I've been using a DGI strategy since the beginning of 2011. I'm an avid reader of articles or comments by David Fish, David Van Knapp, Chuch Carnivale, Dave Crosetti, Richjoy, Robert Samualson, 5 Plus, Norman Tweed, and a few others. I've learned so much from these kind and generous people it's completely unbelievable.
I use David Fish's CCC list as a starting point. I add to that list several other companies (OK....2). I'm not trying to beat the market. Instead, I'm trying to obtain an annualized CAGR of 9% a year using dividends and whatever capital gains happen. I have utilized this strategy for almost 5 years, with a CAGR of 13.3% to show so far. I don't expect it to stay that high but am quite pleased so far.
I'm one of those rare people to still have a defined benefit pension. I recently retired and am optimistic my pension will continue to be secure.
I am an Activity Coordinator working in a Retirement Community/Nursing Care Facility for the past 15 years. I work with both Independent seniors as well as those with Dementia/Alzheimer's and cognitive issues.
From observations through my job and seeing the varied degrees of lifestyles in the aging community, I have learned the value of PLANNING WELL for retirement and the consequences if one does not. I am always open to new ideas and diverse opinions, and enjoy learning from the articles and comments on SA.
I have no professional background in investing but am an EXPERT saver and penny pincher! I am not afraid of well thought out risk, and want to learn the skills to make wise decisions in the investing process.
I am 40 and would like to retire before 60. I am fortunate to work for a state government and I am vested in their pension. So, I am set when I turn 60+. Because I don't have to worry about saving for a normal retirement age, I have been able to put almost all of my savings towards the goal of early retirement, by investing in a taxable brokerage account.
I am a retired investor with market experience going back to the 1960s. I was a software engineer for 42 years, and currently do some part-time consulting, which lets me contribute to a Roth IRA. I am not an accountant and not a financial professional.
My wife and I have established a set of guiding principles for our investment life:
• Change is the only constant in life. Everything in this plan is subject to change.
• Never touch your principal. Wealth is built and maintained by not spending it. Wealth is the primary buffer between ourselves and blind chance.
• Exploit folly, do not participate in it (thank you, Chuck Carnevale). Do not follow the crowd, which is more often than not wrong.
• A portfolio is like a bar of soap – the more you touch it, the smaller it becomes. Do not be a trader.
• Own assets, avoid liabilities. Assets generate income. Liabilities generate expenses.
Based on these principles, we have established two investing goals: 1) sufficient current income with a comfortable buffer, and 2) increasing future income to maintain our buffer.
Our primary investing goal is to generate sufficient current income to cover that part of our living expenses not covered by pensions, with a comfortable buffer. We are retired and depend on investment income to meet a significant minority of our living expenses.
As we age and get closer to the end, current income becomes ever more valuable, and future income becomes ever less valuable. This reality informs all of our investing decisions. However, we know that inflation will cause our income needs to rise, so we also plan for increased future income, which is our second investing goal.
To meet our current and future income needs, we rely on 2 Social Security pensions, 1 private pension, a consulting retainer, income generated by investments, and fully paid up long term care insurance.
It is common to allocate a retirement investment portfolio with some percentage in stocks and the balance in fixed income, such as 60/40. We look upon our pension income as the equivalent of fixed income, with the added benefit that Social Security is indexed to the CPI. In the past we owned no fixed income and had no plans to do so in the future. The future has arrived and we have discovered baby bonds and preferred stocks, and we like the higher current income we can get from these investments. We have therefore started to redirect some of our investment capital into these investments, and as a result our investment income is now greater than it would have been otherwise.
We categorize dividends and interest as income, and capital gains as return of capital, not income. Therefore, our goals are to be met from dividends and interest only.
Investment income currently meets our primary investing goal. We invest in a blend of mostly medium yield (3%-6%) stocks with medium dividend growth, a few high yield (>6%) stocks with no dividend growth, low yield (<3%) stocks with high dividend growth, and fixed income securities with yields in the range of 5%-8% with no growth.
We expect our medium yield and low yield stocks to provide the income growth needed for the future, our second investing goal.
We currently own common stocks, preferred stocks, and bonds. Our portfolio requires regular attention to avoid possible dividend cuts and deletions. As we age, our mental faculties are in decline, and we will become increasingly less able to perform portfolio monitoring intelligently. There will come a time when we will need to use some form of income oriented index ETFs to carry the income generating burden.
