www.tessellation.com/dividends
is updated for 2016.
I had to switch data providers:
All data up to 12/31/2015 are from Bloomberg.
All date after 1/1/2016 are from The Wall Street Journal.
The Wall Street Journal does not publish data for OTC companies.
If you notice anything wrong / missing /etc, please let me know.
If you need to retreat to the previous version, go here:
www.tessellation.com/dividends_before_20...
Thanks,
Robert
]]>www.tessellation.com/dividends
is updated for 2016.
I had to switch data providers:
All data up to 12/31/2015 are from Bloomberg.
All date after 1/1/2016 are from The Wall Street Journal.
The Wall Street Journal does not publish data for OTC companies.
If you notice anything wrong / missing /etc, please let me know.
If you need to retreat to the previous version, go here:
www.tessellation.com/dividends_before_20...
Thanks,
Robert
]]>You might know the story of Grace Groner:
In 1935, Grace Groner purchased three sixty dollar shares in Abbott Laboratories, where she also worked for 43 years. Over the years, her shares split many times, and she reinvested the dividends each time. ... On January 19, 2010, Groner died. After her death it was revealed that her estate totaled in excess of seven million dollars
I will tell you a similar story about someone I know.
Compounding
Investopedia defines "compounding" as: "the process where the value of an investment increases because the earnings on an investment, both capital gains and interest, earn interest as time passes." In simpler words, compounding means your money makes money.
Here's an example: Suppose you invest $100 at 10% interest per period. After one period, you have $110. After two periods, you have $121, not $120.
In dividend investing [DI], if you reinvest your dividends, you enjoy the benefits of compounding.
But wait  there's more!
Compounding is an example of a feedback loop. Wikipedia says:
"The terms virtuous circle and vicious circle (also referred to as virtuous cycle and vicious cycle) refer to complex chains of events which reinforce themselves through a feedback loop. A virtuous circle has favorable results, while a vicious circle has detrimental results. Both circles are complexes of events with no tendency towards equilibrium (at least in the short run). Both systems of events have feedback loops in which each iteration of the cycle reinforces the previous one ... The prefix "hyper" is sometimes used to describe these cycles if they are extreme. The bestknown example of a vicious circle is hyperinflation."
HyperCompounding
Many companies raise their dividend, sometimes year after year for many consecutive years. In dividend growth investing [DGI], if you reinvest your dividends, and your dividends grow, you enjoy the benefits of hypercompounding.
Here's an example: Suppose you invest $100 in one share of company XXX. XXX pays a dividend of $10/share/period. After one period, you have $10, which you reinvest into 0.1 more shares. (I'm assuming a constant share price, purely to illustrate the concept.) You now have 1.1 shares. XXX raises its dividend to $11. After one period, you have 1.1 shares * $11/share = $12.10, which you reinvest into .121 more shares. You now have 1.221 shares. XXX raises its dividend to $12. See the pattern? More shares pay higher dividends which become more shares which pay higher dividends …
You get one virtuous circle from reinvesting, and you get another virtuous circle from dividend growth. Having both simultaneously is an extremely virtuous circle, also known as hypercompounding!
A RealLife Example
This really is a true story. I know the person involved, and that person has all the quarterly and annual statements to verify the numbers I'm about to show you.
On December 19, 1988, Leslie's parents gave Leslie a gift  a certificate for 10 shares of Procter & Gamble (PG) stock, for which they paid a total of $852.00. Leslie wasn't interested in or knowledgeable about investing, so Leslie put the certificate in a drawer. Each time a quarterly or annual statement came in the mail, Leslie put the statement in the drawer.
27 years and 9 months later, on September 1, 2016, just before PG spun off assets to Coty (COTY), Leslie sold all of the shares.
What happened to those shares during that interval?
[I spent far too much time fighting with the Seeking Alpha article editor, in order to embed the spreadsheet inside the article, but I finally gave up. Please see my first comment below, which contains the data.]
Column A is the date of the event.
Column B is the nature of the event  gift, dividend, or split.
Column C is the amount of the pershare dividend.
Column D is the total dividend income for all certificated shares.
Column E is the total dividend income for all DRIP shares.
Column F is the total number of certificated shares.
Column G is the total number of DRIP shares.
Column H is the total number of shares (i.e. the sum of F and G).
Column I is the total cost basis (which includes reinvested dividends).
Column J is the cumulative sum of all dividends paid in that calendar year. It is reset to $0.00 on January 1 of each year.
Column K is the cumulative sum of all dividends paid.
During this interval of almost 28 years, there were no buys, no sells, and no fees paid. The shares were held in a taxable account, so taxes were due and paid each year, but given that the largest calendar year dividend total was $2739.70 in 2015, the taxes were quite small (I do not know the actual amounts of the taxes). Had the shares been held in a taxsheltered account, no taxes would have been due.
The results of hypercompounding
The original 10 shares became 1246.454676 shares, representing a growth of 12,464%.
The original cost basis of $852.00 became $17,489.34, representing a growth of 2,052%.
Had Leslie not sold the shares, they would have paid a calendar year dividend total of $3,000.00+ in 2016.
Had Leslie's parents given Leslie twenty times the number of shares, or 200 shares, costing $17,040.00, the shares would have paid a calendar year dividend total of $60,000.00+ in 2016, and more than that every year after that.
Were Leslie married and filing jointly in 2016 with no other income, Leslie would have been in the 15% bracket, and would have paid zero taxes on the entire $60,000.00+ amount.
Conclusion
Hypercompounding is an excellent investment strategy to produce a growing stream of income, perhaps to fund your retirement, without ever being forced to sell something to produce cash. Hypercompounding starts with a small investment, which grows and grows over many years. The earlier you start, the sooner you will enjoy the benefits. As we all know, "time is money", and the combination of money and time means money and money!
