Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
@David at Imperial Beach:
If commissions from re-investing your dividends into dividend-paying-and- growing stocks is eating into your profits, I suggest you try a different broker.
Recent trades by dollar amount that I've made, and commissions paid:
$2,845.50 --> $1.00 $564.20 --> $1.00
I could go on, but I think you get the point. I've made a bunch of trades in the past 5 months to undo the damage that my "professional" broker/advisor did to my portfolio, and have yet to pay more than $1.00 per trade. One Dollar Per Trade. I'm also about to move my wife's IRA out of the same high-priced / no-value brokerage that my IRA was at into WellsTrade at Wells Fargo, where she [I] will get 100 free trades per year, which is plenty to maintain and grow her portfolio, including re-investing dividends.
Shop around and get a better deal, and start re-investing your dividends into dividend paying companies...
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
heneg:
>>> "Being left-handed I was somewhat dyslexic when young and wrote words backwards. Yours truly heneg." <<<
I've got a quick story for you along those lines. In high school (in the late 70s) I dated a girl who grew up in Romania. She was (or would have been) naturally left-handed, but the communists wanted everyone to conform, to be the same, so they forced her to write with her right hand. As a result, her handwriting was atrocious, but should could do amazing things, like write backwards, write the same thing with both hands at the same time, and then the real show-stopper, she would start with a pencil in each hand, hands next to each other on a piece of paper, and then simultaneously the right hand would write "normally", while her left hand would write the same thing in reverse, a la Da Vince (where you had to use a mirror to read it). Blew my mind. She was a very interesting character... (Ah, my storied, colorful youth! Those were the days, my friends, those were the days...) :-)
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
BTW, David Fish, FYI, I'm about to receive my first dividend from FTE, and the French tax taken out on it was 32.82%, not 25%. That's much worse than the Australian & NZ taxes I used to pay, but any taxes (except Canadian) were bad for me as I couldn't recoup them since these positions were all in my IRA...
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
Robert:
You are correct in your enumerated points. I used to own quite a few foreign stocks on foreign exchanges, thanks to my former brokers' view of the world and the USD, and 1) it's very, very difficult to get financial data to examine for these companies, and 2) when the dividends came into my USA-based brokerage account, they got taxed at various rates (except the Canadian ones), and 2.1) because I held these in an IRA, I could not recoup the tax losses, and 3) the exchange rate fluxuations will drive you nuts.
Yes, many of those foreign companies had impressive yields, even after I factored out the taxes withheld, but many of them also had variable dividend rates (in their own currency), which I believe is indicative of what David Fish was describing, that non-USA companies tend to not have the same emphasis on maintaining and growing their dividends like USA companies do. All in all, aside from a few exceptions, most of my money is now in USD-based stocks, and all of those stocks are trading on USA exchanges (it takes several days to get an order filled from the USA on the Sydney Exchange, which can be frustrating), and I'm SBAN (sleeping better at night) as a result...
It is, and it was keeping me up at night, because it was looking like a potential reality. Then I got off my butt and started managing my own portfolio. No there's a pretty good chance that I won't face that fate (the bridge), but I'd still rather not have to work for someone else whilst in retirement, unless it's doing volunteer work. Nah, I just want to sit around and read Seeking Alpha and make comments all day when I retire! LOL! :-)
My Mad Method: What Next To Buy, And Why? - September, 2012, Updated [View article]
Sheldon:
"It seems that EXC is very large, but very poorly managed. Its dividend yield is high, but of questionable sustainability. Growth of the dividend seems to be out of the question."
Can you expound on this? Do you have any references that you can provide as the basis for why you feel this way about EXC? I'm not questioning your position or trying to be antagonistic, I'm just curious as to what it is you've based this opinion on... Thanks...
You got it, Chump. "given the risk level at which [I] am comfortable" is the key phrase. Dave Van Knapp's, Dave Crosetti's articles and Robert's articles, along with other articles and commentary by chowder and a host of others, has convinced me that by reinvesting the dividends thrown off by good yielding companies into CCC companies who have a proven track record of increasing their dividends every year at rates that beat inflation, which provide goods and services that people _have_ to have, my portfolio will grow at a _reliable_ rate to the point where, along with Social Security, the dividend income from my eventual portfolio should allow me to live comfortably in retirement. Not lavishly, but comfortably, where I can do what I choose to do with my time rather than have to get some sort of a crappy job after busting my ass in Corporate America for many decades or, worse yet, having to live under a bridge eating cat food on Saltines...
No problem, hbarfoot. Thanks for your comment! And you're right, whatever it is that you feel is important in terms of analyzing the stocks you're interested in, whether it's FCF or debt or price or whatever, you can plug it into the MyMM spreadsheet, allow it to be able to be weighted, and include it in the calculation of the MyMM Rank. It's totally customizable to everyone's investing and analysis preferences...
Agreed, Robert. It's not enough to really cause a problem for me, but it's there, and by having an outlet for it, like keeping meticulous records of my investments, what I've bought, what I've sold, their histories of various metrics, etc., that gives me a healthy outlet so that it doesn't cause issues in other aspects of my life...
