongen: Thanks for your comment. I think dividend growth investing is very sensible. The question to ask yourself is this: What are you going to need when you retire and no longer have regular income from a job? The answer, of course, is some form of replacement income. Dividends can be that replacement income. If a young investor builds a solid portfolio of dividend growth stocks over several years, then by the time he's ready to retire, his replacement income will already be in place, with no need to sell off assets. The alignment of dividend growth investing with long-term goals is a major reason why I think it's a sensible strategy.
As for earnings growth, it is important to recognize that sustainable, long-term dividend growth requires earnings growth. By investing in companies that have many years of dividend growth, I am also investing in companies that have many years of earnings growth. Moreover, I consider earnings growth and the prospects for future growth when I evaluate stocks for potential investment.
A Real Dividend Growth Machine: Q1 2013 Review [View article]
Darren: Thanks for your comment.
I plan to continue living below my means because it just comes naturally to me. I expect a modest increase in my regular expenses after I move, but it will be more than offset by the higher salary from my new job, so I actually anticipate an increase in the amount I will be able to save. I'll have a better sense of just how much by the end of this year.
Starting a Roth IRA was my first step toward helping my portfolio tax-wise. Through my new employer, I will also be participating in two tax-advantaged retirement plans.
I plan to diversify my portfolio to the extent that I can find good investment opportunities that help me achieve my goals. There are some investors who have specific targets for the number of stocks in their portfolios, but I don't.
A Real Dividend Growth Machine: Q1 2013 Review [View article]
MintyFresh: Thanks for your comment. You are correct -- the bulk of the year-over-year dividend increase reflects dividends from invested new capital. The increase attributable to organic growth (i.e., dividend increases from existing positions) was about 10%; that was the mean dividend growth rate among my stocks in 2012. Part of the increase also reflects reinvested dividends, but given that I selectively reinvest all dividends by combining them with new capital, I don't know a straightforward way to measure that contribution.
I am well aware that such a large year-over-year increase is not sustainable and I should have mentioned in the article that I do not expect increases of that magnitude in subsequent years. However, I do think that double-digit percent increases are possible for at least the next few years.
Regarding my statement that I "easily outperformed" the S&P: It was based on my first-quarter return after subtracting the amount of new capital invested.
A Real Dividend Growth Machine: Q1 2013 Review [View article]
A Real Dividend Growth Machine: Q1 2013 Review [View article]
Your portfolio looks pretty good. The key is to come up with a strategy and allocation that is well-suited to you, and it seems like you've done that.
A Real Dividend Growth Machine: Q1 2013 Review [View article]
That said, I am not opposed to DRIPs. In my opinion, any form of dividend reinvestment is better than none. As for recommendations, I think a DRIP would work well for stocks that tend to stay fairly valued most of the time (or occasionally become undervalued).
A Real Dividend Growth Machine: Q1 2013 Review [View article]
A Real Dividend Growth Machine: Q1 2013 Review [View article]
A Real Dividend Growth Machine: Q1 2013 Review [View article]
A Real Dividend Growth Machine: Q1 2013 Review [View article]
A Real Dividend Growth Machine: Q1 2013 Review [View article]
A Real Dividend Growth Machine: Q1 2013 Review [View article]
A Real Dividend Growth Machine: Q1 2013 Review [View article]
A Real Dividend Growth Machine: Q1 2013 Review [View article]
As for earnings growth, it is important to recognize that sustainable, long-term dividend growth requires earnings growth. By investing in companies that have many years of dividend growth, I am also investing in companies that have many years of earnings growth. Moreover, I consider earnings growth and the prospects for future growth when I evaluate stocks for potential investment.
A Real Dividend Growth Machine: Q1 2013 Review [View article]
A Real Dividend Growth Machine: Q1 2013 Review [View article]
I plan to continue living below my means because it just comes naturally to me. I expect a modest increase in my regular expenses after I move, but it will be more than offset by the higher salary from my new job, so I actually anticipate an increase in the amount I will be able to save. I'll have a better sense of just how much by the end of this year.
Starting a Roth IRA was my first step toward helping my portfolio tax-wise. Through my new employer, I will also be participating in two tax-advantaged retirement plans.
I plan to diversify my portfolio to the extent that I can find good investment opportunities that help me achieve my goals. There are some investors who have specific targets for the number of stocks in their portfolios, but I don't.
A Real Dividend Growth Machine: Q1 2013 Review [View article]
I am well aware that such a large year-over-year increase is not sustainable and I should have mentioned in the article that I do not expect increases of that magnitude in subsequent years. However, I do think that double-digit percent increases are possible for at least the next few years.
Regarding my statement that I "easily outperformed" the S&P: It was based on my first-quarter return after subtracting the amount of new capital invested.
A Real Dividend Growth Machine: Q1 2013 Review [View article]