]]>You might know the story of Grace Groner:
In 1935, Grace Groner purchased three sixty dollar shares in Abbott Laboratories, where she also worked for 43 years. Over the years, her shares split many times, and she reinvested the dividends each time. ... On January 19, 2010, Groner died. After her death it was revealed that her estate totaled in excess of seven million dollars
I will tell you a similar story about someone I know.
Compounding
Investopedia defines "compounding" as: "the process where the value of an investment increases because the earnings on an investment, both capital gains and interest, earn interest as time passes." In simpler words, compounding means your money makes money.
Here's an example: Suppose you invest $100 at 10% interest per period. After one period, you have $110. After two periods, you have $121, not $120.
In dividend investing [DI], if you reinvest your dividends, you enjoy the benefits of compounding.
But wait  there's more!
Compounding is an example of a feedback loop. Wikipedia says:
"The terms virtuous circle and vicious circle (also referred to as virtuous cycle and vicious cycle) refer to complex chains of events which reinforce themselves through a feedback loop. A virtuous circle has favorable results, while a vicious circle has detrimental results. Both circles are complexes of events with no tendency towards equilibrium (at least in the short run). Both systems of events have feedback loops in which each iteration of the cycle reinforces the previous one ... The prefix "hyper" is sometimes used to describe these cycles if they are extreme. The bestknown example of a vicious circle is hyperinflation."
HyperCompounding
Many companies raise their dividend, sometimes year after year for many consecutive years. In dividend growth investing [DGI], if you reinvest your dividends, and your dividends grow, you enjoy the benefits of hypercompounding.
Here's an example: Suppose you invest $100 in one share of company XXX. XXX pays a dividend of $10/share/period. After one period, you have $10, which you reinvest into 0.1 more shares. (I'm assuming a constant share price, purely to illustrate the concept.) You now have 1.1 shares. XXX raises its dividend to $11. After one period, you have 1.1 shares * $11/share = $12.10, which you reinvest into .121 more shares. You now have 1.221 shares. XXX raises its dividend to $12. See the pattern? More shares pay higher dividends which become more shares which pay higher dividends …
You get one virtuous circle from reinvesting, and you get another virtuous circle from dividend growth. Having both simultaneously is an extremely virtuous circle, also known as hypercompounding!
A RealLife Example
This really is a true story. I know the person involved, and that person has all the quarterly and annual statements to verify the numbers I'm about to show you.
On December 19, 1988, Leslie's parents gave Leslie a gift  a certificate for 10 shares of Procter & Gamble (PG) stock, for which they paid a total of $852.00. Leslie wasn't interested in or knowledgeable about investing, so Leslie put the certificate in a drawer. Each time a quarterly or annual statement came in the mail, Leslie put the statement in the drawer.
27 years and 9 months later, on September 1, 2016, just before PG spun off assets to Coty (COTY), Leslie sold all of the shares.
What happened to those shares during that interval?
[I spent far too much time fighting with the Seeking Alpha article editor, in order to embed the spreadsheet inside the article, but I finally gave up. Please see my first comment below, which contains the data.]
Column A is the date of the event.
Column B is the nature of the event  gift, dividend, or split.
Column C is the amount of the pershare dividend.
Column D is the total dividend income for all certificated shares.
Column E is the total dividend income for all DRIP shares.
Column F is the total number of certificated shares.
Column G is the total number of DRIP shares.
Column H is the total number of shares (i.e. the sum of F and G).
Column I is the total cost basis (which includes reinvested dividends).
Column J is the cumulative sum of all dividends paid in that calendar year. It is reset to $0.00 on January 1 of each year.
Column K is the cumulative sum of all dividends paid.
During this interval of almost 28 years, there were no buys, no sells, and no fees paid. The shares were held in a taxable account, so taxes were due and paid each year, but given that the largest calendar year dividend total was $2739.70 in 2015, the taxes were quite small (I do not know the actual amounts of the taxes). Had the shares been held in a taxsheltered account, no taxes would have been due.
The results of hypercompounding
The original 10 shares became 1246.454676 shares, representing a growth of 12,464%.
The original cost basis of $852.00 became $17,489.34, representing a growth of 2,052%.
Had Leslie not sold the shares, they would have paid a calendar year dividend total of $3,000.00+ in 2016.
Had Leslie's parents given Leslie twenty times the number of shares, or 200 shares, costing $17,040.00, the shares would have paid a calendar year dividend total of $60,000.00+ in 2016, and more than that every year after that.
Were Leslie married and filing jointly in 2016 with no other income, Leslie would have been in the 15% bracket, and would have paid zero taxes on the entire $60,000.00+ amount.
Conclusion
Hypercompounding is an excellent investment strategy to produce a growing stream of income, perhaps to fund your retirement, without ever being forced to sell something to produce cash. Hypercompounding starts with a small investment, which grows and grows over many years. The earlier you start, the sooner you will enjoy the benefits. As we all know, "time is money", and the combination of money and time means money and money!
]]>[1] I am 60. I want to retire in 2 years.
[2] In my first year of retirement, I will need my portfolio to produce $X of income to pay my expenses.
[3] I want 100% of my portfolio income to come from dividends, so that I am never forced to sell anything, especially during a market downturn, just to produce cash.
[4] In each subsequent year, I will need my portfolio's income to grow by Y%, to protect myself from the erosion of purchasing power caused by inflation. (This does not mean that each company in my portfolio must grow its dividend by Y%. This means that overall total portfolio income must grow by Y%. Some companies will grow their dividends by more than Y%, and some by less than Y%.)
