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David Crosetti
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I was born and raised in California. I worked in the family business for a number of years and then decided to spread my wings and try working for someone else. My first significant job was with Frito Lay. After a stint in the salty snack business, I transitioned to the beverage industry,... More
  • Why I Am A DG Investor 87 comments
    May 18, 2013 12:57 PM

    Maybe it's just me, but lately I'm beginning to feel like the world has been turned upside down.

    I've noticed that there are many newer visitors to Seeking Alpha and on the other hand, many of the old timers (and I realize that SA has not been around a long time) seem to have moved on to other things.

    I miss many of those older commentators and writers. Occasionally they will show up with a comment or two, but for all intents and purposes, many seem to have gone away.

    In their place is a new crowd. I like new crowds. They have so many ideas and thoughts about investing that are just so wrong. They remind me of me thirty years ago! They seem to think that the stock market is nothing more or less than some casino game and that it is one that they can consistently beat--because they are smarter than the game operators.

    I used to think that way. I remember when I was stationed in the beautiful A Shau Valley in Vietnam, how I was going to change my life for the good. I was going to become rich and by the time I was 50 (if I got home alive), I was going to go out and take on the challenge.

    Forty years later, it's been a good run. I'm still working. Still trying to make more money. I can't stop. I love the challenge. I love learning the game.

    Last night, as I do on most Friday nights, I recorded the closing values of my different portfolios. Now I'm a DG investor. Boring stocks, no growth, something that only a moron would consider a good investment strategy.

    Now, my spreadsheet tracks the value of each portfolio every month end. The last column on the right is the percentage gain vs. the portfolio values 12 months ago. In effect, it's a rolling 12 month number.

    While the month is not over yet and things change daily, since Aprils month end, the portfolios are up more than 10% in two weeks.

    I think this market has further to run. I'm not chasing anything in particular right now, but I am sitting on my holdings. A correction of 10% would reduce my unrealized gain by exactly the amount that it has increased by over the last 10 trading days.

    But you know what? My dividend checks keep coming in, just like waves at the beach. Over and over and over again. They keep growing with no "corrections." They keep growing at a rate that is greater than inflation. They have finally reached a place where the dividend income I receive is greater than my current salary. That is a fantastic place to be.

    When I retire, I will not be drawing Social Security. I will be taking withdrawals of dividend income from my IRA in an amount that will be less than my current salary. You see, my wife, who is younger than I am, is getting promoted to an Assistant Principal's job in our county school district. She is getting a nice raise, to boot over her current administrator's salary. That raise allows me to withdraw less dividend income from my IRA, so that we will continue to have the same amount of income as we did last year.

    The Social Security, meanwhile will be growing in "value" by 8% a year until I turn 70. That's as big as my benefit is going to get. My wife will be able to use my benefit as a strategy in that she can take half of my benefit or 100% of her own, whichever is greater.

    In the meantime, my dividend income in the IRA will continue to grow--as I am taking out less than the total dividends received--my account will be subject to RMD at my turning 70 1/2, but that's cool because I still have a Roth working and being added to and I will never have to take money out of it at all.

    Money drawn from the IRA over and above our needs will be channeled back into my Roth and my wife's Roth. Kind of a self directed conversion plan. It's almost like a perpetual motion machine!

    But then again, that's the reason I started DG investing and the reason I stay at it. How about you?

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Comments (87)
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  • Thanks Dave for the reasons you are a dividend growth investor. This year has been unprecedented for many of us, especially in capital gains. As Chowder says, watch the dividend stream to be sure it grows each year. Retirement is not the end of the story. It is the beginning!
    18 May 2013, 01:15 PM Reply Like
  • Hi Dave,
    Been a reader since I started investing in 2009. I am so grateful to have found SA and the "old" DG authors.

     

    In 2009, my husbands job was eliminated and we were suddenly in retirement two to three years earlier than planned. He had to take a reduced social security benefit. Fortunately, we had saved like crazy, and had a pension that covered about half of our expenses, but it has no COL provision. We were OK as long as we watched expenses, but I was worried about future inflation, and I decided that we would not touch any principal for four years, until I hit social security eligibility, and our financial situation eased up a bit. As interest rates were so bad, I had to change my ultra conservative investment strategy of CDs and Treasuries. I came across an article by DVK, found his book then other authors, like you (and Norm) and I found DGI. It just made sense to my situation.

     

    I was lucky to have started when I did, because I bought some great companies at bargain bin prices, and with dividend reinvestment of most, not all, companies, our portfolio has grown dramatically. Now I realize it was dumb luck to have started when I did, and I just try to keep learning from the smart guys and become a better investor.

     

    Well, I am now eligible for social security, and my first goal has been met. But having learned so much here, I have a new goal, which is to continue to leave principal untouched, for the most part, and build that income stream every year. I love updating my dividend spreadsheet every month and see those dividends compounding and increasing. We don't have kids, but it would be nice to leave a big chunk of money to our favorite charities. Anyways, I want the peace of mind of knowing there are ample funds if (when) we hit a big medical bill. Retirement is great, but we are finding more and more body parts start to need replacement! :)

     

    Hope you and the "old" authors, Norm, the David's, Chowder, keep hanging around SA, because I depend on you guys!
    Marilyn
    18 May 2013, 01:51 PM Reply Like
  • Thanks for the shoutout, OntheRock. I know how you felt when the layoff notice came--it happened to me in 2000. I believe the worst of this depression was the first 10 years. As unprepared as I was, I made it through and my wife finally got Social Security 2 years ago. It has been difficult for our children and their children, but we have been able to help them as we go through the hard times. You have started down the right path with dividend growth investing and will prosper.
    18 May 2013, 02:50 PM Reply Like
  • Author’s reply » Marilyn:

     

    Much appreciated! If not on articles, I'll be in this blog.

     

    Best Wishes,

     

    Dave
    18 May 2013, 03:31 PM Reply Like
  • Author’s reply » Norman:

     

    As always, you are the best!

     

    Dave
    18 May 2013, 03:31 PM Reply Like
  • David - thanks for the thoughtful article. Sounds like that particular valley in Vietnam was indeed beautiful -- it's nice to have good memories.