We want to behave like landlords and collect rents, but without the risks and demands of owning real estate directly. Dividends and interest are our rental income, and as once-removed landlords we expect to own real estate investment trusts (REITs).
We want our non REIT income to be generated by long-lived, steady companies that provide products and services that we all need regardless of the economy, and thus can be relied upon to provide steady, and steadily growing, income. This requirement points primarily at consumer staples stocks. We own some of the best consumer staples stocks, such as mighty MO, and plan to own one or more ETFs that concentrate on the consumer staples sector of the S&P 500. Our preferred shares are mostly in the REIT sector, with the major exception of the CHS preferreds (CHSCL etc).
• Some of my investing history
During much of my working years I used technical analysis (TA) to invest in individual stocks (I was an early fan of Joseph Granville and I bought an Apple II in 1980 because Granville brought out OBV software for the Apple at that time), and I speculated with short selling and commodity trading. Those were not the best investing decisions I ever made. Later I invested in stock mutual funds and ETFs for total return, with inconsistent results, and no comprehensive plan. Being a software engineer in a lead position left little time or energy for serious investing skills development. In 2005 I had pretty much given up on getting market beating results, and felt that I was getting too old and too close to retirement to continue swinging for the fences, so I decided to buy a variable annuity that guaranteed a minimum return of 6% per year, compounded, with the upside limited only by the performance of the mutual funds offered for investment. I decided to let the insurance company bear the market risk for me. I also had a 401k plan at work to which I contributed the maximum and got the company match. A year or so before 2008 I used a retirement investing projection tool provided by Fidelity, which said the worst returns I could expect in retirement were positive but not spectacular, and the best were indeed spectacular. At that time I was invested in mutual funds and ETFs through my 401k and the variable annuity and had not directly owned stocks since shortly before the start of the great bull market in 1982 (Granville famously missed the whole thing). I thought, with a bit of skepticism but not much, that I was set. We all know what happened in 2008-09. That experience put me off Monte Carlo simulations and Modern Portfolio Theory for life.
When I retired I converted my 401k to a rollover IRA brokerage account and invested in ETFs. I thought I was being appropriately conservative but also ready to capture capital gains by investing in VIG and VCSH.
Then I found Seeking Alpha, and then - thank my lucky stars - David Van Knapp, and the DGI light went on. I had spent most of my adult life thinking I was smarter than most people by relying on TA, and then later letting the insurance company assume market risk. I remember learning about the 200 DMA when I was in my 20s, which is a long time ago, and thinking how revolutionary this idea was and how I should be able to use it to my advantage. Fortunately for me and my family, I also was pretty good at software engineering, so I had a reasonable retirement nest egg accumulated when the time came. With the concepts and methodology of dividend growth investing, and more recently REITs, I now have sleep well at night investments that just keep on churning out increasing income, something that could never be said about using TA.
I started with DGI too late in life to commit totally to low yield, high growth stocks. I hope to capture the double compounding of DRiP investing with that part of my portfolio that is low yield, high growth.
We have recently (Nov 2014) rolled over all of the variable annuities into brokerage accounts. We now believe that we can get sufficient income from our dividend investing strategy, and we want to retain ownership of the annuity capital.
• Tools and Teachers
Tools I use include the CCC list, F.A.S.T. Graphs, Morningstar Premium, the EDGAR web site, and Excel. I get ideas from the many informative articles by (among others) the following (in no particular order): Bill Stoller, Chuck Carnevale, Brad Thomas, Ron Hiram, David Van Knapp, David Fish, Robert Allan Schwartz, Dividend Growth Investor, Dividends4Life, David Crosetti, Tim McAleenan Jr., Reel Ken, Bret Jensen, Alan Brochstein, Chowder, Dane Bowler, Bob Wells, BDC Buzz, Scott Kennedy, Bill Maurer, Darren McCammon, Richard Shaw, Bruce Miller, Preferred Stock Trader, Norman Roberts. Favorite commentators who are not yet authors include Elliot Miller, Paul Leibowitz, mbkelly75, surfgeezer.
I use FAST Graphs heavily for valuation research. Since my pivot toward REITs, FAST Graphs has done a similar pivot. I never consider an investment before first consulting FAST Graphs. Thank you Chuck.
The best investment advice outside of Seeking Alpha have been 'The Intelligent Investor', ‘Securities Analysis’, and 'The Single Best Investment'.
