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  • Which Stocks Would SA Contributors Kick Out Of Their Portfolios First? [View article]

    Great premise and interesting outcome.

    I suspect many of us are perhaps experiencing the bigger business cycles (energy, interest rates, etc.) for the first time since building our DG portfolios. It certainly tests one's mettle, not to mention one's patience!

    I'm a big believer in the "story" behind any stock's recent (1-2 year) performance. If the company is quality and the story more or less intact, I'm more likely to ride it out. At this point, I'm not unloading anything in the sectors mentioned (and I own 8 stocks in your chart above).

    That being said, it is certainly painful to see the paper losses on my energy holdings, KMI, PAA, ETP, CVX, XOM and COP.

    Don't own any BDCs, and have owned most of my (quality) REITs long enough that they are not that much underwater.

    Thanks for a great survey and comments.

    Nov 24, 2015. 06:51 PM | Likes Like |Link to Comment
  • Which Stocks Would SA Contributors Kick Out Of Their Portfolios First? [View article]

    <<One can sell just part of a holding and buy something that looks like a hold forever stock. That way you do get more of your best plan for the future while still standing in line just in case the remaining old shares wake up again.>>

    Excellent point. I did just that earlier this year with WMT and more recently with MCD. Jury still out on WMT but glad I kept half the MCD.

    One never knows, so hedging the bet - especially with aristocrats - seems like a good hybrid strategy.

    I consider it "dollar cost averaging out" - akin to DCA in.

    Nov 24, 2015. 06:43 PM | 4 Likes Like |Link to Comment
  • Buy Low, Sell High? With Altria, It's Buy Yes, Sell No [View article]

    What a great retrospective on MO (and all its descendants).

    I started buying PM for international exposure. So I was late getting around to finally adding MO to our retirement DG portfolio. Started adding a couple of years ago but to date, I have only accumulated about a one-third position in MO.

    I bought my last batch around $35 and then watched from the sidelines as the price soared without a meaningful correction. While MO may be "fairly" valued, it is well beyond my comfort zone to add now. I think your term "stretched" captures it well.

    That being said, I wouldn't hesitate to add more MO on any kind of reasonable market correction. Sitting on plenty of dry powder at present, and itching to put some of it to good use. :)


    Nov 16, 2015. 03:32 PM | 1 Like Like |Link to Comment
  • Risk Tolerance For The Dividend Growth Investor [View article]

    Another excellent piece. Love the way you differentiate generic valuation/price risk from these three income risk factors. I happen to agree with all of them.

    "Permanent loss of capital" resonates especially for me so I'm glad you mentioned it. Too often income investors are accused of ignoring their portfolio value. For many of us, capital preservation is clearly important, even if it is secondary to preservation and growth of income.

    Worth mentioning maybe: price volatility can be a signal that MIGHT lead to permanent loss of capital. So it's usually a good idea to pay attention to the events triggering the volatility.

    Oct 27, 2015. 09:40 PM | 3 Likes Like |Link to Comment
  • Is It Smart For A DGI To Invest In A Company After It Announces Short Term, Falling Earnings Like Wal-Mart? [View article]
    DGI Guy,

    Good article.

    I'm a WMT shareholder. Unloaded half the position (for a modest gain) in early 2014 after the meager 2% increase. Held the other half because I liked the "story": they were conserving cash to invest in neighborhood stores, in-store banking and healthcare services, online presence, delivery, etc.

    It's hard to put any kind of positive spin on this week's WMT news, though, other by than putting all the bad news out there at once, it's now pretty much baked into the price. And with a lot more transparency than typical in corporate America.

    Retail is not core in our portfolio but I wanted some exposure to it (I also own COST). Will probably hold my 1/2 position in WMT for now - can't harvest tax losses in the IRA - but not terribly optimistic about its long term prospects.

    The irony, of course, is that WMT, which famously disrupted Mom & Pop retail establishments on Main Street, is itself being disrupted by the likes of Amazon (which itself is being challenged by upstarts like, Apple Stores, CostCo, etc.

    Oct 16, 2015. 01:06 PM | Likes Like |Link to Comment
  • The Best Way To Reinvest Your Dividends For Retirement [View article]

    Question: "the best way to reinvest your dividends"? Answer: Just do it.