     

    I'm hoping to do the same thing re the RMD's out of the IRA and dumping some of them into the Roth -- "perpetual motion machine"!!

     

    Yes -- "...like the waves at the beach." Those divies just keep rolling on in...it feels so nice as they do...kinda like when you are at a nice, warm beach, and you are just lazily laying on the sand as the little waves roll in over your legs...over and over and over again (uh, keeping in mind the tide! Due diligence!).

     

    Thanks again David for your thoughts -- it helps me.
    18 May 2013, 03:10 PM Reply Like
  • Author’s reply » Maybe:

     

    Actually, the valley kinda sucked. Our job was to hunt down North Vietnamese and disrupt supply lines coming into Vietnam through Laos. We spent a lot of time shooting our weapons at people shooting their weapons.

     

    Just before that, we relieved the Marines at Khe Sanh. 1st Air Cavalry, 3rd Brigade.

     

    Dave
    18 May 2013, 03:38 PM Reply Like
  • Dave, I agree that I miss some of the old group and that the world is being turned upside down. I'm glad that I started DGI in 2011 and can focus on my dividend income rather than on my inflating balance. It helps me keep my head on straight during this rally. Yes, my balance is growing but my income isn't keeping up. Therefore, I stay cautious. I'll stick with what's working. I won't let that big balance make me do something dumb, like chasing the next great cyclical investment at higher risk. Us old guys need to keep reminding each other, and the newbies, of the fundamentals. I'll be frequenting your blog for the fundamental reminders. Keep writing!
    18 May 2013, 03:52 PM Reply Like
  • Author’s reply » DD:

     

    I'm not sure where they went to. Maybe they got bored. Maybe they are enjoying the fruit of their labors.

     

    Or maybe they realize that there might just be some things in life that are more important than Seeking Alpha--like fishing! Caught a mess of Redfish the other day. Filet and bagged up in the freezer.

     

    Dave
    18 May 2013, 05:45 PM Reply Like
  • Hey Dave,

     

    Always appreciate anything you write and learn invaluable lessons from you.

     

    Thanks.

     

    And the redfish.......... that's what I want to be doing someday.

     

    Where are you catching those guys ? Don't worry I won't be able to go there for a few more years but one day....
    19 May 2013, 10:05 AM Reply Like
  • Author’s reply » Lab:

     

    We go out into the Gulf of Mexico where the oil derricks are! There are all kinds of fish in and around those derricks. Once you get into deeper water it's like going to a fish market!

     

    When we lived in Tampa, we used to fish for Tarpon. Not to eat, but just to catch, fight, and release. Pound for pound, Tarpon is one of the best fighting fish you could ever hook into. If they got to the size of a Sailfish, you would never get them to the boat.

     

    Dave
    19 May 2013, 10:30 AM Reply Like
  • I just received my first 5 dollars in dividends. I had never done this before and it is a very nice feeling to start at some point. I made many mistakes chasing and never getting anywhere. I chased appreciation and almost ended up losing all that that appreciated chasing the next run on a stock I thought might go up. Then I found Chowder and the rest of the ppl here in SA. I also found you and have devoured every article I can find that has any kind of wisdom in it. I now see what I was doing was treating the market like a "casino" and that is what it rewarded me with. My mindset is now changed as a result of the goodwill of those who have been gracious enough to share their wisdom here. For me it is becoming a life changing experience and viewing investing in a different way. So, thank you all so much for all the articles. You have so much to offer the youth of today. Please keep up the good work and perhaps one day those who have known me will be as blessed as I am by you all.-Cheesecake.
    18 May 2013, 06:17 PM Reply Like
  • Hey Cheesecake7, I can relate to your '''I made many mistakes chasing and never getting anywhere. I chased appreciation and almost ended up losing all that that appreciated chasing the next run on a stock I thought might go up.'''

     

    Been there, done that! Those capital gains just don't compound and some people don't seem to understand that. Hopefully they can compound those gains manually better than I ever could, but for me I find letting dividends compound themselves works much better.

     

    Now you have received your first dividends, you need to record on a spreadsheet or ledger or similar the date and how much you received. Then if you reinvest those into the same position (hopefully you have free dividend reinvestment) you'll get even more compounding. I love seeing my spreadsheet with the amount received in May, a slightly bigger amount in August, slightly more than that in November, slightly more again in February, then a lot more in May because they increased their payout.

     

    And then to compare this May with the previous May... Wow! The continual increase in dividends because of reinvestment is almost addictive. Without reinvestment you only see the increase from the company when they increase or you buy more, but as you track the payout from that account and it keeps going up... Wow!

     

    Dividend growth investing... Wow!

     

    :)
    19 May 2013, 10:26 PM Reply Like
  • Thanks Dave.

     

    Your articles are one of the reasons I switched to DG investing. Glad to see its all working so well for you. I hope to get where you are, it looks very nice to me. .
    18 May 2013, 06:19 PM Reply Like
  • Author’s reply » Pen:

     

    I'm not known for having a particularly open mind, but when I realized that I had been a DG investor without knowing it, it was an easy transition for me!

     

    Dave
    19 May 2013, 10:31 AM Reply Like
  • Author’s reply » Cheese:

     

    That is probably the best post I've read in weeks. Thank you for being willing to take a look at what you were doing and then be honest enough with yourself to consider that what you were doing wasn't working.

     

    Most people will continue making the same mistakes over and over again. I am as guilty as the next guy. It took me a long time to wake up and challenge my own belief system. Some of my earliest comments were antagonistic toward DG investors.

     

    I could not believe that they did not sell stuff. I could not believe that they didn't lock in profits or really care all that much about the value of their portfolios. That was nonsense to me--illogical.

     

    Then I started thinking it out. I started running number scenarios with Excel spreadsheets. I started back tracking stocks. Then I took a hard look at my own portfolio and realized that I had a few DG stocks in it and I was already practicing DG investing. I didn't even realize it--because my mind was closed to what they were telling me.

     

    When I applied the DG criteria to my KO, PG, JNJ, CL, and KMB holdings, I realized that these were my most profitable holdings and were sending me dividend checks (that were being reinvested) every quarter. My mutual funds? Disasters. My "can't miss growth stocks?" Even worse. Trying to pick the next best thing? A miserable failure.