Narrowing Down My Investment Universe
There are probably hundreds of thousands, if not millions, of companies in the world. How do I begin to narrow down that number to a manageable number, on which to perform due diligence?
Think Globally, Invest Locally
My retirement expenses will be in USD, so I start by narrowing down my investment universe to US companies. US companies produce dividends in USD. I will be insulated from currency exchange rate fluctuations.
Many US companies already receive significant portions of their earnings from international sales, so I don't see this as too limiting.
There are over 3000 publiclyheld companies in the US.
Reliable, Consistent, Dividend Growth
David Fish produces a list of companies that have raised their dividends for 59 consecutive years ("Dividend Challengers"), 1024 consecutive years ("Dividend Contenders"), and 25 or more consecutive years ("Dividend Champions"). These are collectively known as the CCC. David updates his site monthly. This is probably the single best resource a dividend growth investor has at his disposal, and it is free.
I choose to narrow down my investing universe to the Dividend Contenders and Dividend Champions. I want a company to have raised its dividend through the Great Recession of 2008/2009, to show me that it will continue to raise its dividend no matter what happens to the economy during the remainder of my retirement.
There are 349 companies now in my universe.
The Best Offense Is A Good Defense
Some sectors are more defensive than others, and I want my portfolio to be in the more defensive sectors:
[1] Consumer Staples
[2] Health Care
[3] Telecommunications
[4] Utilities
There are 101 companies now in my universe.
Show Me The Money Now!
Younger investors have the luxury of investing in companies that pay a lower current yield but have a higher dividend growth rate. I don't have that luxury. I want to own companies that pay me now.
Normally I don't consider a company for purchase if its current yield is less than 3%, but virtually all of the companies I want to own are now so overvalued that their current yields are below that.
I'm sure I'm not the only investor who believes that share prices will come down from their current lofty heights. I will consider a company for purchase if its current yield is 2.5% or more, because if the share price goes down by 20%, then the current yield will go up by 20%, and will reach my 3% threshold.
There are 54 companies now in my universe.
Alphabet Soup
I do not wish to invest in BDC's, CEF's, or MLP's. This eliminates APU, which is an MLP. [I have no objection to REIT's, but no REIT's have made it this far in my "elimination derby".]
There are 53 companies now in my universe.
Now You See Me, Now You Don't
Some of the companies in the CCC are being acquired. It doesn't make sense to do due diligence on them. This eliminates STR and WR.
There are 51 companies now in my universe.
The Smell Test
Some companies just don't pass the "smell test". NUS has gotten bad press here and here for being a multilevel marketing [MLM] company. I choose to eliminate NUS. As SA member richjoy403 says, "There are many tasty fish in the sea", so I don't see this as too limiting.
There are 50 companies now in my universe. They are, in ticker alphabetical order:
Archer Daniels Midland  ADM 
Armanino Foods of Distinction Inc.  AMNF 
Artesian Resources  ARTNA 
Avista Corp.  AVA 
Bunge Limited  BG 
Black Hills Corp.  BKH 
CMS Energy Corp.  CMS 
CenterPoint Energy  CNP 
Dominion Resources  D 
Delta Natural Gas  DGAS 
Duke Energy Corp.  DUK 
Consolidated Edison  ED 
Eversource Energy  ES 
Flowers Foods  FLO 
General Mills  GIS 
Johnson & Johnson  JNJ 
Kellogg Company  K 
KimberlyClark Corp.  KMB 
CocaCola Company  KO 
Alliant Energy Corp.  LNT 
MDU Resources  MDU 
Altria Group Inc.  MO 
NextEra Energy  NEE 
National Fuel Gas  NFG 
National Healthcare Corp.  NHC 
New Jersey Resources  NJR 
NorthWestern Corp.  NWE 
Northwest Natural Gas  NWN 
Owens & Minor Inc.  OMI 
PepsiCo Inc.  PEP 
Procter & Gamble Co.  PG 
Portland General Electric Co.  POR 
PPL Corp.  PPL 
Reynolds American Inc.  RAI 
RGC Resources Inc.  RGCO 
SCANA Corp.  SCG 
South Jersey Industries  SJI 
Southern Company  SO 
SpanAmerica Medical Systems  SPAN 
Spire Inc.  SR 
Sempra Energy  SRE 
AT&T Inc.  T 
Universal Corp.  UVV 
Vector Group Ltd.  VGR 
Vectren Corp.  VVC 
Verizon Communications  VZ 
Wisconsin Energy  WEC 
WGL Holdings Inc.  WGL 
WalMart Stores Inc.  WMT 
Xcel Energy  XEL 
The Safety Of The Dividend
SA member Chowder has commented positively on Valuentum. The Valuentum Dividend Cushion [tm] is one way to gauge the safety of a company's dividend.
SA member David Van Knapp recently wrote an article in which he described Simply Safe Dividends and its Dividend Safety Score.
Valuentum and Simply Safe Dividends are not free. I am not currently a paying member of either site.
Simply Safe Dividends' Brian Bollinger recommends that investors consider those companies that have a Dividend Safety Score of 61 or more [up to 100]. MDU, NFG, NWN, and VVC have scores of 60 or below, so I choose to eliminate them.
There are 46 companies now in my universe.
Friendly Regulators
Chowder recommends owning utilities that are based in states with friendly regulators, so that rate increases are more likely to be approved. In a personal communication, Chowder identified 18 states as having unfriendly regulators: AZ, CA, CT, DC, DE, IL, MA, MD, ME, NH, NJ, NM, NY, OH, PA, RI, TX, and VT. [Yes, I know that DC is not a state.]
I have not yet researched which utilities are based on those states, but when I do, I will choose to eliminate them.
