The summer after my junior year in college, I travelled in Scandinavia. I found a lovely little art museum called the Louisiana Museum, in Humlebæk, Denmark. In the gift shop was a highly colorful painting by an artist named Ay-O. The price was $100, which was a lot of money for a college student in 1976. I was willing to spend that much to buy it, but I wasn't willing to pay the additional cost of shipping it home. I couldn't carry it with me, and I didn't want to pay to ship it, so I didn't buy it.
I have regretted that decision ever since 1976, and the money I saved was not worth the cost of my regrets.
I thought I had learned my lesson when, a year after my wife and I were married, we began looking for a house. We found one we liked. We put in an offer near the top of what we could afford. The broker told us that our offer had been out-bid, and recommended that we offer an additional $10,000. My wife and I were reluctant to go that high, but we really loved the house. I grabbed a calculator, and quickly computed that $10,000 divided by 10,950 days (30 years * 365 days per year (I was willing to ignore leap-years J)) was 91 cents per day. I asked my wife if she loved the house enough to spend an extra 91 cents per day; she said she did; we raised our bid, bought the house, and have happily lived in the house for many years now.
Recently I realized that I had not learned my lesson. In late April, reports surfaced of Walmart's alleged bribery in Mexico. The stock dropped from $62.45/share on April 20, to a low of $57.36 on April 25, before it started climbing again. When I saw it drop below $58.00, I got greedy, and put in a limit order at $57.00. The price never got that low, the limit order didn't execute, and I didn't get WMT at my price. I should have just put in a market order, and bought WMT at $58.00.
I have regretted that decision since then, and the money I saved was not worth the cost of my regrets.
I recently wrote an article called, "What Do I Want To Buy? When Should I Buy It?". In the article, I described my rules concerning which companies to buy. A candidate has to have a minimum of 10 consecutive years of rising dividends; each dividend increase has to be 5% or more; the current yield at the time of the purchase has to be 3% or more; etc.
The good news is, any company that passes my tests is likely to be a good dividend growth company for many years.
The bad news is, I might be missing out on other good dividend growth companies that don't pass my strict tests.
The following Dividend Champions have raised their dividends high enough and long enough to pass some of my tests, but their current yield is below 3%, and they are currently overvalued:
The following Dividend Contenders have raised their dividends high enough and long enough to pass some of my tests, but their current yield is below 3%, and they are currently overvalued:
Should I buy some of these overvalued companies now, because (like buying my house) in the future, I will be glad that I overpaid a little?
Or should I not buy these companies now, because (like not buying WMT) in the future, the money I saved will not be worth the cost of my regrets?
I have no idea. :-(
What do you think?