     

    I mean, how hard is it to purchase a company like Coca-Cola? Procter and Gamble? Exxon Mobil? Chevron? Walmart? McDonalds? Waste Management? We use the products and services of these companies every day!

     

    By the way--I stole your cheescake recipe and plan on trying it out this weekend. Thanks! (never give away your secret recipes!)

     

    Dave
    18 May 2013, 06:27 PM Reply Like
  • Dead on, Dave. I began using DG investing in our Roth accounts just a couple years ago. Obviously, I'll never be where you are in that I'm within a few years of retirement. I do expect though that we'll better off using a DG philosophy that we ever were with mutual funds.

     

    My 401K began 25 years ago, and has not been a raging success by any means. Mutual funds are the only option there. Upon retirement, I'll be rolling it into an IRA so as to expand our DG holdings. The ultimate goal will be to never touch our principal. Hard to say if that's going to work out, but we're optimistic.
    18 May 2013, 09:05 PM Reply Like
  • Author’s reply » Steve:

     

    Never touching the principal is the way to go. The goal. But whether you make that goal or not, the fact that you tried is all that matters in the end.

     

    You didn't stop working at it. Be proud of that and who knows--once you convert your 401k, you might just hit the land of critical mass!

     

    Dave
    18 May 2013, 10:45 PM Reply Like
  • Most of my wealth was tied up in 401(k) funds when I was working. Like Steve, it never seemed to gain much from income. It seemed what I invested each paycheck moved the needle, but not the returns. When I finally was able to get my money out of the 401(k) mutual funds and into DGI, suddenly the income the became material. The posted and "hidden" fees in the 401(k) program must be crazy high to have sucked up that much income. Getting money out of the 401(k) and mutual fund system was the best thing that ever happened to me!
    19 May 2013, 11:07 AM Reply Like
  • Author’s reply » DD:

     

    After I left Coca-Cola, my job longevity kinda went to hell in a handbasket. (Hey, I get bored easily). At each of the companies that I worked for (the current one is the second longest period of time with 6 years under my belt, but getting antsy) I've joined into the 401k.

     

    Now, one of the companies--Suntory Water Group--had a very good plan. I stayed their 7 years (longest job on record besides KO) and during that time put away a nice sum of money and had it appreciate quite well too.

     

    I digress. But in each case, upon leaving the companies I have worked for, that 401k money was rolled into my Schwab IRA with a direct transfer and I went from those mutual funds to individual stocks.

     

    The advantage to a 401k is that it allows you to triple the amount of money that you can defer from taxes vs the amount of money you can stick into a Roth or Traditional IRA.

     

    There in lies its beauty. You can save up to $17500 in a 401k this year if you are under 50 and $22000 if you are over 50. In the Roth or Traditional you can put away $5500 if you are under age 50 and $6500 if you are older than 50.

     

    I think that not taking advantage of the 401k plan contribution levels and not taking advantage of any company matching is foolish. That money is deferred and accelerates your IRA when you roll it over.

     

    Need to run the numbers. It's a gift horse.

     

    Dave
    19 May 2013, 11:27 AM Reply Like
  • Agree 100% Dave. Max out your 401(k) and put it all in the S&P 500 index fund (lowest cost fund) and get it out of there into a brokerage account and DGI at every opportunity. My wife works for a small company with a 401(k) that charges a 1.75% annual fee for the SP500 index! Seriously, I'm not making this up. Even at that fee level, she does max it out each year. Luckily, last year her company was bought out by another company which technically fired her and rehired her. Woohoo! Got 10 years of 401(k) funding out of the system!
    19 May 2013, 11:35 AM Reply Like
  • Author’s reply » DD:

     

    There are forces at work that we don't understand. I would suck that money into a self directed IRA so fast, your head might spin off. Talk about a break!

     

    Yes, the fees are high. But, the advantages of deferring taxes on a large amount of income is some consolation. Plus, look at the employer matching as reimbursement for the fees.

     

    Let's not get to hung up on the minor details. Shelter the income!

     

    Dave
    19 May 2013, 12:12 PM Reply Like
  • Dave

     

    We came to DGI the same way. I was, or at least considered myself, a trader. Used technical analysis, constantly scanning and looking at charts, lots of work. It was all about return. When I realized by best performing positions were the long term ones that paid dividends, and which required a lot less attention, i.e. work, the light came on, I changed and never looked back. Enjoyed the article.

     

    Eddie
    19 May 2013, 03:59 PM Reply Like
  • '''Never touching the principal is the way to go. The goal. But whether you make that goal or not, the fact that you tried is all that matters in the end.'''

     

    That's right, because that is one of the goals where even if you fall short, you will be better off for having tried than if you had blindly started burning principal until the blunt reality of failure could not be ignored.
    19 May 2013, 10:30 PM Reply Like
  • '''My wife works for a small company with a 401(k) that charges a 1.75% annual fee for the SP500 index! Seriously, I'm not making this up.'''

     

    I believe you. That sounds like my little company (almost the same expense ratio). Is her 401(k) provider also a large national insurance company?
    19 May 2013, 10:32 PM Reply Like
  • The administrator is the largest payroll provider and there is a 75 basis point administrative fee to her employer. So 1% plus 0.75% for fees equals 1.75%. There goes the dividend yield on the S&P index. Can you imagine giving your dividend yield for a management fee? Hey everyone, if you want that deal, give me a call LOL!
    20 May 2013, 07:49 AM Reply Like
  • "There in lies its beauty. You can save up to $17500 in a 401k this year if you are under 50 and $22000 if you are over 50. In the Roth or Traditional you can put away $5500 if you are under age 50 and $6500 if you are older than 50."

     

    With the company match you can get even more into the 401(k). I will be putting in over $26K into the 401(k) this year (and my wife will be putting a similar amount).
    26 May 2013, 08:38 AM Reply Like
  • Author’s reply » P:

     

    I would highly recommend putting as much money as you can afford into your 401k plan. Do the math, in terms of what your net take home pay will be, as it relates to the amount going into the plan and adjust accordingly.

     

    I think it's a no brainer for sheltering lots of money from current taxation--even if the plan has less than stellar investment options.

     

    The winning strategy is keeping the money from being taxed now and accelerating the amount of money that you are putting into tax deferral accounts over the long haul.