Do The Due
Having narrowed down my investment universe to a manageable number of companies, I will begin to perform due diligence on those companies.
I like to use Chuck Carnevale's FAST Graphs tool. It is not free. I am a very satisfied paying customer of FAST Graphs. I use FAST Graphs to help me determine the range of fair valuation, and for many other things.
I will look at S&P Credit Ratings. Some of the 46 companies (AMNF, ARTNA, DGAS, NHC, NJR, RGCO, SPAN) have no S&P Credit Rating. Some (VGR) are belowinvestmentgrade (i.e. below BBB).
Hurry Up And Wait
Above I talked about the share price going down by 20%. I'm not predicting a market crash; I'm not predicting anything at all about the market as a whole.
I'm not the first or only person to observe that ZIRP has virtually forced income investors to invest in equities instead of bonds, and specifically equities that pay dividends. The rise in demand has led to a rise in share price for dividendpaying equities. Many income investors are finding the dividendpaying equities they want to own, to be currently overvalued. I personally am holding cash ("dry powder") for the first time in my investing career, in the hope that interest rates will eventually rise, reducing demand for the companies that I want to own, thereby reducing share prices for the companies that I want to own.
Over the past 6 months, KO, MCD, NWE, RAI, VGR, VVC, and VZ have declined in price, so perhaps more companies will decline over the next 6 months.
Surprises
I did find 3 companies that surprised me  they passed all but one of the tests. They are: MCD (consumer discretionary), PAYX (financials), and PM (has a dividend growth history of 8 years, not 10). I might consider adding them to my investing universe.
Conclusion
If share prices come down just a bit more, I will have no trouble finding a manageable number of dividend growth companies on which to do due diligence, all of which will help me achieve my personal investing goals.
]]>[1] I am 60. I want to retire in 2 years.
[2] In my first year of retirement, I will need my portfolio to produce $X of income to pay my expenses.
[3] I want 100% of my portfolio income to come from dividends, so that I am never forced to sell anything, especially during a market downturn, just to produce cash.
[4] In each subsequent year, I will need my portfolio's income to grow by Y%, to protect myself from the erosion of purchasing power caused by inflation. (This does not mean that each company in my portfolio must grow its dividend by Y%. This means that overall total portfolio income must grow by Y%. Some companies will grow their dividends by more than Y%, and some by less than Y%.)
Narrowing Down My Investment Universe
There are probably hundreds of thousands, if not millions, of companies in the world. How do I begin to narrow down that number to a manageable number, on which to perform due diligence?
Think Globally, Invest Locally
My retirement expenses will be in USD, so I start by narrowing down my investment universe to US companies. US companies produce dividends in USD. I will be insulated from currency exchange rate fluctuations.
Many US companies already receive significant portions of their earnings from international sales, so I don't see this as too limiting.
There are over 3000 publiclyheld companies in the US.
Reliable, Consistent, Dividend Growth
David Fish produces a list of companies that have raised their dividends for 59 consecutive years ("Dividend Challengers"), 1024 consecutive years ("Dividend Contenders"), and 25 or more consecutive years ("Dividend Champions"). These are collectively known as the CCC. David updates his site monthly. This is probably the single best resource a dividend growth investor has at his disposal, and it is free.
I choose to narrow down my investing universe to the Dividend Contenders and Dividend Champions. I want a company to have raised its dividend through the Great Recession of 2008/2009, to show me that it will continue to raise its dividend no matter what happens to the economy during the remainder of my retirement.
There are 349 companies now in my universe.
The Best Offense Is A Good Defense
Some sectors are more defensive than others, and I want my portfolio to be in the more defensive sectors:
[1] Consumer Staples
[2] Health Care
[3] Telecommunications
[4] Utilities
There are 101 companies now in my universe.
Show Me The Money Now!
Younger investors have the luxury of investing in companies that pay a lower current yield but have a higher dividend growth rate. I don't have that luxury. I want to own companies that pay me now.
Normally I don't consider a company for purchase if its current yield is less than 3%, but virtually all of the companies I want to own are now so overvalued that their current yields are below that.
I'm sure I'm not the only investor who believes that share prices will come down from their current lofty heights. I will consider a company for purchase if its current yield is 2.5% or more, because if the share price goes down by 20%, then the current yield will go up by 20%, and will reach my 3% threshold.
There are 54 companies now in my universe.
Alphabet Soup
I do not wish to invest in BDC's, CEF's, or MLP's. This eliminates APU, which is an MLP. [I have no objection to REIT's, but no REIT's have made it this far in my "elimination derby".]
There are 53 companies now in my universe.
Now You See Me, Now You Don't
Some of the companies in the CCC are being acquired. It doesn't make sense to do due diligence on them. This eliminates STR and WR.
There are 51 companies now in my universe.
The Smell Test
Some companies just don't pass the "smell test". NUS has gotten bad press here and here for being a multilevel marketing [MLM] company. I choose to eliminate NUS. As SA member richjoy403 says, "There are many tasty fish in the sea", so I don't see this as too limiting.