Chump: I think Robert pretty much nailed it, but let me take a crack at it, too, see if this helps:
There have been a number of studies, including by Prof. Jeremy Siegel (Wharton, I believe) that have shown that stocks of companies that pay regular dividends outperform stocks that don't in terms of overall returns (i.e., total "growth"). So by switching now to solid dividend payers that are also steady dividend growers, the compounding of reinvesting the income from the dividends plus the organic growth in the share prices of these stocks should provide me with a better asset egg by the time I'm ready to retire than if I tried to pick "growth" stocks now, and switched over to dividend payers when I retire with whatever I've been able to accumulate from a purely "growth" strategy. I can't count on growth to occur regularly, but with CCC companies, I can "rely" on them to continue to pay and raise their dividends at a rate that beats inflation (with the big caveate that I need to monitor those dividend-payers so that if there's trouble in the future with any one of their dividend policies (they cut or freeze), I can choose to sell them and switch those funds to another CCC company; by having a large enough number of positions, say between 30 and 50, I reduce my risk of any one or two of them having a problem with their dividends, more so than I could protect myself from some sort of market crash that could wipe out my accumulated "growth").
By investing in solid dividend payers-and-growers now, I view that as a safer and more reliable way to build my nestegg (wealth) while I'm still in my accumulation years, and then after I retire that "wealth" will (hopefully) continue to throw off enough income for me to replace my paycheck with it and, in the best situation, take whatever I don't need to live on from that dividend income and continue to re-invest it back into those dividend payers, perpetuating the cycle until my wife and I have passed away, and then the portfolio gets split up between my heirs, where the process continues for them after I'm gone.
I hold INTC in a separate account from my IRA, and generally don't write about it as I have a business relationship with them and don't want to get into any disclosure hassles here on SA. (Of course, that doesn't stop me from commenting on other folks' articles about INTC, I just avoid writing about it in my articles.) I keep 2 sets of portfolio summaries (my "Dashboard"), one with INTC on it and one without it, and when I write my SA articles, I use the one without it.
So how does INTC stack up in terms of the MyMM metrics? Bottom line, it is the #1 Ranked stock in terms of the MyMM Rank compared to the other 28 stocks in my portfolio. I don't know how it stacks up in the superlist, as I don't have it there, but I would guess that it would do very well, since my #1 MyMM Ranked stock on the superlist is AFL, which is #3 on my portfolio list.
If you're looking to pick up some INTC, these are good times to do so. I have no idea whether it will go lower or turn the corner any day now, but I'm long INTC myself... I show it as having a yield of 3.89% based on yesterday's close, which is pretty darn close to the 4% you mentioned...
The ".PK" at the end of the symbol signifies that it is a stock that is on the "Pink Sheets", meaning (to the best of my knowledge) that the stock is being reported in the USA, but is traded on a foreign exchange, in this case the Toronto Exchange, as Crescent Point Energy is a Canadian company. So, general rule is, if you see ".PK", you can assume that it's a non-USA company that's traded on a non-USA exchange, probably under a different symbol on that exchange. (If anyone has a better explaination, please chime in...)
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
If commissions from re-investing your dividends into dividend-paying-and- growing stocks is eating into your profits, I suggest you try a different broker.
Recent trades by dollar amount that I've made, and commissions paid:
$2,845.50 --> $1.00
$564.20 --> $1.00
I could go on, but I think you get the point. I've made a bunch of trades in the past 5 months to undo the damage that my "professional" broker/advisor did to my portfolio, and have yet to pay more than $1.00 per trade. One Dollar Per Trade. I'm also about to move my wife's IRA out of the same high-priced / no-value brokerage that my IRA was at into WellsTrade at Wells Fargo, where she [I] will get 100 free trades per year, which is plenty to maintain and grow her portfolio, including re-investing dividends.
Shop around and get a better deal, and start re-investing your dividends into dividend paying companies...
Just MHO, tho... :-)
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
>>> "Being left-handed I was somewhat dyslexic when young and wrote words backwards. Yours truly heneg." <<<
I've got a quick story for you along those lines. In high school (in the late 70s) I dated a girl who grew up in Romania. She was (or would have been) naturally left-handed, but the communists wanted everyone to conform, to be the same, so they forced her to write with her right hand. As a result, her handwriting was atrocious, but should could do amazing things, like write backwards, write the same thing with both hands at the same time, and then the real show-stopper, she would start with a pencil in each hand, hands next to each other on a piece of paper, and then simultaneously the right hand would write "normally", while her left hand would write the same thing in reverse, a la Da Vince (where you had to use a mirror to read it). Blew my mind. She was a very interesting character... (Ah, my storied, colorful youth! Those were the days, my friends, those were the days...) :-)
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
>>> "geneh, you reminded me of the insomniac agnostic dyslexic person, who stayed up all night wondering if there is a doG." <<<
I'll bite:
"I have sexdaily!
I mean dyslexia!"