     

    Dave
    26 May 2013, 09:42 AM Reply Like
  • Dave,

     

    I am actually putting pretty much the max into my 401(k). I have maxed out the regular contributions in a way that also allows me to get the max company match. I am a little short on getting in the max catch up contribution (but my wife is maxing hers out). And we are talking with the tax guy to figure out how much we can add to an IRA as well.
    26 May 2013, 12:44 PM Reply Like
  • Hey Dave,

     

    Keep on writing here. You will be an inspiration to the newer crowd just as much as you are to the older group. Awhile back you mentioned in a comment about how the little cokes in the little glass bottles (about 8 oz I believe) tastes just a little better. Well the next trip to the grocery store I picked some up. I put one in the freezer and waited for it to get very cold. Let me tell you they are good and they brought back memories of when I was a little kid. We use to drink them out of the glass bottles when I was growing up on the mill hill back in the 60's. Now I keep a little stash of them for special occasions. Thanks for the reminder. It's a small thing. But it's something that makes life just a little sweeter. I have one in the fridge waiting on me now.
    18 May 2013, 06:53 PM Reply Like
  • Author’s reply » 2000:

     

    It is a secret thing that most people don't know. I have a stash in my garage. About 5 cases of the stuff. I rotate it because I want to keep it fresh (yeah, it will go bad).

     

    You don't drink it out of any other container but the small glass bottle (actually should be 6.5 oz). No ice, no glass, just out of that bottle--really cold.

     

    Look at the fizz that comes out of the top of the opened bottle. Savor it. Love on it. It is better than a Cuban cigar!

     

    Dave
    18 May 2013, 07:52 PM Reply Like
  • My mom always insisted on drinking only the 6.5 oz glass bottles of Coca Cola saying they just tasted better.
    Was there a difference in the production or ingredients of those ?
    19 May 2013, 10:34 AM Reply Like
  • Author’s reply » Lab:

     

    Same ingredients--just the perfect container. It's a little like drinking a glass of brandy from a red Dixie cup as compared to a brandy glass.

     

    The carbonation is held better in glass. It's in a smaller package so it escapes slowly. Try a taste test side by side with a sip from a plastic bottle and a sip from a glass one.

     

    Maybe it's in my head, but it tastes different from that glass bottle.

     

    Dave
    19 May 2013, 04:00 PM Reply Like
  • Bake the cheese cake around 55 minutes at 325-350.....in a springform pan.....
    18 May 2013, 07:43 PM Reply Like
  • Author’s reply » Cheese:

     

    I am a huge fan of real cheescake. I collect recipes all the time. I had a friend who was a baker. He would make some of the most incredible cakes, pies, and cheesecakes you could ever imagine. Not only did they look good--they tasted even better.

     

    Dave
    18 May 2013, 07:49 PM Reply Like
  • Okay, I'll bite :-). Do you bake the topping or separately make some kind of glaze out of it? I'm not a cook but I love good cheese cake.
    19 May 2013, 03:54 PM Reply Like
  • Author’s reply » Eddie:

     

    Am I missing something here?

     

    Dave
    19 May 2013, 04:01 PM Reply Like
  • Eddie the topping is separate and put on after you bake the cheesecake.
    19 May 2013, 04:54 PM Reply Like
  • Dave

     

    No, I was asking the question of Cheesecake. On his recipe you referred to it didn't specifically say what to do with the topping and like I said, I'm not a cook but wanted to try the recipe. Sorry if I muddied the water.

     

    Eddie
    19 May 2013, 04:57 PM Reply Like
  • "Sorry if I muddied the water."

     

    Just don't muddy the cheesecake. :-)
    19 May 2013, 05:01 PM Reply Like
  • "Just don't muddy the cheesecake. :-)"

     

    I would probably, no definitely, be better off to just give the recipe to my wife and say "Honey, why don't we try this." :-)
    19 May 2013, 05:04 PM Reply Like
  • Author’s reply » Eddie:

     

    Just take your time and follow the directions! It will come out right as long as you used the springform pan. Just practice opening it before you put the cheesecake in it. It will be wonderful with some Columbia coffee to help it go down!

     

    Dave
    19 May 2013, 05:43 PM Reply Like
  • @Eddie, the cheesecake recipe posted is a bit confusing in the topping section...

     

    The topping section looks to combine the baked topping portion (the sour cream base) with the after baking "when being served" portion (the fruit base).

     

    If you look closely at the profile picture you will see the pictured cheesecake has a thin layer at the top of a slightly less yellow color and more solid or gelled texture. That is a sour cream based topping that is applied when mostly baked and then baking is finished to set that layer.

     

    If I had to guess from the recipe, I think the sour cream, powdered sugar and vanilla would be mixed and applied to the partially backed cheesecake. I could ask my wife, she makes a very similar cheesecake.

     

    The raspberries would be divided and some portion pureed with the granulated sugar and water to make a glaze for serving.

     

    When serving I would drizzle the glaze on a wedge of cheesecake and plate, then sprinkle a few whole raspberries on the wedge and plate. This highlights the fresh, whole berries. Or you could sprinkle a few whole raspberries then drizzle the glaze over all. Or carefully stir the whole raspberries into the glaze and put a dollop on a wedge of cheesecake.
    19 May 2013, 10:43 PM Reply Like
  • AgAu

     

    Thanks! My goodness, you're making me hungry... :-)
    19 May 2013, 10:48 PM Reply Like
  • Dave,

     

    Count me as another recent DGI convert, due to the inspiring and eminently practical articles and comments from you and the other DG "giants" here on SA.

     

    DGI is clear and logical and made sense to me from the start, unlike just about everything else in the world of high finance. I'd been investing for 25 years but discovered SA only about 18 months ago, and began transitioning our portfolio to DG stocks less than a year ago. The results are nothing short of astounding! And I don't mean the total value, which of course has been fantastic in this bull market. I mean the tangible and visibly rising income in my pocket every month -- or, more accurately, in my accounts, as I'm still about a year away from needing to use it. So compounding those divy's as much as I can until then.

