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My name is Ron Smith, I am 62 years old and just retired from a community college. I conceptualize our IRA portfolios as Growth and Income funds - about 90% dividend stocks, 10% options (LEAPS mostly) and 0% cash at this time (March, 2013. I checked professor on the description list, but I am... More
  • Two Barriers To Being A Self-Directed, Dividend Growth Investor 1 comment
    Jul 7, 2013 12:04 PM

    Here comes another short post - which is going to be a characteristic of most of my posts.

    1) There have been comments on various Dividends & Income posts I have read lately about how much money an investor might have, how much they can add regularly to what they have and other related matters.

    My feeling on this is that is does not matter much. The fundamental principles of Dividend Growth Investing remain much the same. It does matter a little for diversification purposes - but even with a sum as low as $30,000 one could have twenty $1,500 positions and be on the road.

    Do not let a small balance dissuade you from becoming a self-directed dividend growth investor.

    2) There have also been some comments lately about the ability/desire/time to do a lot of company financial statement analysis and the extent to which that might be a pre-requisite for being a self-directed investor.

    I think it is necessary to learn something about the companies I decide to buy. There are many sources for this information. I like Morningstar's key ratios, giving one a quick look at 10 years worth of important data.

    I also rely on the work of others - and if successful investors are going to detail their work and publish it at places like Seeking Alpha, well I would be a fool not to benefit from their generosity. You do need to learn about who to pay attention to. Here are some of the folks I tend to pay attention to. Please not that paying attention to is not the same as treating everything they write as the gospel truth and does not excuse you from using your own smarts to evaluate what they write.

    Here is a partial list of some of those folks, in my view:

    Chowder, Chuck Carnevale, Bob Wells, Bob Johnson, David Van Knapp, David Crosetti, David Fish and Robert and Robert Allan Schwartz.

    There are others, this list is just off the top of my head

    Lastly for this post, there are some sources of information that cost money. David Van Knapp puts out an annual e-book on the 40 best Dividend Growth Stocks for each year - costs $40, well worth it.

    Morningstar has a Dividend Investor newsletter that I subscribe to. Costs some money - I think it is between $100 and $200 a year. For me, it has already paid for itself.

    A lot of people like F.A.S.T. Graphs - Chuck Carnevale is responsible for this one. I think the basic subscription is about $10 a month and worthwhile.

    And free resources exist. The one I use most is David Fish's Dividend Champions, Contenders and Challengers spreadsheet. Check it out.

    Good luck. Off to do more work on the house.

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    "My feeling on this is that is does not matter much. The fundamental principles of Dividend Growth Investing remain much the same. It does matter a little for diversification purposes - but even with a sum as low as $30,000 one could have twenty $1,500 positions and be on the road.

     

    Do not let a small balance dissuade you from becoming a self-directed dividend growth investor."

     

    I've never understood the sentiment that you need a fortune to begin investing- you have to start somewhere- if you wait until you have a million dollars to start investing, odds are you will never invest. Commissions are low enough that you can open positions that wouldn't be feasible decades ago (my rule is a 1% commission expense, so many of my holding were opened around $1,000). That being said, if you're near or in retirement and only have $30,000 to invest, the likely $1,500 in annual dividends probably won't sustain you.
    8 Jul 2013, 11:17 AM Reply Like
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