I have to admit, I did not perform DD regarding ETY. An article was recently written (on SA) about it touting it as the one to buy this year, so I figured if/when I decide to buy into a CEF, it will be the first I look into. However, I also noticed that the distributions, NAV, and market price keep falling. As noted above, I was hoping to avoid using real securities in the article, because the whole premise entirely theoretical (for better or for worse)- it's merely intended to see the broad picture. One must look deeper into all facts related to his situation and investment options.
But, not even considering your point yet, I ran into the following conundrum. Why should I bother putting money into any CEF (even one with stellar/stable performance) if I really intend to let it sit for longer than any "normal" dividend growth stock would return higher? Would it only be for the possibility that I need more income sooner? The amount that I will be putting in, at the beginning at least, will likely not warrant withdrawing the income from anyway.
Thank you for pointing that out. I completely agree with you. In fact, in the original draft, I had a paragraph delineating my assumptions, including the one you mentioned. I had to scrap that article because it didn't deal with specific equities. In that one, I took the average of each of the three CCC lists and compared them to a random equity that may pay 9%. SA didn't like the fact that I didn't reference any real equities, though, and I had to rewrite the article. That being said, I probably should have left in the paragraph referred to, but I incorrectly assumed it would be obvious and of little value.
As the "youngster" that I am, I personally have difficulty imagining anything maintaining high performance (or any stable performance, for that matter) for such long periods. What I am working toward is convincing myself that equities (specifically dividend growth) actually can. But of course, there is risk as to many aspects that relate to and effect performance, and it was negligent of me to not be more specific.
I appreciate your dropping a line. There are a group of SA members who I have come to respect (more than the rest) and look forward to reading their contributions, be it in articles, blogs, or comments. You are in my group.
Can you imagine sitting in the cabin of a plane and the pilot gets on the radio and says, "Welcome aboard. It looks like we don't have enough gas in the plane, but I think if we just go for it, we'll make it." NOBODY's going to stay on that plane. So why should we?
Are you reading the copy with Zwieg's commentary? I'm not commenting whether he's a source to be reckoned with, but he brings facts proving Graham's ideas 60 years later. Phenomenal.
Just this morning, I read basically your exact point in Single Best Investment- a certain amount of dividend growth is essential, but there is the inherent uncertainty of the maintenance of such growth (more than continued dividends).
Lowell went on to add that even if you can find a company that grows at a high, consistent rate, it can take so long for it to surpass a higher yield/slower growth company, only adding to the strength of your (and Lowell's own) point.
Thanks for the feedback, and from what I've seen of your site, it looks to be very helpful. I plan on spending significant time checking it out once I get more serious about initiating positions.
I don't know if you've read chowder's other posts, nor do I know your policy on opening links posted by strangers, but I posted a link to a pdf of SBI on another of chowder's instablogs here http://seekingalpha.co... entitled "dividend growth investing- getting your mind right." There are definitely certain advantages to having it on your computer, and saving the ten bucks, but that's each person's call obviously.
Procter & Gamble: A Great Company, But A Bit Expensive At Current Valuations. [View article]
Good point. Thank G-d, little debt. My wife has approximately 13k in loans. We're making monthly payments on it, and actually this morning I started with another "principal only" payment, which I hope to do at least once a month.
From these same "close people," it came recommended to not blow 13k paying the debt off at once, taking 2 considerations into account. First, and the lesser, is the tax deduction makes the interest payments too burdensome. Second, having a sum of 13k is not so easy to come by, whereas paying $193/month is very doable. If the situation were reversed, so to speak, and I pay the loan off, and then try to contribute the $193 to an invest-able sum of 13k, it would take several years to add to that amount, and it would require a lot of discipline (although it shouldn't require much more discipline, since in either case it can be auto-debited!).
Other than that: debt-free; we're sitting on cash (13k+a little); and the "post-practice funds" sitting with a wealth manager or whatever he calls himself nowadays (for some reason, it's assumed by all parties involved that this money will stay there and be available for the down payment, notwithstanding or not really caring about any decrease in principal).
Procter & Gamble: A Great Company, But A Bit Expensive At Current Valuations. [View article]
Thanks. I was hoping for a free resource, although free will almost never be as good. It's difficult for me to spend more money on the research than I can expect the return at this juncture.
I guess my most pressing question can fit in here as well as anywhere:
I would like to move my family into a house in the relatively near future. With my current job and my perceived lack of security in it (not to mention I don't think I'm being compensated at a fair rate :) ), I don't feel comfortable taking on a mortgage just yet. My position right now, and has been recommended by people close to the situation, is stay out of the markets because I don't want to be caught with getting a better job and the stability to afford a house with my down payment funds tied up and worth (read: market price) diddly (in the event of a correction over this indefinite period of time). But I want to get my "compounding machine" set up (not to mention that I want a couple years of practice before I take back control of the money that's sitting in mutual funds, and I want to see if I can do this already!).
So, basically, it's not a question. But I'm looking for inspiration that I should just start investing and getting this ball rolling; alternatively, I need someone to slap me silly and just be patient. Thanks in advance.