     

    Thank you for all you do. I hope you're not planning to disappear anytime soon! I'm still on the steep part of the learning curve, need all the good advice I can get. :)

     

    As others have said, I hope one day to be in a position to "give back" by sharing my own DG investing experiences (good and bad) with newer investors. I only hope I can measure up!

     

    "If I have seen further it is by standing on the shoulders of giants." - Isaac Newton

     

    emac
    18 May 2013, 08:00 PM Reply Like
  • Author’s reply » 99:

     

    I have to tell you in all honesty. When I look at my Schwab statement at the end of the month and I look at the dividends received, I get excited!

     

    If I want to really get a charge, I go on-line and click on the "history" tab which gives me all my dividend transactions for the last month or so.

     

    I scroll down and see each entry. There's $400 here, $345 dollars there. It's almost like finding a $20 bill in the parking lot when you are walking to your car.

     

    I think: "Yeah, baby! This is so freaking cool!" And it is.

     

    Dave
    18 May 2013, 10:49 PM Reply Like
  • Another new DGI convert here. I started visiting Seeking Alpha in January of this year and after reading The Single Best Investment by recommendation of Chowder and many other articles and comments by the regulars I jumped in. I sold off all of my mutual funds in my 401k and now have a self directed 50 stock dividend growth portfolio that I built myself.

     

    In the short time since I completed the portfolio I've already seen dividend increases from CVX, COH, APPL, CLX, RGR and others. Its such a simple yet exciting way to invest, I love keeping track of all the dividend re-investments that are already working their compounding magic.

     

    So thanks David for your inspiration, I truly appreciate your contributions to this site. While some of your old regulars may not be around much, hopefully some of us youngsters can keep the discussion interesting for you!
    18 May 2013, 09:04 PM Reply Like
  • Author’s reply » Eric:

     

    That is a FANTASTIC story! I am so proud of you and I don't even know you! To actually get going--instead of just thinking about it--makes me say, "Yeah!"

     

    As long as I keep getting well thought out, intelligent comments like these, I think I'll stick around. By the way, I added CLX in January!

     

    Dave
    18 May 2013, 10:51 PM Reply Like
  • Dave it is because of you and the many other fantastic authors that SA a premier site for investors. I converted from a "total number guy" to a DG strategy at the beginning of the year. It has worked out great so far and will be even better 30 years form now. It is from great authors, articles and comments generated that gives me the confidence to do it on my own.
    Thanks, Josh
    19 May 2013, 07:46 AM Reply Like
  • Author’s reply » Josh:

     

    I still look at total returns. I am a trimmer of my holldings. I trim twice a year, most years. Just like you get a haircut, I do the same with my portfolio. Nothing major. Sometimes my way of trimming might be collecting the dividends as cash and putting that money elsewhere to build up a position. Sometimes I will sell a few shares to bring things back into balance.

     

    It's a practice that a lot of people don't like, but each of us, like I've always said, if it works for you, then you are a free person to do what you like. Don't let someone tell you that what YOU do is wrong.

     

    That's like saying you're an idiot if you only date blonds. Some redheads can be a lot of fun, too!

     

    Dave
    19 May 2013, 10:35 AM Reply Like
  • Dave...

     

    Let me join in thanking you for all you have done for the Dividend Growth community and for me personally. Along with you and "the other Daves" you were among the first I read on the Dividend Growth concept as I was struggling during my first year as a self-directed investor back in 2011. Your articles continue to make a difference my friend.

     

    Bob
    19 May 2013, 08:10 AM Reply Like
  • Author’s reply » Bob:

     

    Well, you are a case, perhaps, where the "student" became the "teacher."

     

    I like reading your articles more than you know! The way you have transitioned your portfolio and explained how you were doing it, one step at a time, is priceless!

     

    Dave
    19 May 2013, 10:36 AM Reply Like
  • Dave
    Your dividend growth portfolio is made up with individual stocks.
    I'm looking at the Global X Super Dividend ETF with a 12 month yield of 7.42%. Would this be a good alternative for those who are just not comfortable holding individual stocks.
    Appreciate your comments
    19 May 2013, 08:33 AM Reply Like
  • Author’s reply » G:

     

    I used to be a mutual fund investor. I'd purchase large cap, mid cap, and small cap funds in each of their "varieties", growth, blend, and value.

     

    I thought others could manage my portfolio better than I could. Hey, it worked and it didn't work. Funds have a way of buying and selling positions. Turnover within the portfolio is an important metric. It can kill performance. So then I branched out into Index Funds.

     

    Now Index Funds present an interesting conundrum. When you own them, you will never do worse than the market your index tracks. By the same token, you will never do better than the market the index tracks.

     

    Lately, there are ETF's and other forms of mutual funds that have some advantages over traditional funds. I wish I was more knowledgeable about those, but I'm not. I don't follow ETF's at all.

     

    I think what you might do is research ETF's and maybe someplace like Morninstar would be a good place to start. I would find out as much as I could about the ETF, what it does, what it's goals are, what their performance has been, how do they select their holdings, what kind of turnover do they have in their portfolios, what are their metrics and how does an outfit like Morningstar rate them?

     

    You have to compare the ETF's withing each of their categories and looks for the ones who have performed the best with the criteria that you are looking for from a managed portfolio!

     

    Good luck.

     

    Dave
    19 May 2013, 10:43 AM Reply Like
  • "Would this be a good alternative for those who are just not comfortable holding individual stocks."

     

    Gary, before that question is answered, I think it would be useful to ask why you are "just not comfortable holding individual stocks"?

     

    Does the dis-comfort come from not knowing which individual stocks to buy?
    Does the dis-comfort come from not knowing when to buy them?
    Does the dis-comfort come from watching their prices go up and down?

     

    I'm not suggesting you rush out and buy individual stocks.
    I'm only suggesting acquiring a better understanding of the dis-comfort, because once you have that, you might find ways to reduce the dis-comfort.

     

    Best of luck with your investing!

     

    Robert
    19 May 2013, 10:57 AM Reply Like
  • David & Robert, I really appreciate your feedback.
    Over the past 30 plus years I have only purchased a handful of individual stocks and lost my entire investment each time.
    I always held on too long until the stocks were worthless.
    19 May 2013, 12:48 PM Reply Like
  • Gary, with a record like that, I too would be terrified to put as much as a penny into any individual stock. :-(

     

    I empathize with you.