There are 50 companies now in my universe. They are, in ticker alphabetical order:
Archer Daniels Midland  ADM 
Armanino Foods of Distinction Inc.  AMNF 
Artesian Resources  ARTNA 
Avista Corp.  AVA 
Bunge Limited  BG 
Black Hills Corp.  BKH 
CMS Energy Corp.  CMS 
CenterPoint Energy  CNP 
Dominion Resources  D 
Delta Natural Gas  DGAS 
Duke Energy Corp.  DUK 
Consolidated Edison  ED 
Eversource Energy  ES 
Flowers Foods  FLO 
General Mills  GIS 
Johnson & Johnson  JNJ 
Kellogg Company  K 
KimberlyClark Corp.  KMB 
CocaCola Company  KO 
Alliant Energy Corp.  LNT 
MDU Resources  MDU 
Altria Group Inc.  MO 
NextEra Energy  NEE 
National Fuel Gas  NFG 
National Healthcare Corp.  NHC 
New Jersey Resources  NJR 
NorthWestern Corp.  NWE 
Northwest Natural Gas  NWN 
Owens & Minor Inc.  OMI 
PepsiCo Inc.  PEP 
Procter & Gamble Co.  PG 
Portland General Electric Co.  POR 
PPL Corp.  PPL 
Reynolds American Inc.  RAI 
RGC Resources Inc.  RGCO 
SCANA Corp.  SCG 
South Jersey Industries  SJI 
Southern Company  SO 
SpanAmerica Medical Systems  SPAN 
Spire Inc.  SR 
Sempra Energy  SRE 
AT&T Inc.  T 
Universal Corp.  UVV 
Vector Group Ltd.  VGR 
Vectren Corp.  VVC 
Verizon Communications  VZ 
Wisconsin Energy  WEC 
WGL Holdings Inc.  WGL 
WalMart Stores Inc.  WMT 
Xcel Energy  XEL 
The Safety Of The Dividend
SA member Chowder has commented positively on Valuentum. The Valuentum Dividend Cushion [tm] is one way to gauge the safety of a company's dividend.
SA member David Van Knapp recently wrote an article in which he described Simply Safe Dividends and its Dividend Safety Score.
Valuentum and Simply Safe Dividends are not free. I am not currently a paying member of either site.
Simply Safe Dividends' Brian Bollinger recommends that investors consider those companies that have a Dividend Safety Score of 61 or more [up to 100]. MDU, NFG, NWN, and VVC have scores of 60 or below, so I choose to eliminate them.
There are 46 companies now in my universe.
Friendly Regulators
Chowder recommends owning utilities that are based in states with friendly regulators, so that rate increases are more likely to be approved. In a personal communication, Chowder identified 18 states as having unfriendly regulators: AZ, CA, CT, DC, DE, IL, MA, MD, ME, NH, NJ, NM, NY, OH, PA, RI, TX, and VT. [Yes, I know that DC is not a state.]
I have not yet researched which utilities are based on those states, but when I do, I will choose to eliminate them.
Do The Due
Having narrowed down my investment universe to a manageable number of companies, I will begin to perform due diligence on those companies.
I like to use Chuck Carnevale's FAST Graphs tool. It is not free. I am a very satisfied paying customer of FAST Graphs. I use FAST Graphs to help me determine the range of fair valuation, and for many other things.
I will look at S&P Credit Ratings. Some of the 46 companies (AMNF, ARTNA, DGAS, NHC, NJR, RGCO, SPAN) have no S&P Credit Rating. Some (VGR) are belowinvestmentgrade (i.e. below BBB).
Hurry Up And Wait
Above I talked about the share price going down by 20%. I'm not predicting a market crash; I'm not predicting anything at all about the market as a whole.
I'm not the first or only person to observe that ZIRP has virtually forced income investors to invest in equities instead of bonds, and specifically equities that pay dividends. The rise in demand has led to a rise in share price for dividendpaying equities. Many income investors are finding the dividendpaying equities they want to own, to be currently overvalued. I personally am holding cash ("dry powder") for the first time in my investing career, in the hope that interest rates will eventually rise, reducing demand for the companies that I want to own, thereby reducing share prices for the companies that I want to own.
Over the past 6 months, KO, MCD, NWE, RAI, VGR, VVC, and VZ have declined in price, so perhaps more companies will decline over the next 6 months.
Surprises
I did find 3 companies that surprised me  they passed all but one of the tests. They are: MCD (consumer discretionary), PAYX (financials), and PM (has a dividend growth history of 8 years, not 10). I might consider adding them to my investing universe.
Conclusion
If share prices come down just a bit more, I will have no trouble finding a manageable number of dividend growth companies on which to do due diligence, all of which will help me achieve my personal investing goals.
]]>I could not discern from that site if the "annual return" is "price return", "dividend return", or "total return".
Here are the raw data sorted by year:

The interval between 1928 and 2015 represents 88 calendar years.
Of those 88 years, the S&P 500 went up in 64 years (72.7273%) and went down in 24 years (27.2727%).
The ratio of up years to down years was 64 / 88 or 2.66667, which means the S&P 500 went down once every (approximately) 4 years on average.
Here are the raw data sorted by return:

The worst return was 43.84% in 1931.
The best return was 52.56% in 1954.