CenturyLink Shocks The Market With Its Dividend Cut [View article]
I second Neal. I always give it a second day, up to a week to level out. Look at KO the past 3+ days. As nonvolatile as KO is, it could be a chance for a quick capgain, not to mention the expected div increase announcement in the coming days.
Ignoring 52-Week Highs, Reinvesting Dividends And Other Lessons Learned [View article]
I respectfully disagree with your first paragraph, as the logic really could go either way. If it were true, then one should never invest and wait on the sidelines forever, so as not to lose out. Clearly, everyone within these walls sees the value of being invested, and taking the dips and bumps in stride. But I think the value of your (the common approach) is that you have a rule. That psychological advantage is probably more important than getting in +/- 1 month.
As to your second paragraph, I think I will end up doing something similar. I may even base the minimum amount on the stock I'm buying, so that the commission will be "paid back" in the first dividend received. But who knows. I'm still contemplating my macro situation (that may or may not be the proper usage) which is preventing my current investing, and anything can change after the present.
Establishing My Dividend Growth Strategy And Portfolio As A New Investor [View article]
You can multiply your target by an inflation factor.
Alternatively, you can ignore the specifics of inflation (of course we *know* we'd love to beat it), and in due time worry about it. If inflation increases faster than you expect, you may find that your corporate stakes are producing more revenue, earnings, and dividends than your original projections, too.
AIG - Buy It Today For Value And Sell Covered Calls For A 37.5% Annualized Yield Rate [View article]
But you would have to close the put if the stock drops below your strike and you no longer want it assigned.
Which is a nice segue, and I might as well ask. I sold a put on a company because it was such a high premium, like too-good-to-be-true premium, and it was. Accounting scandal tanked the stock, now it's trading at about 50% of the strike. I've been rolling out the options for about a year , because psychologically I think it's better to try and withdraw some of my principle (the protect the principle principle!) and making a little bit off of the premiums.
But my question is, is it? Should I pay to close out the position, or let the option get assigned to me, or should I continue what I'm doing? Is it simply a matter of what my return on the position is? Chances are I'd get a better return if I take my money elsewhere, but then I have to face a real loss.
The last couple of days, the stock actually has been trading higher. I'm really curious how its earnings report tmrw will play out.
DMND, in case you're wondering. I sold the put literally the day the scandal broke! Clearly some people already had wind of the information or the premiums wouldn't have been so high. That's neither here nor there. Thankfully, I feel confidant that I've learned a lesson and it will cost less than $3k, maybe less depending on how it plays out.
Dividend Growth Investing - Getting Your Mind Right [View instapost]
Are your returns better than they were when you were trading? My concern is that in order to properly DG, I need to contribute, and then over time, I would (hopefully) amass wealth. Indeed, I think it's a great plan. But without the capital to contribute, it won't provide with enough income to actually sustain itself. Whereas, my impression is that, assuming one can be successful at it, trading can act as an "income-earning job" in the sense that it can provide a source of income to then contribute in DG fashion.
Dividend Growth Investing - Getting Your Mind Right [View instapost]
Ok, last post about this from me- my computer just finished running an AVG scan, which I commenced after having opened and saved the pdf to my desktop, virus free. Hooray!
I mean, I guess if you trust me, you probably already clicked on the link, and if you don't then you won't believe this either! But I figured I'd share anyway.
High Yield Vs. Dividend Growth [View article]
I have to admit, I did not perform DD regarding ETY. An article was recently written (on SA) about it touting it as the one to buy this year, so I figured if/when I decide to buy into a CEF, it will be the first I look into. However, I also noticed that the distributions, NAV, and market price keep falling. As noted above, I was hoping to avoid using real securities in the article, because the whole premise entirely theoretical (for better or for worse)- it's merely intended to see the broad picture. One must look deeper into all facts related to his situation and investment options.
But, not even considering your point yet, I ran into the following conundrum. Why should I bother putting money into any CEF (even one with stellar/stable performance) if I really intend to let it sit for longer than any "normal" dividend growth stock would return higher? Would it only be for the possibility that I need more income sooner? The amount that I will be putting in, at the beginning at least, will likely not warrant withdrawing the income from anyway.
High Yield Vs. Dividend Growth [View article]
Thank you for pointing that out. I completely agree with you. In fact, in the original draft, I had a paragraph delineating my assumptions, including the one you mentioned. I had to scrap that article because it didn't deal with specific equities. In that one, I took the average of each of the three CCC lists and compared them to a random equity that may pay 9%. SA didn't like the fact that I didn't reference any real equities, though, and I had to rewrite the article. That being said, I probably should have left in the paragraph referred to, but I incorrectly assumed it would be obvious and of little value.
As the "youngster" that I am, I personally have difficulty imagining anything maintaining high performance (or any stable performance, for that matter) for such long periods. What I am working toward is convincing myself that equities (specifically dividend growth) actually can. But of course, there is risk as to many aspects that relate to and effect performance, and it was negligent of me to not be more specific.