     

    Perhaps you could start with blue chip companies (the kind that have been around forever and will be around forever), with small investments, like a few hundred dollars. Kinda like dipping your toe in the water before you wade in deeper.

     

    What do you think?
    19 May 2013, 02:48 PM Reply Like
  • garygr:
    My sympathies. As RAS said, I would keep completely away from the types of stocks you have purchased in the past. If you have no money in stocks right now, I would seriously consider getting involved in DRIP investing. You can build up solid holdings over time, using blue chips to form your core portfolio.

     

    A ton of resources are out there for the taking when it comes to DRIP investing. You could start with http://dripinvesting.org and go from there. Just my 2 cents.
    19 May 2013, 03:08 PM Reply Like
  • Gary,
    I'd like to echo Robert's recommendation that you start small with some dividend paying blue chips. Try David Fish's U.S. Champions, Contenders and Challengers list at http://bit.ly/aA8y3H for ideas. It took me a while to understand that investing for dividend growth (income) and not trying to find the next home run stock was the secret.
    Bob
    19 May 2013, 03:10 PM Reply Like
  • Robert:
    Next month I'll be 65 and just don't have the patience and tolerance for individual stock swings.
    I can handle mutual funds and ETF's much better. I guess that's why I initially asked Dave for his comments about Global X (SDIV) yielding close to 8%.
    Also DIV, Super X Dividend US only is a high yield EFT.
    I really just wanted to know if these were good choices for building a Dividend Portfolio.

     

    Years ago I purchased three stocks-Manhattan Bagel, IGMM gaming, and Global Marine and sat with them until worthless.
    (six figures down the drain) I wish I could forget about them, but they still keep me up at night.
    19 May 2013, 03:40 PM Reply Like
  • Gary...

     

    SDIX with a Beta of 1.1 is not a sleep well at night choice. Only one of the top ten holdings is a Dividend Champion, Challenger or Contender.

     

    For a true sleep well at night portfolio I don't believe you should push for more than a 5% yielding portfolio. Most who follow Dave prefer a hand selected portfolio.

     

    If you feel you need EFTs you could consider starting with a sector ETF for the utilities portion. Some seeking income from MLPs might consider AMLP. Vanguard has an etf for REIT exposure. Wisdom Tree's Equity Income is as close as I can find to a "real Dividend Growth" etf and yields over 3.7%. A combined portfolio would yield at least 4% and might be a good way to start feeling comfortable again.

     

    I would really hate to see you chasing either yield or capital gain at this stage.

     

    Take care
    Bob
    19 May 2013, 04:11 PM Reply Like
  • "I can handle mutual funds and ETF's much better."

     

    Gary, you might want to read the following articles by David Van Knapp about ETF's before you buy one:

     

    http://seekingalpha.co...

     

    http://seekingalpha.co...

     

    All of David's articles about dividend growth investing are well worth your time.

     

    Robert
    19 May 2013, 04:43 PM Reply Like
  • @garygr, I highly recommend you look at the articles written by Bob Wells. I believe you will find he addresses your concerns about individual stocks and their price swings.

     

    When he talks about "sleep well at night" in his comment here, what he doesn't say is that he has constructed a portfolio so that he is able to sleep well. His articles document his concerns and the process he used to address those concerns.

     

    I lost a lot of money in mutual funds, and I lost a lot of money in individual stocks. Not since I focused on dividend growth investing.
    19 May 2013, 10:50 PM Reply Like
  • Author’s reply » Ag:

     

    Bob is one of my favorites!

     

    Dave
    20 May 2013, 02:17 PM Reply Like
  • "Just before that, we relieved the Marines at Khe Sanh. 1st Air Cavalry, 3rd Brigade."

     

    I was a Senior in High School during The Tet Offensive. I recall the nightly news. That didn't look like a good time.

     

    The only thing that has me spookedright now, is this crazy market. I may buy some puts on a couple key positions.
    19 May 2013, 03:28 PM Reply Like
  • Author’s reply » Hack:

     

    I wasn't a Marine (the guys who went house to house, door to door in Hue), but I was in-country for TET. We actually kicked their ass. Problem was that after we did, the North Vietnamese regular army decided that they would be better off fighting more of a guerilla war. They were very good at that, but not very good at matching our fire power in conventional warfare.

     

    Don't be spooked by the market. I'm not the brightest bulb on the tree, but I think we have a ways to go yet. We'll correct, but right now I think this is a bull market.

     

    But, hey, I could be wrong.

     

    Dave
    19 May 2013, 03:34 PM Reply Like
  • Yeah. I'm pretty good at military history (took a semester of it as part of college ROTC back in 1970 - probably one of the best history classes I've ever taken). The Tet Offensive was a major loss for the NVA. Unfortunately, it was also marked the turning point on the homefront.

     

    I agree, there is some additional upside left in the market. But considering I'm up 50% on both BA and PM, I'm getting a bit anxious. PM doesn't want to smoke $100, but BA.... Well, I just don't know where that bird is going to fly. In additon, I'm in GE at under $15. All in my taxable account. I'd love to take some profits, but I loathe the taxman.

     

    Oh, and to add to the KO discussion (I'm also up nicely on that position), I prefer it in Glass. Just like beer, it just tastes better. Haven't tried the Mexican Coke that Sam's sells, but I also prefer real sugar to HFCS.

     

    Peace Bro....
    19 May 2013, 05:51 PM Reply Like
  • Author’s reply » Hack:

     

    Americans back home didn't like seeing their boys coming home in body bags.

     

    I own GE and PM, but not BA. I own BAC (which has been on a rip since I bought it last year). I have a nice run on many of my newer holdings, like CA, SPLS, SWY, WU, CSX and NSC. With the older holdings, I've got enought of a lead vs. cost that a 20% decline is just paper losses.

     

    I hardly ever sell anything in my taxable account. It's bad enough that I have to pay taxes on the dividends, much less capital gain. That taxable account is my best ideas for income.

     

    Dave
    19 May 2013, 05:56 PM Reply Like
  • "Americans back home didn't like seeing their boys coming home in body bags."

     

    Forty-five years later, I still don't like seeing our men AND women come home like that. Or missing body parts.