    Love the article and especially your clear descriptions and examples of DRiP vs. DCA vs. Collect & Invest, Averaging Down, etc.

    No new money has gone into our retirement portfolio for the past 4 years, yet I've still been able to reinvest the small amount of excess dividends beyond what we've needed to live on. The compounding effect on income (and total return) has been noticeable, even in that short time.

    Bottom line: any reinvestment method, as long as you ARE reinvesting, is a wonderful thing. Compounding is a powerful force, so harness it any way you can!

    Oct 16, 2015. 12:28 PM | 21 Likes Like |Link to Comment
  • Different Ways To Think About Dividend Re-Investment, Part 1 [View article]

    Important topic. I echo Rose's comment above - IMO it's not as important HOW you reinvest as long as you do. The acceleration impact on compounding is simply amazing, in any phase.

    During accumulation, my company 401(k) was set up for automatic reinvestment into my designated mix of stock and bond funds. The combination of twice monthly automatic contributions, and auto pilot reinvestment through all market conditions including 2000 and 2008, grew the balance exponentially in just 20 years. With very little effort on my part (except for occasional rebalancing). I couldn't invest in individual stocks and had no time to be an SDI. Plus the ready info, online tools and low trading fees weren't really available.

    Anyway, that all changed by the time I was laid off. Rolled everything into a self directed IRA and retired, but haven't contributed any new monies in 4 years. And yet using DGI I've not only been able to draw out substantial cash as dividends, but found there's enough left over to still have the (happy) problem of what to do about reinvestment.

    Having an established portfolio, I "dip" vs DRIP, i.e., add on every significant market pullback to whichever underweight position is presenting the best value at the time. I want to own more of all the great companies making up our DG portfolio. So whenever there's excess cash (at least quarterly, and sometimes monthly), I find no problem deploying it!

    Despite being in the distribution phase, I'm a young retiree, so our DG portfolio must deliver growing income for the next several decades at least. Im counting on that double compounding impact of dividend growth and regular (selective) reinvestment of excess dividends to get me to the finish line.

    Oct 10, 2015. 10:55 AM | 2 Likes Like |Link to Comment
  • My K.I.S.S. Dividend Portfolio: 3rd Quarter 2015 Update [View article]

    Thanks! I figured I'd just recover the foreign taxes when I file my 2015 return, but better not to have them withheld in the first place.

    Oct 8, 2015. 07:46 PM | 2 Likes Like |Link to Comment
  • My K.I.S.S. Dividend Portfolio: 3rd Quarter 2015 Update [View article]
    I own MDT in both an IRA and a brokerage account.

    There's been no withholding of foreign taxes in the IRA, but there's been a 20% withholding in the taxable brokerage account this year.

    Long MDT

    Oct 8, 2015. 02:50 PM | 2 Likes Like |Link to Comment
  • After 8 Years, It Was Time To Say Goodbye To McDonald's [View article]

    Thanks for this article.

    MCD is, to me, similar to GE (which I also own): I stubbornly hold on for potential that never quite seems realized. But, since I own them primarily for the income, I'm not expecting much near-term growth. As long as they keep paying dividends, I'm fine with modest increases if it keeps payout ratios from getting astronomical.

    I haven't exited either MCD or GE completely but I did reduce my positions by about one-third. But they pay me decently, so I'm willing to give them more time to work through their transitions and prove their worth.

    Trends like health food, fast casual, and food trucks are certainly a factor for MCD domestically. You mention Russia and Asia. That's important as MCD earns two-thirds of its revenues overseas. But even with the international challenges and currency headwinds, there does seem to be runway left for MCD to grow overseas. Which is why I'm keeping my (2/3) hand in play.

    Oct 8, 2015. 02:38 PM | 1 Like Like |Link to Comment
  • Quirky Or Sensible? Weighting A Dividend Growth Portfolio By Quality And Income [View article]
    Paul Wagner,

    << The 'equal weighting" issue aside, if you are willing to put 5% of your portfolio value at risk in one stock, why wouldn't you be willing to have each of your stocks represent about 5% of your portfolio.>>

    Simple answer: Because even excellent companies don't always have the established track record I'm looking for to protect my income stream. They need to "earn" the right to be at the maximum. That takes time.

