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Doctor Dividend

 
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  • Retirement Strategy: Dividend Income Investing And The Distribution Phase [View article]
    Be Here Now:

    Thanks for bringing that point up and something else that Jim Roth mentioned in the book. When you do the conversion from an IRA to a Roth, yes, you are paying the tax now in the year of the conversion, BUT it grows tax-free AND you take out the withdrawals on your clock and not the government's. If you have other accounts, which should be spent in the following order:

    1)Taxable account
    2) IRA (RMDs if/when you are required)
    3) Roth

    you can let that Roth compound for years if not decades longer and the spendable dollars will multiply significantly (until the government changes the rules...again).

    DD
    May 19 03:59 PM | 2 Likes Like |Link to Comment
  • Retirement Strategy: Dividend Income Investing And The Distribution Phase [View article]
    To do a Roth conversion (going from a traditional IRA to a Roth and paying the tax in that year) - NO. You do not have to have any earned income.

    To ADD to a Roth in that year, you must have earned income and not go over whatever the six figure limit is in earned income for that year.

    DD
    May 19 03:43 PM | 1 Like Like |Link to Comment
  • Retirement Strategy: Dividend Income Investing And The Distribution Phase [View article]
    DVK:

    The answer is yes, it pays. Instead of thinking as "total dollars," one must think in terms of "spendable dollars." It was best described by Jim Roth of http://bit.ly/1qPVZOq and his book "The Roth Revolution." Very well done, lots of graphs. Has some really excellent radio shows which are all archived. Listen to them when hiking.

    It's nice to help someone who has helped so many of us here.

    DD
    May 19 03:40 PM | 2 Likes Like |Link to Comment
  • Altria: Great Stock But Overheated Now [View article]
    Completely agree DBT. And are you receiving in dividends more than $1000 per quarter to make the transaction less than 1% (assuming anywhere between 7-10 bucks per trade)?

    The other argument to make is if you go by a dividend range of every stock, a la Investment Quality Trends. The range for MO is 5% yield as undervalued and 3% yield when overvalued. That's why I didn't have a problem buying shares for my kids Roths because it was right around 5%. Should be good with DRIPping for the foreseeable future.

    DD
    Apr 11 11:15 AM | Likes Like |Link to Comment
  • Actually It Is All About Total Return...Totally! [View article]
    retail:

    I would rather go with a known tax on my dividends now than an unknown tax with capital gains, my IRA withdrawals, and let's just see what happens with the Roth (most likely grandfathered) in the future.

    Again, that's just me.

    DD
    Apr 8 03:47 PM | 2 Likes Like |Link to Comment
  • Actually It Is All About Total Return...Totally! [View article]
    To buddy up to Crosetti's comments, so you go for total return. You get your $2 million nest egg. Now you switch it all (and I know we wouldn't but for simplicity) into income producing assets. Congratulations. You now have a 23.8% tax hit and your 2 million is down to $1.6 million. Oops! Didn't see the tax consequence mentioned anywhere.

    Here is the other reason I like focusing on income. As one person said, it is more predictable. Second, and more importantly for me, I now have 2 areas where money is being accumulated into the portfolio. One from my own surplus from my job. Second, from the current income stream of the companies I invest into. 2 funnels going into the pot is better than relying on one.

    But good articles to think about as always.

    DD
    Apr 8 10:57 AM | 7 Likes Like |Link to Comment
  • Altria Group: A Good Dividend Pick? [View article]
    Hannan:

    I was with you but there are some other articles on MO which helped solidify how and why dividend growth continues.

    1) The stake in SAB miller
    2) They sell dip
    3) They sell wine
    4) They are late to the party but will sell vapor
    5) They have the additional stream of selling vapor products for PM, which will be the "international sales."
    6) As sengle says below, I believe they will be into marijuana in some way, shape, or form before the decade ends.
    7) Have always been shareholder friendly.

    So, yes, their main cash cow is in decline but there are enough other drivers that I just bought MO for my children's Roth and expect 7-9% annual div increases going forward.

    DD
    Mar 18 09:21 AM | 1 Like Like |Link to Comment
  • Rich And Retired? Don't Buy Dividend Stocks [View article]
    Lots of good discussion and a wonderful problem for your friend to have. But you mentioned looking at "cash-generative business models." So I looked at morningstar and looked at each stock recommended and looked at ROA, ROE and ROIC. Overall, it's not impressive so I don't understand what metric you are using to give these recommendations. (I ballparked the last 5 years for each company)

    ROA ROE ROIC
    BRK.B 3.8 9 5.5
    MKL 2 7 3
    L 1 5 2
    DTV 13.5
    JEC 6 11 9
    INT 5.5 13.5 11
    DVA 5 18 4.5
    GOOG 14 18 16

    So I am really not understanding why, outside of tax implications, and the tax on dividends is favored, why a simple screen of say ROA>5%, ROE> 12, ROIC > 8 all 5 year averages with a dividend of 1.5% or higher and 5 year div growth of 5% and low payout ratio of under 60% couldn't be used? As Dave Crosetti, it shouldn't be that hard for the equity portion to diversify the income stream, but different strokes for different folks.
    Mar 13 01:22 PM | Likes Like |Link to Comment
  • How To Get The Most Out Of Dividend Growth [View article]
    Thanks for the article. Good food for thought, but it still comes down to what makes you sleep well at night? Even if I am leaving "money on the table," the corollary is true that if I am DRIPping the dividends, I am purchasing newer shares at a better value than the market which will increase my income stream faster over time.