Here are the raw data sorted by the frequency of similar returns:
number of losses >= 44% and < 43% is 1
number of losses >= 37% and < 36% is 1
number of losses >= 36% and < 35% is 1
number of losses >= 26% and < 25% is 2
number of losses >= 22% and < 21% is 1
number of losses >= 15% and < 14% is 1
number of losses >= 13% and < 12% is 1
number of losses >= 12% and < 11% is 1
number of losses >= 11% and < 10% is 2
number of losses >= 10% and < 9% is 2
number of losses >= 9% and < 8% is 5
number of losses >= 7% and < 6% is 1
number of losses >= 5% and < 4% is 1
number of losses >= 4% and < 3% is 1
number of losses >= 2% and < 1% is 3
number of gains >= 0% and < 1% is 1
number of gains >= 1% and < 2% is 2
number of gains >= 2% and < 3% is 1
number of gains >= 3% and < 4% is 1
number of gains >= 4% and < 5% is 1
number of gains >= 5% and < 6% is 4
number of gains >= 6% and < 7% is 2
number of gains >= 7% and < 8% is 2
number of gains >= 9% and < 10% is 1
number of gains >= 10% and < 11% is 2
number of gains >= 12% and < 13% is 2
number of gains >= 13% and < 14% is 1
number of gains >= 14% and < 15% is 2
number of gains >= 15% and < 16% is 2
number of gains >= 16% and < 17% is 2
number of gains >= 18% and < 19% is 5
number of gains >= 19% and < 20% is 2
number of gains >= 20% and < 21% is 2
number of gains >= 22% and < 23% is 3
number of gains >= 23% and < 24% is 3
number of gains >= 25% and < 26% is 2
number of gains >= 26% and < 27% is 1
number of gains >= 28% and < 29% is 2
number of gains >= 29% and < 30% is 1
number of gains >= 30% and < 31% is 2
number of gains >= 31% and < 32% is 4
number of gains >= 32% and < 33% is 2
number of gains >= 33% and < 34% is 1
number of gains >= 35% and < 36% is 1
number of gains >= 37% and < 38% is 2
number of gains >= 43% and < 44% is 2
number of gains >= 46% and < 47% is 1
number of gains >= 49% and < 50% is 1
number of gains >= 52% and < 53% is 1
Ups and Downs
After a down year, the following year was a down year 8 times out of 24 (33.33%), and was an up year 16 times out of 24 (66.67%).
After an up year, the following year was a down year 16 times out of 63 (25%), and was an up year 47 times out of 63 (75%).
Streaks
Here are the streaks of consecutive down years:
streak starting in 1973 for 2 consecutive years
streak starting in 1939 for 3 consecutive years
streak starting in 2000 for 3 consecutive years
streak starting in 1929 for 4 consecutive years
Here are the streaks of consecutive up years:
streak starting in 1935 for 2 consecutive years
streak starting in 1967 for 2 consecutive years
streak starting in 1975 for 2 consecutive years
streak starting in 1954 for 3 consecutive years
streak starting in 1978 for 3 consecutive years
streak starting in 1963 for 3 consecutive years
streak starting in 1970 for 3 consecutive years
streak starting in 1942 for 4 consecutive years
streak starting in 1958 for 4 consecutive years
streak starting in 2003 for 5 consecutive years
streak starting in 1947 for 6 consecutive years
streak starting in 2009 for 7 consecutive years
streak starting in 1982 for 8 consecutive years
streak starting in 1991 for 9 consecutive years
Streaks of up years tend to be longer, and occur more frequently, than streaks of down years.
Mean, Standard Deviation, and Compound Annual Growth Rate [CAGR]
The mean return was 11.4122%. This is the simple arithmetic average of all of the returns.
The interpretation of "average" is not as easy as it looks. Perhaps you've heard the quote from William Kruskal's article, "Statistics, Moliere, and Henry Adams", American Scientist 55 (1967), p. 416 to 428: "A man standing with one foot in a bucket of boiling water and the other in a bucket of freezing water would be a ridiculous fool to summarize his experience by saying, "On the average, I feel fine.""
Suppose you begin with $100. During the first year, you experience a return of +50%, and end up with $150. During the second year, you experience a return of 50%, and end up with $75. It is indeed nonsensical to claim that your "average" return was 0.
Standard deviation "is a measure that is used to quantify the amount of variation or dispersion of a set of data values. A standard deviation close to 0 indicates that the data points tend to be very close to the mean (also called the expected value) of the set, while a high standard deviation indicates that the data points are spread out over a wider range of values."
The standard deviation of S&P 500 returns was 19.7028%.
This means that 68% of the time the S&P 500 return was between the mean +/ one standard deviation (i.e. 8.2906 and 31.115), 95% of the time the S&P 500 return was between the mean +/ two standard deviations (i.e. 27.9934 and 50.8178), and 99.7% of the time the S&P 500 return was between the mean +/ three standard deviations (i.e. 36.284 and 81.9328).
To help you visualize what this means, there is a good diagram here.
The compound annual growth rate [CAGR] answers the question, "What constant rate of return would take you from the starting value to the ending value over the time interval?". If you bought $1 worth of S&P 500 at the beginning of 1928, you would end up with $2,940.88 at the end of 2015. The CAGR of S&P 500 returns was 9.5%.
Conclusions
What conclusions can be drawn from these data?
I hesitate to make guesses, estimates, or predictions of future returns based on the history of past returns, because as all investors hear at least once per day, "past performance is no guarantee of future results".
One must be careful to avoid the Gambler's Fallacy  "the mistaken belief that, if something happens more frequently than normal during some period, it will happen less frequently in the future, or that, if something happens less frequently than normal during some period, it will happen more frequently in the future (presumably as a means of balancing nature)."
2015 was the 7th year in a streak of up years. What does that say about 2016? Sadly, very little of statistical significance.
I wish good luck to all investors.
]]>I could not discern from that site if the "annual return" is "price return", "dividend return", or "total return".
Here are the raw data sorted by year:

The interval between 1928 and 2015 represents 88 calendar years.
Of those 88 years, the S&P 500 went up in 64 years (72.7273%) and went down in 24 years (27.2727%).
The ratio of up years to down years was 64 / 88 or 2.66667, which means the S&P 500 went down once every (approximately) 4 years on average.
Here are the raw data sorted by return:

The worst return was 43.84% in 1931.
The best return was 52.56% in 1954.
