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  • The Golden Rule Of Retirement [View article]
    PendragonY,
    Although dividends are growing at 5%, you also have to take into account the decrease in capital from the previous year. So dividends would decrease from $28,000 to $27,856 in the second year. There is a constant 3.5% yield because dividend increases match capital gains.

    Hopefully this helps.
    May 30, 2013. 01:58 PM | Likes Like |Link to Comment
  • The Golden Rule Of Retirement [View article]
    Good question. In an effort to use more "realistic" numbers in the examples, I used a modified method of a dividend growth portfolio. Although about 5% of the number of shares were sold off every year, the capital gains ensure that the value stays about the same and the 5% dividend increases allow the amount of dividends to continue growth. In order to use solely dividend income without any combination I would have had to adjust the withdrawal amount or used a $2 million plus portfolio which I tried to avoid. Thanks for reading.
    May 30, 2013. 12:56 PM | Likes Like |Link to Comment
  • The Golden Rule Of Retirement [View article]
    I assumed withdrawals and dividends were at the beginning of every year for simplification, so the balance after 1 year would be $795,900 ((800,000-70,000+28,00... If you run the numbers continuously through age 95 it will actually bring the portfolio to 0 because dividends decrease every year that capital decreases. This means that every year more and more capital will have to be withdrawn, further draining the portfolio.
    May 30, 2013. 11:57 AM | Likes Like |Link to Comment
  • How To Invest $3 Per Day For Retirement [View article]
    Thank you for the kind words, if you send me a message with your email address I will be able to send you the spreadsheet.
    Apr 17, 2013. 05:58 PM | Likes Like |Link to Comment
  • How To Invest $3 Per Day For Retirement [View article]
    Thanks for the comments Alex, the assumptions I used were that the portfolio value appreciated at 7%, consistent with the dividend growth rate. This means that at age 66 like you mentioned, the portfolio increases in value by 7%. This along with the dividends allow for a $110,000 withdrawal with a decrease in the ending balance of only about $3000. Hopefully this answers your question.
    Apr 17, 2013. 05:56 PM | Likes Like |Link to Comment
  • How To Invest $3 Per Day For Retirement [View article]
    Robert,

    I completely agree with your thought process, I just wanted to show how a retirement plan could develop from small contributions. The contributions in the article would have had to be greater to realistically retire off of only the dividends.
    Apr 17, 2013. 01:20 PM | Likes Like |Link to Comment
  • How To Invest $3 Per Day For Retirement [View article]
    While PG and JNJ are great choices for a dividend portfolio, their dividend growth rates have slowed recently to mid single digits. I would prefer higher rates of increases for the yields that they currently have.
    Apr 17, 2013. 01:17 PM | Likes Like |Link to Comment
  • How To Invest $3 Per Day For Retirement [View article]
    I appreciate the feedback, I guess I should have made it a little more clear that the $3 would not actually be invested daily, it would be an annual investment that amounted to $3 X 365 days. You make a good point about this being more effective in a Roth IRA.
    Apr 17, 2013. 01:10 PM | 1 Like Like |Link to Comment
  • How To Invest $3 Per Day For Retirement [View article]
    The $3 daily is actually just 365 days X $3 invested at the end of each year. I decided to use $3 daily as the point of the article because I felt that it would make it easier for readers to visualize how they could make small adjustments to their lifestyle to achieve this.
    Apr 17, 2013. 01:08 PM | 1 Like Like |Link to Comment
  • How To Invest $3 Per Day For Retirement [View article]
    Thanks for the comments, I agree that a percentage of income would probably be a more typical and far more successful plan. I used the constant $3 daily amount for simplicity, as it would have made the article much more complex to project future earnings.
    Apr 17, 2013. 01:07 PM | 1 Like Like |Link to Comment
  • Selecting The Best Dividend Stocks [View article]
    Thanks for the comment. No reason, I just felt like I had included PM in more of my past articles. I like both.
    Apr 13, 2013. 03:50 PM | Likes Like |Link to Comment
  • Selecting The Best Dividend Stocks [View article]
    Good points on the DGRs, valuation was not included in the screen because different industries can trade at different valuations.
    Apr 13, 2013. 03:43 PM | 1 Like Like |Link to Comment
  • How Forbes' Richest People List Can Build Wealth For The Average Person [View article]
    I understand the point, but it is not realistic to assume that you will be able to purchase the same company growing its dividend at 8% annually for the same price over the course of your life. I think the 30%+ current yield that you show in year 42 shows how unrealistic this assumption is. Also, the YOC needs to take into account the additional capital invested annually.

    Again, I agree with the basis of the article, but the numbers could use some cleaning up.
    Mar 22, 2013. 05:02 PM | 1 Like Like |Link to Comment
  • My Dividend Growth Scorecard [View article]
    Dave,
    Earnings would come into play through a combination of DGR and payout ratio, since a company with no earnings increases can't raise the dividend substantially while keeping the payout ratio low. I used revenue growth because I felt that it was a simpler way to measure how the company is growing, especially when using historical values. I agree that earnings are usually a better indicator of value, but often can be misleading. Maybe a more accurate representation than both of these would be free cash flow from operating activities?
    Mar 22, 2013. 03:35 PM | Likes Like |Link to Comment
  • How Forbes' Richest People List Can Build Wealth For The Average Person [View article]
    I like the ideas presented in this article, but the calculations are incorrect. I think part of the problem is that the author is assuming that the stock price is staying constant over the next 42 years, while the dividend is increasing by 8% annually. Even with reinvestment, a stock yielding 2% with 8% growth will not reach even a 40% YOC until almost 30 years down the road. I wrote a similar article explaining YOC, hopefully it helps to clear up the YOC issue:

    http://seekingalpha.co...
    Mar 22, 2013. 03:28 PM | 2 Likes Like |Link to Comment
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