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  • Just How Do I Handle My IRA? [View article]

    You are welcome. You have been a trove of logical information over the many previous months, so I am happy to help.

    I will expand on your question in Part 2, but whether it is an IRA or a Roth, as soon as the heir is not your spouse, the RMDs are required. Period. The calculation is the same, and of course, the distribution from the Roth is tax-free upon withdrawal.

    My suggestion is the Roth does your go to your wife for continued tax-free, not required RMD compounding and then not to your children, but grandchildren to stretch the longevity of these accounts. More detail to follow.

    Dec 19, 2012. 08:04 PM | 3 Likes Like |Link to Comment
  • The Dividend-Growth Large-Cap Fallacy [View article]

    The answer is yes, more Challengers are near the top of the growth list. I think 2 simple reasons why. First, there are more of them. Bigger population, better probability they will be first.

    Second, and this is more conjecture, I think the young'ns are still trying to find the sweet spot of dividend growth balanced with growth of the company. At this point, is it difficult to really guess that KO will raise their dividend between 6 and 9% year in and year out? No. Did I ever expect Accenture to jump their payout 50% last year (am a shareholder and very LONG ACN)? Heck no; I expected more like 15% and would have been happy. But ACN is still a young company.

    Hope that made sense.

    Sep 21, 2012. 02:44 PM | 3 Likes Like |Link to Comment
  • Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]

    I think the US centric nature of the articles is because most people who write articles and comment on them are American. It's not good or bad, it just is. Also, when you look at the CCC list, how many foreign based companies are in the Champions list? I believe zero. When you get to the Contenders, maybe 5%. If there were long standing CCC foreign-HQed companies, they would be on Fish's list and we Americans would appreciate the greater diversity, currency exchange risk, semi-annual dividends, and foreign withholding taxes notwithstanding. Remember what is on the CCC list - companies that have INCREASED the dividend every year. There may be foreign companies on the LSE or the FTSE that have paid dividends for decades but their policy is to base it on a percentage of earnings (traditionally) and if the earnings went down last year, so do your dividends the next year.

    DVK - the other thing you didn't really touch on with MPT is not only the "science" and numerous studies, but that advisors can you use the economic science and bundle fees around it, whether on a transaction basis or as AUM. I know there are a few advisors that focus on dividend growth like we do here (Deschaine and Company and Lowell Miller come to mind), but they are obviously few and far between. The easier sell is to go with the herd.

    Sep 19, 2012. 09:15 PM | 3 Likes Like |Link to Comment
  • How To Raise Portfolio Income By Selling Overvalued Companies [View article]
    Good, thought-provoking article. I am with DGM on this one. I can't figure out overvaluation. And with the market right now getting (IMO) toppy, where would you put the profits? Yes, you can go from a company that is yielding 2.1% (WMT) into a yielding company of 3.2% (WEC) but I wouldn't put it there because WEC seems way overvalued (and utilities in general). I guess I am trying to say you may pay too high a premium for an increase in the income stream (hence, valuations of the specific companies matter) just because your new yield is higher.

    I think sometimes, simple is better and I will default back to the Chowder Rules (not as good as the Jordan Rules, but really close). If my current portfolio provides an income stream X% higher than the same month or quarter as compared to last year AND nothing fundamentally has changed with the companies I own, I do nothing.

    My .02 reinvested.

    Sep 15, 2012. 08:05 AM | 3 Likes Like |Link to Comment
  • Dividend Growth Stocks Can Provide Retirees Great Total Returns [View article]

    Another great article. I do want to highlight one sentence:

    Risk, or maybe better said, the individual's tolerance for risk, is another crucial piece of the puzzle.

    How are you defining risk in this case? I view it, much like Chowder, as the chance of my income stream going down or being less than inflation and not on a total return basis. Just curious on your take.

    Aug 30, 2012. 08:15 AM | 3 Likes Like |Link to Comment
  • Why Dividend Growth Is More Important Than Yield (Don't Be A Yield Vigilante) [View article]
    The author Doug Carey does an excellent job comparing high yield with little to no growth versus the lower yield/high DGR stock. He repeated the article 3 or 4 times now with various stocks, but is an excellent tutorial on why you need to at least start with a 1.25-1.50x yield greater than the S&P 500 because as good as a company like FAST or CHRW may be and the DGR has been outstanding on those two examples, it's takes way too long to get a yield of substance. Skyler, if you use the example of T vs WMT, you would get a very different view of which stock you would choose.
    Jul 19, 2012. 10:22 PM | 3 Likes Like |Link to Comment
  • Why You Should Save For Your Kids' Retirement: The Power Of Time [View article]
    Gee whiz, Skyler - you really meant it that I should write articles instead of giving you all the ideas.

