Rob Ward

Dividend investing, portfolio strategy, dividend growth investing
Rob Ward
Dividend investing, portfolio strategy, dividend growth investing
Contributor since: 2012
Company: Backyard Solutions
Really like your logic and reasoning with your portfolio. Like Dale said, you might add a few PG like stocks to the portfolio for peace of mind to get closer to 20 (my personal sweet spot).
I like your strategy. Most of my portfolio is in ETF"s as well. I use DTD for USA stocks and VEU for international. My bond portion is a combination of VCSH,VWOB, and BND.
There is more to come as well.
:). If they have to borrow to do it, I hope they do neither.
Many people think of a dividend like an interest payment. Dividends come from earnings, we hope (and not from borrowing). I pick the stocks I own based on fundamentals. Many companies, mostly mature ones, have excess cash flow and pay a dividend as a result. I am drawn to these mature companies first for the earnings, second for the lack of volatility, and third for the dividend. Not paying a dividend does not make a stock and automatic "No" for me. BRK has done pretty good long term.
My portfolio averages 2.75% dividend. To me, that is a good mix of value and growth that will hold up in the rising rate environment that will happen at some point.
I would rather them suspend the dividend and keep the buybacks going strong when the share price is down.
I enjoyed the conversation Robert, I guess we will just disagree as I feel higher EPS leads to higher demand, higher share price, and more ability to pay an ever increasing dividend.
I am pretty sure we are going to get to the same destination in the end. Just might take a few different roads along the way. Happy investing!
I am a total return investor, so I am somewhere in the middle of capital gain/dividend investor. As a result, I do not think dividends are bad, nor the holy grail. I am 20+ years from retirement, and do not need current income BTW.
You honestly think PG's stock would be $81.83 if they still had that $11/share in dividends they have paid in the last 5 years? Debt could be less, R&D could have cut costs, or they could have bought back stock. All raising EPS.
I see your point. I am 20 years from retirement, so I keep reinvesting and adding with yearly contributions. I suspect I may have 20 stocks by the time I retire. Each stock is really only 5-6% if you consider the bond allocation in my portfolio.
Are you arguing just for the sake of arguing?
CEF's are an easy way to see NAV erosion from paying out too much in dividends. Not paying a dividend does not mean you hoard cash, there are other uses for excess capital.
The whole point is that dividends come from somewhere. It is not free money, and does influence share price. Once again, that does not make them bad.
PG has paid out over $11/share in dividends in the past 5 years, do you think the stock would be over $81.83 right now had they not paid the dividend?
I have 12 stocks and VEU for international exposure, I own every sector except energy currently. There is a fair share in VEU however. It is way less than most, but that is what works for me. I could never figure out why some have 3 big oils, 4 utilities, 5 consumer staples, and 6 REITS. Why not pick 1-2 per sector and be done with it.
I agree, as long as other aspects of the business are not being neglected to do so. Big oil comes to mind. We will see what they do with dividends.
No doubt about it, TROW is a great stock with great fundamentals. My only point is that dividend money is money that can no longer be used for buybacks, M/A, R&D, or paying down debt. That does not make them bad though.
Very nice article by the way. We are on the same page, your selections are very good long term plays IMO. OHI is the perfect combination of growth and income. Just wanted to point out that dividends come from somewhere and do effect share price.
Did I say it had to go down??? If the dividend is bigger than earnings/income, the NAV goes down. This happens a lot with CEF's because expenses and dividends are too high. The same thing happens with stocks as well, even dividend aristocrats. XOM for example, they are in a pickle right now.
Yes, OHI has a very nice dividend growth history, it is slowing though. It gets tougher and tougher to increase a dividend double digits FFO has grown as well along the way to support the raises.
My point is that I would rather have lower dividend growth that is conservative/repeatable than big increases that don't last, and eventually get cut.
I am not trying to get into a dividends are bad/dumb debate as I do not think they are. Companies pay a dividend because they do not have a better use for it. Usually, mature businesses with great cash flow.
Also, I never claimed that a company that pays a dividend goes down forever. As earnings rise, so does the stock price. That is why a company like PG can raise the dividend for decades and still only pay a 3% dividend, and still have a P/E around 20 give or take. If the earnings do not keep up, either the dividend increases will stop, or they will borrow money to keep paying. Look at PM and big oil right now.
Another example that shows how dividends are not free money is a CEF that pays mostly return of capital. If you look, the NAV will be slowing dropping because the dividend is partially a return of your initial investment.
I disagree. The smaller the dividend amount, the harder it is to see. Look at a company like (T) for example with a large dividend and you can clearly see the ex-date 4 times a year. Share price can "normalize" as you say over time from others factors, mainly earnings.
If you have a company worth $1000 and pay your 10 employees $10 each in bonuses, is your company still worth $1000 at that moment?
Dale, what do you think of using VCSH (or an equivalent from another broker) for your entire bond allocation? It is very cheap, liquid, and diversified. Should get around 2%, and have very little interest rate risk when the time comes.
Thanks for your articles. People need to be reminded that stocks (even utilities and REITS) are not bonds.
On a good note, at least the average investor can beat Japan and Inflation!
I will believe the $2.00 dividend when I see it. I am counting on 1c this coming quarter, but may be wrong. I am OK with a smaller, more conservative dividend increase (kind of like OHI).
I agree. My point is that when a company pays the dividend, the company is worth less by the amount of the dividend. So, the money came from somewhere (earnings we hope), it is not an interest payment like a CD has.
The author said, "The special dividend is essentially a quick 2.4% rebate on my purchase price". That is not totally correct, because the share price will also go down 2.4%.
Don't get me wrong, I love dividends and almost all of my holdings pay one.
two nice choices. dividends and special dividends are not free money though, they do make the stock worth less by the amount of the dividend. if they were, people would buy the day before the ex-date and sell the after 1 day.
I never personally buy a stock for the dividend. That can be a recipe for below market returns, or often loses on a total return basis.
At 130 I took 1/3 off my AAPL of the table. I missed the high, but can buy back right now if I choose and get a few extra shares. The stock had run so far so quick, and I have not got a good enough grip on the watch just yet. Not being in AAPL is a mistake for any investor DGI/Income or not.
I like to make a "dummy account" that uses an ETF or a combination of ETF's that matches my portfolio very closely and try to beat it each year. NOBL, VIG, VYM have been useful in the past in my little "game". It is humbling when the ETF wins, but I must admit is does happen about 1/2 the time.
I like 10 stock portfolio's, and these 10 are a pretty good list.
i would use extra cash to pay down debt. that is the decision i would make if my personal life/business had debt. the thing most people do not consider is risk. for example, 100% of houses that are repo'd have a mortgage. i know it is a simplistic example, but it does get to my point.
who do you think is paying the medical bills when smokers get old?
you can allocate the money from borrowing wherever you want. the fact remains they are borrowing and paying a huge dividend. that does not make good business sense, imo. i would be a much happy shareholder if there was less of a dividend and a better balance sheet.
it always seems like it something, now it is currency. what will it be next? the fact is less people are smoking, and governments hate big tobacco. i cannot wrap my head around management that borrows to pay a dividend. they are running this thing like the US government.
VGR confuses me. It is a quasi real estate/tobacco stock. The financials are a mess, not sure where the money comes from. The long track record is remarkable though.
is PM borrowing again this year since there is not going to be any share buybacks? if they do, they are just borrowing to pay a big dividend, which makes no sense to me.
Why has KMI held up so much better than OKE or even WMB for that matter in the past several months?