I appreciate your dropping a line. There are a group of SA members who I have come to respect (more than the rest) and look forward to reading their contributions, be it in articles, blogs, or comments. You are in my group.
Market Strategies - The Philosophy [View instapost]
Market Strategies - The Philosophy [View instapost]
And chowder, thanks for another good one!
High Yield Vs. Dividend Growth [View article]
Lowell went on to add that even if you can find a company that grows at a high, consistent rate, it can take so long for it to surpass a higher yield/slower growth company, only adding to the strength of your (and Lowell's own) point.
Thanks for the feedback, and from what I've seen of your site, it looks to be very helpful. I plan on spending significant time checking it out once I get more serious about initiating positions.
Establishing A Core Portfolio [View instapost]
I don't know if you've read chowder's other posts, nor do I know your policy on opening links posted by strangers, but I posted a link to a pdf of SBI on another of chowder's instablogs here http://seekingalpha.co... entitled "dividend growth investing- getting your mind right." There are definitely certain advantages to having it on your computer, and saving the ten bucks, but that's each person's call obviously.
Procter & Gamble: A Great Company, But A Bit Expensive At Current Valuations. [View article]
From these same "close people," it came recommended to not blow 13k paying the debt off at once, taking 2 considerations into account. First, and the lesser, is the tax deduction makes the interest payments too burdensome. Second, having a sum of 13k is not so easy to come by, whereas paying $193/month is very doable. If the situation were reversed, so to speak, and I pay the loan off, and then try to contribute the $193 to an invest-able sum of 13k, it would take several years to add to that amount, and it would require a lot of discipline (although it shouldn't require much more discipline, since in either case it can be auto-debited!).
Other than that: debt-free; we're sitting on cash (13k+a little); and the "post-practice funds" sitting with a wealth manager or whatever he calls himself nowadays (for some reason, it's assumed by all parties involved that this money will stay there and be available for the down payment, notwithstanding or not really caring about any decrease in principal).
Procter & Gamble: A Great Company, But A Bit Expensive At Current Valuations. [View article]
I guess my most pressing question can fit in here as well as anywhere:
I would like to move my family into a house in the relatively near future. With my current job and my perceived lack of security in it (not to mention I don't think I'm being compensated at a fair rate :) ), I don't feel comfortable taking on a mortgage just yet. My position right now, and has been recommended by people close to the situation, is stay out of the markets because I don't want to be caught with getting a better job and the stability to afford a house with my down payment funds tied up and worth (read: market price) diddly (in the event of a correction over this indefinite period of time). But I want to get my "compounding machine" set up (not to mention that I want a couple years of practice before I take back control of the money that's sitting in mutual funds, and I want to see if I can do this already!).
So, basically, it's not a question. But I'm looking for inspiration that I should just start investing and getting this ball rolling; alternatively, I need someone to slap me silly and just be patient. Thanks in advance.
Procter & Gamble: A Great Company, But A Bit Expensive At Current Valuations. [View article]
CenturyLink Shocks The Market With Its Dividend Cut [View article]
Ignoring 52-Week Highs, Reinvesting Dividends And Other Lessons Learned [View article]
As to your second paragraph, I think I will end up doing something similar. I may even base the minimum amount on the stock I'm buying, so that the commission will be "paid back" in the first dividend received. But who knows. I'm still contemplating my macro situation (that may or may not be the proper usage) which is preventing my current investing, and anything can change after the present.
Establishing My Dividend Growth Strategy And Portfolio As A New Investor [View article]
Alternatively, you can ignore the specifics of inflation (of course we *know* we'd love to beat it), and in due time worry about it. If inflation increases faster than you expect, you may find that your corporate stakes are producing more revenue, earnings, and dividends than your original projections, too.
AIG - Buy It Today For Value And Sell Covered Calls For A 37.5% Annualized Yield Rate [View article]
Which is a nice segue, and I might as well ask. I sold a put on a company because it was such a high premium, like too-good-to-be-true premium, and it was. Accounting scandal tanked the stock, now it's trading at about 50% of the strike. I've been rolling out the options for about a year , because psychologically I think it's better to try and withdraw some of my principle (the protect the principle principle!) and making a little bit off of the premiums.
But my question is, is it? Should I pay to close out the position, or let the option get assigned to me, or should I continue what I'm doing? Is it simply a matter of what my return on the position is? Chances are I'd get a better return if I take my money elsewhere, but then I have to face a real loss.
The last couple of days, the stock actually has been trading higher. I'm really curious how its earnings report tmrw will play out.
DMND, in case you're wondering. I sold the put literally the day the scandal broke! Clearly some people already had wind of the information or the premiums wouldn't have been so high. That's neither here nor there. Thankfully, I feel confidant that I've learned a lesson and it will cost less than $3k, maybe less depending on how it plays out.
Dividend Growth Investing - Getting Your Mind Right [View instapost]
Am I being overzealous/ignorant/too hopeful?
Dividend Growth Investing - Getting Your Mind Right [View instapost]
I mean, I guess if you trust me, you probably already clicked on the link, and if you don't then you won't believe this either! But I figured I'd share anyway.