    The answer sat, is yes, you can "employ" your children. My kids are soon to be 4 and 7. I have a flyer that promotes my business and has both of them in the flyer. They were paid as "models." Both were paid $395. No tax problems because under $400 for children and you don't even need to file any tax returns.

    Only one dividend paying stock is in their Roth right now: INTC. Next year $395 more. We'll see what DRIPping these stocks does in 45-50 years.

    Jul 17, 2012. 02:44 PM | 3 Likes Like |Link to Comment
  • Do Dividend Stocks Pose Hidden Risks With The Fiscal Cliff Looming? [View article]

    Nice article. I am right on the cusp of being in the "5%" as Skyler and I have had talks offline and could probably tell my family does pretty well. What can I do about it? No more Roths for me, no more IRA contributions, but my wife has a 401K which we do just to the match. I don't trust tax rates moving forward leaving me almost 50/50 taxable/tax-deferred(f... Not a heck of a lot I can do and frankly, I leave it up to my accountant to tell me how much I owe or how much to withhold each pay period. Not bragging, just fact.

    But I never worried about the tax rate because of something Fish said a long time ago on one of these threads:

    With dividends, you are paying the taxes bit by bit over time, but with a 401K/IRA distribution, you are getting wallopped all at one time.

    I know there is no way to really analyze it, but I wonder what the taxes paid over holding a stock 20 years (say KO) for its dividend would have been versus in a IRA and distributing at the 20th year? DRIPping both, my hunch tells me one would end up really close to paying the same amount in taxes at the end. Too many variables, I know, but the results would be intriguing of paying the tax man now at a known rate versus the tax man later at the who-the-heck-knows rate?
    Jul 13, 2012. 02:19 PM | 3 Likes Like |Link to Comment
  • The Art Of Finding Rock Solid Retirement Stocks [View article]
    Your most important line in your article is this:

    I can afford to buy Bank of America (BAC) and sit on it for 10 years in hopes of achieving a phenomenal return down the road.

    The purpose of DG and the subset of DGI is to not "have to hope" to get a return. Most people that turn to this type of investing have gone past hope and have realized that a return of their money is more important than the return on their money. (Will Rogers)

    Free screener can be found at Don't forget low to moderate D/E and low payout ratios as being important on a checklist.
    Jun 29, 2012. 02:05 PM | 3 Likes Like |Link to Comment
  • One Man's Search For A Safe And Growing Stream Of Income, Part 2 [View article]

    There are a LOT of variables that try and answer your question, but I have a spreadsheet that can approxiamate your answer.

    I assume this is a taxable account.
    I also assume that the qualified dividend tax rate will be 25% (because we don't know what it will be right now)
    I assumed ZERO growth in the actual price of the stock (for simplicity)
    I assume all dividends reinvested (until you reach your magic $36K after taxes in dividends)
    AND let's not start talking about inflation and the buying power years from now.

    The final assumptions are starting yield of 3.6% and 7% growth of the dividend every year.

    If you did a one time plunk of $5000 and reinvested thereafter, in 35 years you would have your $36K after taxes in dividends.

    If you were looking to add X annually (monthly gets too many data points for me), $2400 per year ($200/month), 27.5 years for $36K.

    $300/month = down to 25.5 years.

    Realistically, your principal would grow not in a direct line of 7% but a good approx because the dividend would just get too juicy. Imagine MCD back 2003 with a 28 cent annual dividend and priced at $12 per share. Using Buffett's idea of closing the market, but business continues and they send out their dividend checks and let investors know of the dividend increases by press release, their dividend is now $2.80. Do you think the market when it finally reopens June 1, 2012, it would let you have a well-run stock with a 20% dividend yield ($2.80/$12/share)? HELLS NO. That price will zoom up to a reasonable yield of 2.8-3%. This, I believe, is the crux of DGI. The company can clue you in that they can continually increase their money back to their investors (hopefully greater than inflation) and not damage the long term success of the company.

    My .02, reinvested.

    May 8, 2012. 12:16 PM | 3 Likes Like |Link to Comment
  • The Long Road To A Dividend Growth Strategy [View article]
    I applaud you for writing about yourself and "putting yourself out there." I think the list you have in terms of stocks is an excellent starting point for any investor. To boost the yield a little, maybe EPD or MWE. Yes, they are MLPs (these are pipelines, the toll bridge for the oil and gas to go through so you don't have to worry about the price of oil per barrel) so they are not true dividends but distributions, but I think if you have an overall portfolio dividend around 4% with all of these dividend increasers, you should be fine.

