Dividend Inc

When Timing Meets Opportunity: Which Dividend Achievers Are at a 52-Week Low?

Greetings BlueOkie,

I have backtested this approach since 1994 and actually used this method since 2004. Essentially, I took 10 years of testing and countless number of timesbacktesting this approach. My method obviously isn't the answer however it has returned double digit positive gains since 2004.

Greetings Larrysyr,

I totally agree with you about the viability of this method for the long term. However, when you visit my blog you'll see clear indications of when I issue a sellrecommendation. Additionally, I attempt to " seek fair profits" by holding only as long as it takes to beat "guaranteed" sources of income like treasuries or CDs. My "About This Site" section is much more clear on this concept.

Another matter to consider, if the return from the stock exceeds the dividend that could have been received within a year then the investor should seek betteralternatives. As as example, if a stock yields 5% but the price increases 10% in 6 months then the justification for holding the stock any longer has dissipated. I wouldn't sell the stock but I would definitely research any stocks that are within 10% of the 52-week low seeking to switch from one to another.

Another matter that is critical to my approach as listed on the blog is that I don't follow traditional diversification orthodoxy. I only hold 2 to 5 stocks at a time. This mean that 20% to 50% of investable funds will go into one stock. My attempt at explaining this concept can be found in the article titled "Diversification Doesn't Matter."

Elliot_Mllr,

Personally, I de-emphasis the matter of dividend yield. Dividend yield is the red herring in investment decision making among Dividend Achievers. Almost any company can pay out anoutsized dividend long enough to draw in new investors. More important to me is the earnings power and quality management behind the dividend yield. As far as I'm concerned the consistency of dividend increase is proof of both. As an example, when I issued my research recommendation of Helmerich & Payne in 2006 the dividend yield was less than 1%. However, if the stock was bought at or near the date of the recommendation the short and long term gains that followed were beyond what could have been received through any high dividend yield.

Dividend Investment Myths

Thanks captainccs for your comments. You are absolutely right about the fact that I'm data mining. However, as with any stock purchase you face the potential for downside risk when you buy. For this reason, I only data mine the stocks that are part of Mergent's Dividend Achiever Index (approximately 350 companies) so that I don't experience buyer's remorse once I'm in a stock. If the price falls after the purchase, I can easily "justify" my position with the mantra of "buy and hold." In the meantime, I'll be compensated for my wait.

As you pointed out, I selectively examine only those that pay dividends. Of course, in reality I only chose those that are current and former Dividend Achievers. This means that I forego the opportunity to get the highest yields and the stellar performing non-dividend paying stocks. However, I am assured by the fact that management has an interest in seeing that the shareholders are compensated for their wait for the "promises" to deliver to materialize.