Here are the raw data sorted by the frequency of similar returns:
number of losses >= 44% and < 43% is 1
number of losses >= 37% and < 36% is 1
number of losses >= 36% and < 35% is 1
number of losses >= 26% and < 25% is 2
number of losses >= 22% and < 21% is 1
number of losses >= 15% and < 14% is 1
number of losses >= 13% and < 12% is 1
number of losses >= 12% and < 11% is 1
number of losses >= 11% and < 10% is 2
number of losses >= 10% and < 9% is 2
number of losses >= 9% and < 8% is 5
number of losses >= 7% and < 6% is 1
number of losses >= 5% and < 4% is 1
number of losses >= 4% and < 3% is 1
number of losses >= 2% and < 1% is 3
number of gains >= 0% and < 1% is 1
number of gains >= 1% and < 2% is 2
number of gains >= 2% and < 3% is 1
number of gains >= 3% and < 4% is 1
number of gains >= 4% and < 5% is 1
number of gains >= 5% and < 6% is 4
number of gains >= 6% and < 7% is 2
number of gains >= 7% and < 8% is 2
number of gains >= 9% and < 10% is 1
number of gains >= 10% and < 11% is 2
number of gains >= 12% and < 13% is 2
number of gains >= 13% and < 14% is 1
number of gains >= 14% and < 15% is 2
number of gains >= 15% and < 16% is 2
number of gains >= 16% and < 17% is 2
number of gains >= 18% and < 19% is 5
number of gains >= 19% and < 20% is 2
number of gains >= 20% and < 21% is 2
number of gains >= 22% and < 23% is 3
number of gains >= 23% and < 24% is 3
number of gains >= 25% and < 26% is 2
number of gains >= 26% and < 27% is 1
number of gains >= 28% and < 29% is 2
number of gains >= 29% and < 30% is 1
number of gains >= 30% and < 31% is 2
number of gains >= 31% and < 32% is 4
number of gains >= 32% and < 33% is 2
number of gains >= 33% and < 34% is 1
number of gains >= 35% and < 36% is 1
number of gains >= 37% and < 38% is 2
number of gains >= 43% and < 44% is 2
number of gains >= 46% and < 47% is 1
number of gains >= 49% and < 50% is 1
number of gains >= 52% and < 53% is 1
Ups and Downs
After a down year, the following year was a down year 8 times out of 24 (33.33%), and was an up year 16 times out of 24 (66.67%).
After an up year, the following year was a down year 16 times out of 63 (25%), and was an up year 47 times out of 63 (75%).
Streaks
Here are the streaks of consecutive down years:
streak starting in 1973 for 2 consecutive years
streak starting in 1939 for 3 consecutive years
streak starting in 2000 for 3 consecutive years
streak starting in 1929 for 4 consecutive years
Here are the streaks of consecutive up years:
streak starting in 1935 for 2 consecutive years
streak starting in 1967 for 2 consecutive years
streak starting in 1975 for 2 consecutive years
streak starting in 1954 for 3 consecutive years
streak starting in 1978 for 3 consecutive years
streak starting in 1963 for 3 consecutive years
streak starting in 1970 for 3 consecutive years
streak starting in 1942 for 4 consecutive years
streak starting in 1958 for 4 consecutive years
streak starting in 2003 for 5 consecutive years
streak starting in 1947 for 6 consecutive years
streak starting in 2009 for 7 consecutive years
streak starting in 1982 for 8 consecutive years
streak starting in 1991 for 9 consecutive years
Streaks of up years tend to be longer, and occur more frequently, than streaks of down years.
Mean, Standard Deviation, and Compound Annual Growth Rate [CAGR]
The mean return was 11.4122%. This is the simple arithmetic average of all of the returns.
The interpretation of "average" is not as easy as it looks. Perhaps you've heard the quote from William Kruskal's article, "Statistics, Moliere, and Henry Adams", American Scientist 55 (1967), p. 416 to 428: "A man standing with one foot in a bucket of boiling water and the other in a bucket of freezing water would be a ridiculous fool to summarize his experience by saying, "On the average, I feel fine.""
Suppose you begin with $100. During the first year, you experience a return of +50%, and end up with $150. During the second year, you experience a return of 50%, and end up with $75. It is indeed nonsensical to claim that your "average" return was 0.
Standard deviation "is a measure that is used to quantify the amount of variation or dispersion of a set of data values. A standard deviation close to 0 indicates that the data points tend to be very close to the mean (also called the expected value) of the set, while a high standard deviation indicates that the data points are spread out over a wider range of values."
The standard deviation of S&P 500 returns was 19.7028%.
This means that 68% of the time the S&P 500 return was between the mean +/ one standard deviation (i.e. 8.2906 and 31.115), 95% of the time the S&P 500 return was between the mean +/ two standard deviations (i.e. 27.9934 and 50.8178), and 99.7% of the time the S&P 500 return was between the mean +/ three standard deviations (i.e. 36.284 and 81.9328).
To help you visualize what this means, there is a good diagram here.
The compound annual growth rate [CAGR] answers the question, "What constant rate of return would take you from the starting value to the ending value over the time interval?". If you bought $1 worth of S&P 500 at the beginning of 1928, you would end up with $2,940.88 at the end of 2015. The CAGR of S&P 500 returns was 9.5%.
Conclusions
What conclusions can be drawn from these data?
I hesitate to make guesses, estimates, or predictions of future returns based on the history of past returns, because as all investors hear at least once per day, "past performance is no guarantee of future results".
One must be careful to avoid the Gambler's Fallacy  "the mistaken belief that, if something happens more frequently than normal during some period, it will happen less frequently in the future, or that, if something happens less frequently than normal during some period, it will happen more frequently in the future (presumably as a means of balancing nature)."
2015 was the 7th year in a streak of up years. What does that say about 2016? Sadly, very little of statistical significance.
I wish good luck to all investors.
]]>http://www.tessellation.com/dividends
If you'd like me to add a company I don't already have, please let me know.
Thanks,
Robert Allan Schwartz
]]>http://www.tessellation.com/dividends
If you'd like me to add a company I don't already have, please let me know.