    One other food for thought. I, too, have a lot of cash sitting on the sidelines waiting for a healthy pullback. You mentioned do I sell the mutual funds to purchase XOM and KO? If KO comes down to your price point, my guess is the overall market has come down so you will have less to invest less in your new positions. I would personally sell now if there are no tax issues. There is no perfect day for all of this to occur. If you feel like you have to have international small and mid cap dividend exposure, the only ETF company I am aware of that gives you a plethora of choices is Wisdomtree ETFs.

    Best of luck.

    My .02 reinvested.

    Apr 25, 2012. 08:26 PM | 3 Likes Like |Link to Comment
  • Avoiding Expensive Mistakes Made By Rookie IRA Investors - How To Open A Long Position Cheaply [View article]
    Good comments:

    the one other way you "lose" is if you wanted the stock and it goes higher on you. My example: Back in November 2011, i sold some Cash secured puts for MDT. It was trading at $34. i sold 3 of the Jan 2012 puts with a strike price of 32 for $1.80. I immediately got $540 (excluding commissions).

    What happened? At expiration, MDT was $39. If I just outright bought it, i would have been up $5 per share vs holding $1.80 in cash for the potential of buying it at a lower price.

    As someone said it's tradeoff. i wanted it only at the lower price. Someone was willing to pay me to take it at the lower price. It didn't happen, the stock went up, that's life. Find the next trade to go with. But someone correctly said, ONLY do this for stocks you want to own anyway. For some good articles on this, find the author K202 on SA. His first few articles explain the concept nicely.

    Apr 18, 2012. 02:07 PM | 3 Likes Like |Link to Comment
  • Asset Allocation For A Dividend Growth Investor [View article]

    I'll answer your question about the next bear market, and I will paraphrase the answer RAS gives so many times:

    If my portfolio drops 20-50% but my income from the portfolio rises because of the increased dividends that my chosen companies have delivered to their shareholders, then yes, I can stay with the portfolio.

    This is me talking now, but I feel the purpose of investing is to annuitize the portfolio as early in your iinvesting life as possible with a PREDICTABLE return of assets that has shown growth over time. I will not expand further on this thought now because it is time to watch Alcatraz, but maybe I'll take DVK on his challenge and give him my thought of what the allocation should look like for an under 40 investor.

    Feb 8, 2012. 11:13 PM | 3 Likes Like |Link to Comment
  • Rising Dividends: My Dividend Growth Portfolio 2011-2012 Report [View article]

    I will answer your question as well. My wife and I each have IRAs and Roths. She has a 401K through work. I am a small business owner in the healthcare field, so I would have to set something up for my employees, which is more hassle than help.

    Is this my focus for investing? The answer is yes. As DVK explained, and I have said in my other comments, I am starting my annuity stream NOW and letting reinvestment of the dividends help grow that annuity for when the time arises that I can start extracting from it. My goal? Like many others, to have only the dividends pay for my future lifestyle. Being in my mid-30s, having a net worth (for my age group) probably in the upper 5%, I think 18-20 years will get to my goal. I've had a few stinkers since rethinking on what investing should be (TEF, WM) and missing some others recently (AFL, MDT), but it comes with whatever investing plan you follow. Relying only on the rise and fall of stock prices just gets too hairy for me that this approach, to my logic, is much more dependable to get to my end goal.

    As far as other "investments," I don't consider my house as an investment. If anything, it feels more like a money pit than an asset builder. No rental properties, no boats, no fine art. The only other thing that I have that accumulates (variable) dividends is dividend-paying whole life insurance. I'm not stealing this thread and others can say what they want about it, but IN THE RIGHT CIRCUMSTANCES, this is another slow-going asset building approach which dually can be protected from creditors, something that is valuable for medical professionals. I am also using the WL as a substitute for having bonds in my portfolio, of which I have a few 20 year old EE savings bonds paying 4% interest but they are so far over face value that I may have to lock in the capital gains in the next 12 months before interest rates rise again.

    Lastly, equites compared to bonds/WL, about 85:15.

    Take it for what it's worth.

    Jan 23, 2012. 04:38 PM | 3 Likes Like |Link to Comment
  • Targeting A Retirement Income Level From A Dividend Growth Portfolio - Part 2 [View article]
    As you note, this was in an IRA. Wouldn't Larry want his 50,000 after taxes? That means he really needs closer to $60,000 in dividends making the needed DGRs even higher.

    Nice illustrations to get the point across.
    Dec 21, 2011. 08:14 AM | 3 Likes Like |Link to Comment