     

    I agree on the cap gains. I do sell calls against postions that may have run up past 'reasonable'. My Waste Management postion (200 shares) got assigned this weekend, but it had run up $10+ from where I bought it. I haven't been a buyer of anything lately. My last purchases were INTC for my IRA when it hit the 4% yield point. Otherwise I've been accumulating cash in both my taxable and tax deferred accounts.
    20 May 2013, 08:45 AM Reply Like
  • In quiet moments I sometimes wonder about things the world has missed due to loss of life in conflicts/wars over the years. Imagine if people like Galileo, Mozart, Gutenberg, Ted Williams, Edison, or Fleming had been lost at war at an early age.

     

    A dozen or so authors here have been extremely helpful to me, not only in the articles they write, but the discussion on the topics in this forum. It has helped me in many ways as I have pieced together a very solid DGI portfolio that I am extremely pleased with. I had been researching just such a strategy when I stumbled upon this forum awhile back and it accelerated my learning curve very sharply.

     

    As one of the authors that has contributed substantially in both adding to and honing my way of thinking, thank you.
    20 May 2013, 01:34 PM Reply Like
  • Author’s reply » Long:

     

    War is a terrible thing. I have lost many friends and God only knows what their contributions to society might have been. Not only am I troubled still by the losses of my comrads, but also the losses sustained by our "enemy."

     

    Each of them was someone's husband, father, son.

     

    When my own son told me that he wanted to go into the military and was targeting an assignment in Special Ops, I had a heart to heart discussion with him. I told him that there wasn't much to be gained in the experience of taking another man's life. Some 40 years later, I am still haunted by memories of that place and time. It has not served me well as a man except to have a finer appreciation for my fellow man.

     

    I wish that we did not ever have to send our young men off to fight, but at the same time, I wish that those who decide to pick a fight would get a sense of reason and restraint. It would be great if we could all get along, but I guess our human nature makes us unable to coexist with one another. It's a sorry state of affairs to be sure.

     

    My son has enlisted and will be heading to basic training in June. He has chosen to use the military to learn a set of skills which interests him and will have some relevance to civilian life, should he decide to not make the military a career.

     

    I would hope that my being open and transparent in my feelings and thought processes has been useful to others and I surely hope that I am not becoming a boor.

     

    I appreciate your comments.

     

    Dave
    20 May 2013, 02:08 PM Reply Like
  • I just want to add my two cents worth (for what it may be worth).

     

    I too am grateful for many of you who share your thoughts and ideas with the rest of us. I have learned so much the last 18 months or so since I started really paying attention to what you post.

     

    I am also grateful that I have, like you Dave, kind of fallen into the DGI mode. Started with an LLC (MLP like) when I didn't know about them--just what the distribution rate was in a good sector. Was truly glorious making free money like that!

     

    Now that I have been better trained through many on this site, I am switching over to more income.
    I still like to play with some growth stocks as my situation right now allows me to do that. As a retired g state government worker, I am receiving a good pension. This allows much of the money I put away (deferred comp plus Roth) to sit and accumulate for me for a few more years.
    I am more cautious now as I have the same issue as Gary--holding stocks until the green turns to red. That greed of wanting the next AAPL can kill you.
    Now have KO and FLY along with some REITs to bring the income up with a lot less in growth lottery stocks.

     

    Anyway--just wanted to say thanks to you authors and investing veterans for all you do for us.
    19 May 2013, 09:14 PM Reply Like
  • Author’s reply » PS:

     

    Like you, I still have a certain fondness toward "growth" stocks. Sometimes it's hard for me to look at a screen and not see something just screaming out at me, "BUY ME!"

     

    Back when GE was selling under $15 a share; XOM a few years back at $60. I don't like to admit it, but the banks--BAC, WFC, and JPM have been fantastic purchases for me, having bought BAC under $8 a share, WFC at $24, and JPM at $29. Now I own 3 banks with nice dividends (well, surely not BAC) but WFC and JPM.

     

    When others hate a particular company and you see the price being less than the break up value, it is hard for an old dog to stick with new tricks.

     

    Just because I am first and foremost a DG investor does not preclude me from buying other things. I just don't do it as often anymore.

     

    Dave
    20 May 2013, 02:15 PM Reply Like
  • Dave, you are the boss. There's no other way to describe it.

     

    You demonstrate in clear, commonsense terms that holding excellent companies for a long period of time can be a lucrative way to build wealth.

     

    You had the common sense to buy Coke, Colgate, P&G, J&J, and I'm sure others you've mentioned but I'm forgetting here, and you provide a roadmap to show what the investment journey for a dividend growth investor can look like over the long term.

     

    Thank you for all that you do, good sir.
    19 May 2013, 09:42 PM Reply Like
  • Dave,

     

    Thanks for your contributions. I believe your articles and comments have helped many new DG investors like me.

     

    Your well of wisdom seems never run dry.
    19 May 2013, 10:22 PM Reply Like
  • Dave - as always thanks for the quality read. You provide a terrific model for us to emulate and you have a knack for sharing accumulated wisdom which makes it accessible.
    20 May 2013, 08:25 AM Reply Like
  • Author’s reply » Cheese:

     

    Thanks! I appreciate that.

     

    Dave
    20 May 2013, 02:16 PM Reply Like
  • Dave,

     

