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  • Hasbro Flies High, But What Does This Mean For Dividend Growth Investors? [View article]
    Yes, for clarity's sake: At the end of 2012, like many dividend paying companies, HAS rushed out a payment early to avoid the uncertainty of Bush-era taxes cuts expiring. They would have paid a $.36 dividend in Jan 2013 but they paid it out in late December 2012. In April 2013 Hasbro paid a $.40 dividend. Now they have declared, and will pay in April 2014, a $.43 dividend.

    I also own MO myself so maybe it's time for some reallocation like you said! Sounds like a great company to reexamine for another article.
    Feb 11 09:18 PM | Likes Like |Link to Comment
  • How Apple Can Help You Retire When You Want [View article]
    Thank you Gypsy, I could not look up any historical information when I commented on this article.
    Jun 28 01:40 PM | Likes Like |Link to Comment
  • How Apple Can Help You Retire When You Want [View article]
    What has their P/E and earning done in the mean time? In 10 years, yeah, there isn't much price change. But don't cherry pick and forget the 10 before that when MSFT was riding high on the dotcom nonsense-wave and their P/E was absurd. We're talking about a company that trades for less than 10x earnings on year 1
    Jun 28 10:48 AM | 2 Likes Like |Link to Comment
  • How Apple Can Help You Retire When You Want [View article]
    I'm not going to get into an Apple fight, so let's just say there is a company called Oranges.

    Oranges has a yield of 3.0% and dividend growth rate (DGR) of 15%. We won't even consider stock buybacks but they are going to have to seriously grow their earnings if they want to sustain a DGR of 15% forever. We'll be generous and say their earnings grow at 15% of year.

    So let me get this straight. We have a company that double the dividend and earnings every 5 years. I invest in them for 20 years. That means the dividend and earnings double four times - eg, start at year 1, double (2x the original) in year 5, double again (4x) in year 10, double again (8x) in year 15 and finally double one last time in year 20 (16x). Now, **assuming their share price never changes** that means in 20 years their be is 1/16th of what it is today and their dividend is 16 times larger.

    While I applaud a dividend growth model for not relying on share price as part of the 'will they run out of money' question how in the hell can anyone construct a model that assumes, for the sake of reinvestment, that share price never changes? If they company has a P/E of 16 today (and Oranges is more like 9.5) that means you're expecting them to have a P/E of 1.00 in 20 years. After growing earnings at 15% per year. For 20 years. That's not a "no," that's a "hell no!"

    I believe in dividend growth investing and that's what I'll rely on for my retirement but this is not in any way a reliable expectation for the behavior of a dividend growth portfolio. It doesn't even mention cash flow which is what a dividend growth portfolio is about. This model and article are flat out destructive to anyone weighing the pros and cons for dividend growth investing.
    Jun 28 08:38 AM | 5 Likes Like |Link to Comment
  • Buy Coca-Cola: It Will Pay Dividends In The Long Run [View article]
    > "with a long standing dividend which has been paid since 1987,"

    Yeah, I stopped reading here.
    May 14 08:21 AM | 2 Likes Like |Link to Comment
  • Twenty Dividend Stocks I Recently Purchased For My IRA Rollover [View article]
    "I should know better, since economists as a group are known for having forecast nine out of the past five recessions."

    Classic.
    May 2 08:57 AM | 5 Likes Like |Link to Comment
  • Want To Retire Before 60? Here Is What You Need To Know [View article]
    noobie, I definitely feel like that is an under served group in most of the retirement articles you'll find. I have written about some those scenarios in my articles. You can look at my article history if you're interested but I'm not going to post links in someone else's article without their permission.
    May 1 11:06 AM | 2 Likes Like |Link to Comment
  • Is Dividend Growth Investing Crippling Your Dividend-Based Retirement? [View article]
    I agree that this is a surprising result but I stand by my math.

    In that case we're talking about a stock that has had 1% growth for 30 years while the dividend has grown by 10% for 30 years. The dividend has grown four fold and the stock price barely moves. With dividends reinvested that portfolio becomes a dividend monster.

    However, as I described that is a very unlikely scenario. Coke has grown their dividend at that rate (and I recommend you look at their dividend history on their website) but of course their share price has grown as well.
    Apr 24 10:58 AM | 2 Likes Like |Link to Comment
  • Is Dividend Growth Investing Crippling Your Dividend-Based Retirement? [View article]
    I agree that taxes play a part in the decision about where to invest your retirement funds. I will just say that I'm still in the 25% bracket given the choice I don't know that I would ever be in a lower bracket. I also like the idea that Roth IRAs don't have RMDs so, in a perfect world, I would never even take dividend distributions from the Roth. I imagine I will but at least it will be the amount I need and not a mandated amount.

    It's also worth pointing out that I participate in an employer matched 401k and everyone should too because it's free money. I agonize over what my Roth returns but the truth is that my 401k gains 100% the day it is invested so I don't even think about my 401k performance. We'd have to experience at 50% decline before I actually lose money.

    As the other commenter points out, there is an income based contribution limit to the Roth so it may make sense to add money to a Roth while you can and switch to other investment vehicles if your income passes a certain threshold.
    Apr 24 10:53 AM | Likes Like |Link to Comment
  • Is Dividend Growth Investing Crippling Your Dividend-Based Retirement? [View article]
    Robert, it may not be the case in investing that the last 40 years will repeat itself.