    When the research says "high yield" and "low payout ratio," do they give a number or percentage associated with it? How is that defined? That's the frustration with these research articles is not giving the general public parameters of the definition that we can understand.

    DD
    Mar 11 09:26 AM | 3 Likes Like |Link to Comment
  • Retirement Reality: Let's Raise The Mandatory Distribution Age [View article]
    bionic:

    I am not disagreeing with you and my comments are slightly tongue in cheek. However, this guy is writing an article for (I am hoping) readers where this is not or will not be an issue. If you are needing to work, either you are bored or you are broke and so raising the retirement age is moot. You probably raided your 401k years before and stupidly took a 10% penalty along with now paying income tax on what you withdrew early. I'm done with this article.

    DD
    Feb 6 02:05 PM | Likes Like |Link to Comment
  • Retirement Reality: Let's Raise The Mandatory Distribution Age [View article]
    OK. Other plan. Have one and only one employer. Work past age 70 or until they force you out and you don't have to take RMD until that point.
    Feb 6 12:07 PM | Likes Like |Link to Comment
  • Retirement Reality: Let's Raise The Mandatory Distribution Age [View article]
    I think the author's premise is wrong on one simple statement:

    If you are working past the age of 70 and you have a 401K with that current employer, you do not have to take any RMDs. If they are personal IRAs, yes, but a 401K with that employer, no. So how do you not take RMDs?

    Be employed past 70, roll everything into that 401K plan, work, don't withdraw. Retire, then move it out. I just saved 1000 words and blew this whole premise up. This answer is plastered everywhere on the internet by every big financial company.

    DD
    Feb 6 11:06 AM | Likes Like |Link to Comment
  • Dividend Paying Whole Life Insurance - The Alternative Fixed Income Vehicle (Part 5 Of 5) [View article]
    The Death Benefit rate of Return (DBR) and the Cash Value ROR (CVR) are very different beasts. Let's look at each piece separately:

    The death benefit payout is determined by not only how much you put into the policy each year but how much time you have left. Let's say it is a $5,000 premium per year. The person who is 55 yo will have a lower death benefit than one who is 25 yo. Why? Because the insurance company is estimating how much that premium per year (and how much of that becomes your cash value) will eventually become at the age of 121 yo. The Cash Value and the death benefit will be exactly the same. So, to get the highest DBR, die in your first year. Better yet, get a term life policy and die in your first year. Just joking but the DBR will be astronomical.

    The percentage increases I am talking about are strictly the CVR. Research has shown that the average increase of all WL policies has been 4.2% over a 30 year time period. That is a tax-free return as long as the money continues to reinvest within the policy. What is that 4.2% made up of? There is a guaranteed base increase (let's use 3%) and the variable dividend. The dividend is variable because it is really an excess of premium that is returned to the policyholders (a return of capital, hence the tax-free part). The variables are number of new policies written, policies cancelled, portfolio of bonds, adequate reserves and did the number of people dying were above or below expectations. So, amongst all companies and all policies written, the dividend per year was 1.2% extra over the guarantee for 30 years.

    My personal policy went up 5.6% the first year (guarantee plus dividends). When it is written advantageously (more of the money you put in goes towards Cash Value), the returns can be higher.

    Hope that helps.

    DD
    Feb 5 03:31 PM | Likes Like |Link to Comment
  • The Case Against Selling In The Wake Of A Dividend Freeze [View article]
    One other point which hasn't been addressed in this article but has was bantered around about a year ago. There is compounding, and then the new term "hypercompounding," where we had both the growth of the dividend along with DRIP of shares to get the income stream growing faster. With DH seeming to be pretty young (as well as I in the grand scheme of things) and with most importantly, time on our sides, sometimes you have both parts of the machine chugging you forward and sometimes only one part may be working. In the case of Intel (because frankly, that's what this article is really in reference to), I will keep my shares and let the DRIP continue. Why? Because in the long haul, I believe they will still be here 10 years from now still paying a dividend. I do have the time on my side that I can let this one hiccup not dissuade me from making a hasty decision.

    So, in my circumstance, the income stream is still compounding, just not as fast at the current time.

    DD
    Jan 27 10:05 AM | Likes Like |Link to Comment
  • The Unadulterated Truth About Dividend Growth Investing [View article]
    The author states:

    Said differently, what Southern Company pays as dividends to you is not a source of value - the company is simply paying the money you've invested in it back to you.

    Am I wrong but when you invest in a stock, the company does not receive any money directly unless it is dumping shares on to the market directly? It's just supply and demand between buyers and sellers to determine the price and the company does its thing independent of who the owner is, correct?

    DD
    Jan 16 10:53 AM | Likes Like |Link to Comment
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