    I came to the DGI method in a round-about way. It's amusing to me now, that had I just paid attention to my family's investing history, I would've seen something very similar to the DGI method. I see it now, but it took me a few years to get to that point.
    It’s sort of a long story, but basically I received a good sized inheritance as a child due to the death of my father. This inheritance largely consisted of 2 individual stocks and a group of mutual funds. The two stocks were Rockwell International and American Home Products. I largely ignored all the investments as I was told about them in high school. I knew that my college would be paid for and I put my trust in mom to handle everything. But after I graduated college at 21, and began working and then getting married at 22, I knew that I had to figure out how to invest. I knew that if we weren’t careful, the inheritance could evaporate and everything my parents had worked for would be for null. I would not let that happen.
    I left the investments alone while I began my research. As a young fool who knew nothing, where do you think I started my investing search? That’s right: MSN.com and other pop culture websites. It didn’t take me long before I realized that their own articles were often contradictory or just didn’t make sense. I knew enough that a stock was a piece of a REAL company (some people may call that common sense). I tried reading articles that contained words like “technical, moving average, or resistance,” but my eyes just glossed over them. What does any of that stuff have to do with the company itself? I realized that their “analysis” may well have been used to predict the weather. It’s just movement of numbers. I’m surprised a weather temperature hedge fund hasn’t already been created. (I’ll give you a hint: buy in January and sell in August).
    Then I learned about value investing and found the Motley Fool. You have to pick your articles at the Fool, and some are still pretty good. Anyway, I came to realize that a business has an intrinsic value. This single point meant everything to me. With this single point, I realized that stocks were not like baseball cards or any other type of “asset” – as the MPT crowd calls them. I wanted my investments to be ever increasing in intrinsic value. If I knew that the intrinsic value was ever-increasing, then I knew I could hold my investment when the market price went up or to buy if the price went down. This is when a person becomes a REAL INVESTOR: knowing the value of your investment and using the market price to your advantage.
    The MSN-type websites talked greatly about inflation, but their “solutions” of gold, art collectables, asset allocation, etc, never compiled with me. They always talked about how stocks had the greatest long-term return, but they never wanted stocks to be 100% of a portfolio. I never understood that.
    It took me a few years to realize that earnings (or FCF or FFO) and earnings growth are the basis for intrinsic value (and it took a while to understand financial statements to find and calculate these values). But I had immediately realized that dividends were important on a number of levels: from an indicator of shareholder friendliness and profitability, to realizing that 40% or so of total returns are from dividends. Dividends also gave me cash without me having to sell, which is just fantastic. It’s hard enough to buy at the right price; it’s 4 times as hard to buy and sell at the right prices. Plus, dividend freezes or cuts can be used as further indicators to get out early, before the company goes bankrupt. The benefits of dividends far outweigh the negatives (which are few and weak in and of themselves).
    And then low and behold, I discover Seeking Alpha, the DGI cult, and David’s CCC list. After reading yours, van Knapp’s, and Chuck’s articles, and taking a long look at the CCC list, I realized that I made it to the top of the mountain. I believe I have reached the point where any further investing education will only “round out the edges”, so to speak. Some people are trying to shoot a rock, while I’ve already hit the target: focus on quality companies that increase their earnings and dividends every year, while trying to buy at decent prices. But I will always continue to learn as much as I can and enjoy other people’s investing experiences.
    In case you get a chance, take a look at American Home Product’s (renamed Wyeth and then bought by Pfizer) dividend history. For a long, long time, it was increasing those dividends. My grandparents received a few hundred shares back in the 1950’s. Although they never directly reinvested the dividends, I’m sure they have tens of thousands of shares today. My guess is that they reinvested the dividends into the farm they owned, or a few other stocks along the way.
    The more I come to learn about proper investing, the more I realize that 99% of all investing articles are crap. It’s much easier than people think: find a few big companies that pay increasing dividends that also have a bright future ahead of them. Just hang on for the ride and use the dividends as you see fit. Buffet is right when he says to sit on your hands and move at sloth speed. That’s why I love living in Kansas. Although we may move a little slower than the east/west coast folks, we have a safely-kept secret: that the laid-back way is the better way. (And the conservative values and lower cost of living also helps!)

     

    Thanks for all your teachings,
    Ruralist
    20 May 2013, 02:15 PM Reply Like
  • Ruralist, '''Buffet is right when he says to sit on your hands and move at sloth speed. That’s why I love living in Kansas. Although we may move a little slower than the east/west coast folks, we have a safely-kept secret: that the laid-back way is the better way. (And the conservative values and lower cost of living also helps!)'''

     

    Bingo! Which is very likely one reason why Buffett stayed in Omaha.

     

    Excellent development story, btw. If you always remember what you wrote and how you ended up "on top of the mountain" I expect you are going to have much success in your investing. I left the mountain top for about 10 years shortly after I started to invest in earnest, and it was only upon rediscovering where I was and where I had been that I was able to return and experience those grand vistas once again.
    21 May 2013, 10:09 AM Reply Like
  • Dave,

     

    thanks for sharing your life experiences and wisdom with all of us. I really enjoy reading your articles, blog posts, and commentary. Having only recently graduated from law school, I have appreciated learning from you and others on SA as I begin setting up my own dividend growth investment portfolio. It is remarkable how much my perspective has changed in the last six months with regard to investing thanks in large part to you and others with similar takes. One of my favorite things is to send the article that you wrote about CL, discussing the power of dividend reinvesting over the last 30 years, to my friends...and then standing by to watch their mind explode. It really makes you think. Thanks again!
    20 May 2013, 05:56 PM Reply Like
  • Author’s reply » Sum:

     

    It's amazing when you see what a little planning can do for your portfolio. You don't have to start off with a big amount of money--just start!

     

    Don't sell, reinvest the dividends and let the garden grow.

     

    Dave
    20 May 2013, 06:04 PM Reply Like
  • I just started and got my first split! In CL. Chowder had maintained that it is not always a bad thing to invest at a market high. I took that to heart and invested anyway. Just now I checked and my CL has split and I have more shares and more dividends!! I am happy camper!! Just start is what I am telling my friends. Thanks to all.
    20 May 2013, 06:10 PM Reply Like
  • Author’s reply » Cheese:

     

    Saw your post on another article! It's exciting news for sure!

     

    Dave
    20 May 2013, 06:11 PM Reply Like
  • Dave Your articles were the first ones that I read when I discovered SA. The very informative articles and comments are teaching lessons in themselves.To this old timer who retired in 1999,they really helped as to where to put CD and mutual fund money.I will forever be grateful to you DVK Chuck Carnevale David Fish RAS Bob Wells Eddie Heering Chowder and Tim McAleenanTHANK YOU Bob
    24 May 2013, 08:01 AM Reply Like
  • Author’s reply » Foxy:

     

    Thank you.

     

    Dave
    25 May 2013, 07:16 PM Reply Like
  • David,

     

    Thank you for your blogs and posts. You just earned a new follower!
    25 May 2013, 06:45 PM Reply Like
  • Author’s reply » Adam:

     

    Welcome aboard!

     

    Dave
    25 May 2013, 07:16 PM Reply Like
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