    Similarly, with the government's own measurements indicating about 12% under employment and the lowest labor force participation rates in 30 years one should not assume that the next 40 years will mirror the last 40 years in terms of employment possibilities either. I focus on retirement for several reasons not the least of which is that I can't imagine I will have to continue my line of work until I'm 65.

    Education is great but I know people that paid more for college and/or graduate degrees than I did for my house. And I have a higher income than they do. Education has become big business and while valuable it is not worth what some places charge. Now, to relate this to the article...

    As a commenter above pointed out, it is difficult to max out IRAs when you have kids in daycare and a mortgage. That is true and I don't mean to make light of that commenter's situation. However, when you start your adult life with $100,000 of debt that cannot be discharged in bankruptcy that makes investing difficult too. Plus, you will ultimately pay $250,000 or more over the life of the loan. In all scenarios in the article the invested capital was only $150,000 over 30 years.

    If $250,000 were equally invested over 30 years with all the assumptions retained in the article, plus 1% growth for dividend and share price you would still have an ending portfolio value of $561,108.

    Yes, everyone's circumstances will be different but since we're talking about retirement young people must ask themselves very plainly: will the benefits of my education outweigh the costs?
    Apr 23 07:32 PM | 1 Like Like |Link to Comment
  • Is Dividend Growth Investing Crippling Your Dividend-Based Retirement? [View article]
    Myer, thanks for the perspective. I do have a 401k that is actually larger than my Roth IRA. Because the 401k doesn't have a large number of investment options it is my 'set it and forget it' portfolio. I aim to diversify across market cap and to some extent geographic region. The Roth I try to use for dividend growth investing through a 'buy and monitor' approach.

    I am glad to hear that DGI worked out for your retirement needs. Taxes are normally left as an exercise of the article's audience but you raise an interesting point about the ratio of taxable and tax sheltered accounts. Perhaps annual portfolio reviews for intra-portfolio rebalancing should include inter-portfolio planning or rebalancing to assess future distribution taxes?
    Apr 23 06:08 PM | 1 Like Like |Link to Comment
  • Is Dividend Growth Investing Crippling Your Dividend-Based Retirement? [View article]
    mostserene, thanks for sharing your experiences. I always enjoy hearing the 'slow and steady' approach to achieving financial independence in retirement. Just having a discipline approach obviously goes a long way.

    I was still in the "knowledge accumulation" phase when the Great Recession hit and I did not participate in the value investing fest it kicked off. In the future I will definitely be greedy when others are fearful. The major drops like 2008 - 2009 seem to repeat thanks to our boom-bust mentality. I don't necessarily hope that we have another event like that but it seems like you can almost set yourself up for life with the value investing that such an event presents. You often hear that younger investors should take more risk because they have longer to recoup losses. I like that you were able to take a substantial loss towards the end of your accumulation, realize the value to be had and be in a position to invest in the value. Kinda sticks a spanner in the works of traditional thinking!
    Apr 23 05:56 PM | 2 Likes Like |Link to Comment
  • Is Dividend Growth Investing Crippling Your Dividend-Based Retirement? [View article]
    dividendbonanza, in these examples the yield was fixed and DGR and price appreciation were variable. I hope to explore the relationship between yield and DGR as you mentioned in #4. I agree that lower yield + higher growth eventually trumps high yield + low growth but only in terms of the dividend itself. I would be interested to see how that stands up when factoring in price appreciation.

    Thanks for the comment and well wishes.
    Apr 23 05:43 PM | 1 Like Like |Link to Comment
  • Is Dividend Growth Investing Crippling Your Dividend-Based Retirement? [View article]
    Ruralist, just to be clear, my calculations that I reported were all based off of investing a set contribution over time. The portion you quoted was questioning how to start even a relatively small DIY portfolio. Yes, I certainly agree that valuation is a paramount concern and you probably would be better off buying larger or whole positions first than emphasizing diversity. Every category goes through cycles of some kind but perhaps well valued consumer staples would be best to start large positions with? That way you'd hopefully have some blue chip dividend payers to start with that would not fluctuate wildly as you continue to build the rest of the portfolio.

    Thanks for also pointing out that portfolios take time to build. That should be implicit given their long duration but it is a fact that is overlooked in some of the "take $100,000 invest it MCD, WMT, T and JNJ" guides that we see.
    Apr 23 03:39 PM | Likes Like |Link to Comment
  • Is Dividend Growth Investing Crippling Your Dividend-Based Retirement? [View article]
    True, spouses can contribute to your joint retirement but they still double the food, gasoline, cellphones and plane tickets you'll want in retirement. It is more principal to compound but no matter what I see health care as the dominant cost in retirement and a spouse can increase that by a multiple of 0 to 10, there's no telling. It is certainly worth running the numbers but I am unmarried so it did not enter my calculations. You should probably start retirement planning the moment you start earning money which predates your getting married.

    Before anyone asks I consider housing costs to be zero because you'll want your house paid off before you retire anyway.
    Apr 23 03:28 PM | 1 Like Like |Link to Comment
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