Thanks,
Robert Allan Schwartz
]]>Perhaps the most common answer is 30. Why is that?
Here is an explanation of why 30 is used as a sample size. It states: "The answer really hinges on an understanding of how confidence intervals for the standard deviation are created, and how they rely on the sample size for their accuracy: the larger the sample size, the better the accuracy of the standard deviation estimate." Terms like "confidence interval", "standard deviation", "sample size", etc. are from statistics. Don't worry, you don't have to know or understand any statistics in order to read and understand the rest of this article.
The most common use of statistics in investing comes from Modern Portfolio Theory (MPT), invented by Harry Markowitz in the 1950's.
I am an investor, but I do not invest using MPT, so MPT's answer of 30 won't help me. I still wonder how many companies should I own?
The smallest number is one  I could "put all my eggs in one basket". If you do that, then make sure you follow the rest of this Mark Twain quote: "Put all your eggs in one basket and then watch that basket." With all of your cash invested in only one company, you run a very large risk of not achieving your investing goals: If you are a capital gain investor, then the share price might go down; if you are an income investor, then the dividend might be frozen, reduced, or eliminated.
The largest number is "all of the companies available for purchase on any stock exchange in any country", which is surely in the tens of thousands or more. When I think of how long it would take to perform due diligence on that many companies, I immediately reach for the nearest bottle of aspirin (or single malt scotch).
The "right" number must be somewhere inbetween.
You and I likely have different investing goals, different investing timeframes, different investing strategies, different investing tactics, etc. so I'm only asking the question, "What is the right number for me?" You might ask a similar question for yourself.
Rather than ask if the right number for me is 20, 30, 40, or any other particular number, I'm going to ask a slightly different question: If I have cash to invest, should I invest it in one of the companies I already own, or should I invest it in a company I do not already own? If I choose the former, then I will not change the number of companies I own; if I choose the latter, then I will change the number of companies I own.
The obvious answer is, "It depends". What does it depend on?
Which is more likely to achieve your investing goals  investing new cash into one of the companies you already own, or investing new cash into a company you do not already own? If adding one more company to your portfolio allows you to achieve your investing goals sooner, or with more safety, or with higher probability, then it might make sense to add one more company to your portfolio.
Of course, adding one more company requires you to spend more time once on due diligence, and more time on an ongoing basis to monitor that company. If you would rather not spend more time on investing, then it might make sense to not add one more company to your portfolio.
Conclusion
Rather than start with the goal of owning a particular number of companies, my approach is as follows: As long as adding one more company helps me achieve my investing goals, and I'm willing to spend more time on investing, then I buy shares in that company; when there is no company out there that could help me achieve my investing goals better than all of the companies I already own, then I maintain the same number of companies. This means that my number of companies goes up and down over time  up when it's beneficial for me to own one more company, and down when a company's performance stops helping me achieve my investing goals so I sell it.
]]>Perhaps the most common answer is 30. Why is that?
Here is an explanation of why 30 is used as a sample size. It states: "The answer really hinges on an understanding of how confidence intervals for the standard deviation are created, and how they rely on the sample size for their accuracy: the larger the sample size, the better the accuracy of the standard deviation estimate." Terms like "confidence interval", "standard deviation", "sample size", etc. are from statistics. Don't worry, you don't have to know or understand any statistics in order to read and understand the rest of this article.
The most common use of statistics in investing comes from Modern Portfolio Theory (MPT), invented by Harry Markowitz in the 1950's.
I am an investor, but I do not invest using MPT, so MPT's answer of 30 won't help me. I still wonder how many companies should I own?
The smallest number is one  I could "put all my eggs in one basket". If you do that, then make sure you follow the rest of this Mark Twain quote: "Put all your eggs in one basket and then watch that basket." With all of your cash invested in only one company, you run a very large risk of not achieving your investing goals: If you are a capital gain investor, then the share price might go down; if you are an income investor, then the dividend might be frozen, reduced, or eliminated.
The largest number is "all of the companies available for purchase on any stock exchange in any country", which is surely in the tens of thousands or more. When I think of how long it would take to perform due diligence on that many companies, I immediately reach for the nearest bottle of aspirin (or single malt scotch).
The "right" number must be somewhere inbetween.
You and I likely have different investing goals, different investing timeframes, different investing strategies, different investing tactics, etc. so I'm only asking the question, "What is the right number for me?" You might ask a similar question for yourself.
Rather than ask if the right number for me is 20, 30, 40, or any other particular number, I'm going to ask a slightly different question: If I have cash to invest, should I invest it in one of the companies I already own, or should I invest it in a company I do not already own? If I choose the former, then I will not change the number of companies I own; if I choose the latter, then I will change the number of companies I own.
The obvious answer is, "It depends". What does it depend on?
Which is more likely to achieve your investing goals  investing new cash into one of the companies you already own, or investing new cash into a company you do not already own? If adding one more company to your portfolio allows you to achieve your investing goals sooner, or with more safety, or with higher probability, then it might make sense to add one more company to your portfolio.
Of course, adding one more company requires you to spend more time once on due diligence, and more time on an ongoing basis to monitor that company. If you would rather not spend more time on investing, then it might make sense to not add one more company to your portfolio.
Conclusion
Rather than start with the goal of owning a particular number of companies, my approach is as follows: As long as adding one more company helps me achieve my investing goals, and I'm willing to spend more time on investing, then I buy shares in that company; when there is no company out there that could help me achieve my investing goals better than all of the companies I already own, then I maintain the same number of companies. This means that my number of companies goes up and down over time  up when it's beneficial for me to own one more company, and down when a company's performance stops helping me achieve my investing goals so I sell it.
]]>