• Some historical portfolio stuff
My DGI portfolio was started on 2011/4/20 with CTL, which I have since sold. It was a beginner's mistake. Subsequent mistakes were MLPs, and to a lesser extent, mortgage REIT common. I did not allow for any circumstance that could cause WTI to fall as far and as fast as it has, so I lost money on MLPs. The prolonged flattening of the yield curve, plus the persistent markdown from NAV for the mortgage REIT commons, has made these unappealing as long term investments. Now I keep my distance from anything that is dependent on commodity pricing, and I invest very carefully in the carry trade. A glaring mistake was selling JNJ when it languished for several years.
Subsequent to my disenchantment with mortgage REIT common, I discovered mortgage REIT preferreds, along with preferreds and baby bonds in general. I have decided that mREIT preferreds are a reliable source of steady income and I own some.
• Some ongoing portfolio stuff
The target dividend growth rate for our entire portfolio was formerly 5%. With our pivot to higher current income at the expense of higher future income, this target is not realistic, and I now hope for 3-4% growth.
I use yield on cost to allocate our investments so that each position in aggregate generates approximately the same amount of income. I learned the basic methodology from a comment on a SA article. SA is a wonderful resource! I have published an SA Instablog that describes the method: http://seekingalpha.com/instablog/902946-be-here-now/4581516-portfolio-allocation-for-equal-income-from-each-position-using-excel
• Current portfolio:
equity REIT: we recently sold some of our health care REITs in favor of data center REITs, which leaves us with: CONE, DFT, DLR, EPR, LTC, NSA, O, OHI, STAG, WPC
consumer staples: we recently sold our positions in most consumer staples to invest in preferreds with much higher current yields, leaving the one stock that should never be sold: MO
financial: GBDC, GSBD, HTGC, MAIN, TCPC
baby bonds: HTGX, NEWTL, TCCA, TPVZ
preferred: AGNCB, AGNCP, AHT-F, AHT-G, CHSCL, CYS-B, DFT-C, DLR-F, GAB-G, GGZ-A, HT-D, LXP-C, MNR-C, NLY-C, STAG-B, VER-F
Prospective additions: none currently; I plan to buy more CHSCL at the right price
As the founder and CEO of Freedom Capital Advisors, Ron McCoy has been in the financial markets as an independent advisor for over 25 years. He has a tremendous understanding of the markets and uses both technical and fundamental analysis to assist his clients in achieving their goals. One of the major themes in his investment strategy is a very thorough understanding of risk vs reward and how it affects investment decisions. We specialize in selling options including but not limited to covered calls(buywrites) and naked and covered puts. We are value minded and would consider most of our investments on the conservative side. We do however, run a family investment fund that utilizes margin and selling puts and covered calls calls, the LOWS strategy. You can invest alongside us thru Covestor. If interested, click HERE for more information.
Bank of America Corporation is a bank holding and a financial holding company. It is a financial institution, serving individual consumers, small and middle market businesses, corporations and governments with a range of banking, investing, asset management and other financial and risk management products and services. Through its banking subsidiaries and various non-banking subsidiaries, it provides a range of banking and non-banking financial services and products through six business segments: Deposits, Global Card Services, Home Loans & Insurance, Global Commercial Banking, Global Banking & Markets and Global Wealth & Investment Management. In June 2011, it sold Balboa Insurance Company. On September 29, 2011, it ceased to be a substantial holder in Bow Energy Limited. On November 24, 2011, it announced that Bank of America Corporation ceased to be a substantial holder in the Company. In December 2011, its Bank of America Merrill Lynch closed its private banking unit in Brazil.
Currently, I'm an engineer working in the semiconductor industry, but I have had a varied career. I am nearing retirement. I came to the realization a few years back that I could not approach retirement and remain an amateur investor, that I needed to step up my game. Still in the process of doing that. Looking for and value. I can't imagine any non-investment pro finding their way around in the stock market, without a community like this one.
Update: Retired, as of 12/2015
Retired since March 2013 except for brief stint in a temporary job. Social Security began in Sept 2015 at age 70. RMD began in 2016. Wife has collected SS on my account for a couple of years (file & suspend strategy). Most assets (some tax-deferred, some taxable) managed by Fidelity Portfolio Advisory Service. Remainder managed by myself.
Degrees in Chemical and Nuclear Engineering. Naval Officer on nuclear submarine. Commercial engineering experience. MBA following collapse of nuclear industry in late 70's. Cost control and cost accounting experience since then including 1 1/2 years of consulting.
Interests are analytical evaluation of portfolio performance and projections/predictions.