:-)
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? [View article]
You are correct in your enumerated points. I used to own quite a few foreign stocks on foreign exchanges, thanks to my former brokers' view of the world and the USD, and 1) it's very, very difficult to get financial data to examine for these companies, and 2) when the dividends came into my USA-based brokerage account, they got taxed at various rates (except the Canadian ones), and 2.1) because I held these in an IRA, I could not recoup the tax losses, and 3) the exchange rate fluxuations will drive you nuts.
Yes, many of those foreign companies had impressive yields, even after I factored out the taxes withheld, but many of them also had variable dividend rates (in their own currency), which I believe is indicative of what David Fish was describing, that non-USA companies tend to not have the same emphasis on maintaining and growing their dividends like USA companies do. All in all, aside from a few exceptions, most of my money is now in USD-based stocks, and all of those stocks are trading on USA exchanges (it takes several days to get an order filled from the USA on the Sydney Exchange, which can be frustrating), and I'm SBAN (sleeping better at night) as a result...
My Mad Method: What Next To Buy, And Why? - September, 2012, Updated [View article]
My Mad Method: The 'Rating Signal' [View article]
It is, and it was keeping me up at night, because it was looking like a potential reality. Then I got off my butt and started managing my own portfolio. No there's a pretty good chance that I won't face that fate (the bridge), but I'd still rather not have to work for someone else whilst in retirement, unless it's doing volunteer work. Nah, I just want to sit around and read Seeking Alpha and make comments all day when I retire! LOL! :-)
My Mad Method: What Next To Buy, And Why? - September, 2012, Updated [View article]
"It seems that EXC is very large, but very poorly managed. Its dividend yield is high, but of questionable sustainability. Growth of the dividend seems to be out of the question."
Can you expound on this? Do you have any references that you can provide as the basis for why you feel this way about EXC? I'm not questioning your position or trying to be antagonistic, I'm just curious as to what it is you've based this opinion on... Thanks...
My Mad Method: The 'Rating Signal' [View article]
:-)
How To Raise Portfolio Income By Selling Overvalued Companies [View article]
MLPs, too, eh? That's good to know...
My Mad Method: The 'Rating Signal' [View article]
My Mad Method: The 'Rating Signal' [View article]
"A man's got to know his limitations..." :-)
My Mad Method: The 'Rating Signal' [View article]
There have been a number of studies, including by Prof. Jeremy Siegel (Wharton, I believe) that have shown that stocks of companies that pay regular dividends outperform stocks that don't in terms of overall returns (i.e., total "growth"). So by switching now to solid dividend payers that are also steady dividend growers, the compounding of reinvesting the income from the dividends plus the organic growth in the share prices of these stocks should provide me with a better asset egg by the time I'm ready to retire than if I tried to pick "growth" stocks now, and switched over to dividend payers when I retire with whatever I've been able to accumulate from a purely "growth" strategy. I can't count on growth to occur regularly, but with CCC companies, I can "rely" on them to continue to pay and raise their dividends at a rate that beats inflation (with the big caveate that I need to monitor those dividend-payers so that if there's trouble in the future with any one of their dividend policies (they cut or freeze), I can choose to sell them and switch those funds to another CCC company; by having a large enough number of positions, say between 30 and 50, I reduce my risk of any one or two of them having a problem with their dividends, more so than I could protect myself from some sort of market crash that could wipe out my accumulated "growth").
By investing in solid dividend payers-and-growers now, I view that as a safer and more reliable way to build my nestegg (wealth) while I'm still in my accumulation years, and then after I retire that "wealth" will (hopefully) continue to throw off enough income for me to replace my paycheck with it and, in the best situation, take whatever I don't need to live on from that dividend income and continue to re-invest it back into those dividend payers, perpetuating the cycle until my wife and I have passed away, and then the portfolio gets split up between my heirs, where the process continues for them after I'm gone.
Hope that helps...
My Mad Method: The 'Rating Signal' [View article]
I hold INTC in a separate account from my IRA, and generally don't write about it as I have a business relationship with them and don't want to get into any disclosure hassles here on SA. (Of course, that doesn't stop me from commenting on other folks' articles about INTC, I just avoid writing about it in my articles.) I keep 2 sets of portfolio summaries (my "Dashboard"), one with INTC on it and one without it, and when I write my SA articles, I use the one without it.
So how does INTC stack up in terms of the MyMM metrics? Bottom line, it is the #1 Ranked stock in terms of the MyMM Rank compared to the other 28 stocks in my portfolio. I don't know how it stacks up in the superlist, as I don't have it there, but I would guess that it would do very well, since my #1 MyMM Ranked stock on the superlist is AFL, which is #3 on my portfolio list.
If you're looking to pick up some INTC, these are good times to do so. I have no idea whether it will go lower or turn the corner any day now, but I'm long INTC myself... I show it as having a yield of 3.89% based on yesterday's close, which is pretty darn close to the 4% you mentioned...
Thanks for asking, and I hope that helps...
My Mad Method: The 'Rating Signal' [View article]
Hope that helps...