    Most of my holdings are less than 5%. Some are legacy, some are younger CCC's, some are ones I've stopped adding to because of valuations, some have made acquisitions or splits or changes in dividend growth that put them "on watch," etc.

    To your point, though: I have been concentrating our overly diversified portfolio the past 18 months to focus more on "best ideas." At its max, the portfolio had 74 positions. It's currently 58 (including a few small spin off positions).

    My goal is around 50 and I am comfortable with that. As Chowder has said, if you own just the top 2 or 3 in each sector, you'll get to a sizeable number of holdings fairly quickly. Most are so establishished, and so widely covered, they don't require a lot of monitoring.

    I don't ever see myself with just 20-25 holdings. But glad that works for you.

    Oct 8, 2015. 12:10 PM | Likes Like |Link to Comment
  • Retirement Strategy: The Simplicity Of A More Secure Retirement Portfolio For Regular Folks [View article]

    << We own a bunch of "your" stocks, plus PEP, WMT, VZ, INTC -- similar types of companies. Was stunned the other day to find that Fidelity rated our asset allocation "most aggressive." HUH?? >>

    Ditto. LOL. I actually called my Fidelity account manager about that, more out of amusement than anything else.

    Their automated software calculates a 95% allocation to domestic stock on my IRA, which defaults to "Most Aggressive." When in reality, like you, it's mostly boring blue chips or quality CCC contenders and challengers spinning off tons of dividends each month with relatively low volatility.

    Adviser is completely mystified by my DG strategy and doesn't understand why (as a retiree) I don't have an annuity, index equity funds, and at least 40% bonds. But then he sheepishly admits "you seem to know what you're doing" and "it seems to be working for you," and leaves it at that.

    He gets the AUM but no extra fees from me, no siree. :)

    Oct 6, 2015. 06:11 PM | 3 Likes Like |Link to Comment
  • Top 10 Healthcare Stocks For Dividend Growth And Income [View article]

    Excellent work here, thanks for your diligence on this important sector. I concur with your view, and that of many commenters, that healthcare continues to offer both growth and income growth (despite the generally low yields typical of R&D oriented industries), making it a good diversifier for most portfolios.

    I've gone the "mini-ETF" route with health care too, though not entirely by design. Some holdings, like BDX, simply got away from me in price before I could build a full position. Others, like BAX and MDT, executed spin offs (BXLT) or acquisitions (Covidian) and conversions that substantially changed the nature of their businesses or tax structures, and hence their roles - and risk profiles - in our portfolio. Some, like NVS, are legacy holdings from my pre-DGI days. I used to own PFE and ABT/ABBV but foolishly sold all three, the latter shortly after they split (and before I had an investing plan).

    There is so much rapid change and volatility in this sector, especially the pure biotech plays, that valuation remains a huge challenge. That's what's kept me out of GILD, AMGN, CELG and the like so far. I dislike excessive volatility and uncertainty, and only good old wide-moat champion JNJ seems in any way predictable. Which may explain why JNJ is my largest health care position. Ha!

    Health care REITs are another way to play in this space and I own three from the CCC: HCN, HCP and OHI. VTR is on my watch list. In addition to MOB's, SNF's and hospitals, some host biotech start-ups in life sciences facilities. So REITs are an indirect way to get further exposure to the explosive growth in health care, while capitalizing on higher yields.

    Nice work, again, Eric. Keep 'em coming!

    Oct 6, 2015. 12:34 AM | 1 Like Like |Link to Comment
  • Quirky Or Sensible? Weighting A Dividend Growth Portfolio By Quality And Income [View article]

    Yup. Exactly.

    No way I'm going to hold a LMT, MSFT, BCE or EPD in the same amounts as a PG, KO, T or JNJ. Different industries/geographies mean different business cycles, different pressures, and and different risks. And yet they are all worthy companies that work just fine together in my overall portfolio. Some for yield, some for dividend growth, some defensive, some cyclical, etc.

    Oct 5, 2015. 11:39 PM | 1 Like Like |Link to Comment
  • Quirky Or Sensible? Weighting A Dividend Growth Portfolio By Quality And Income [View article]

    << If that stock isn't good enough to equal weight, then you shouldn't be buying it.>>

    Really? So you would hold a BBB- rated, 13 year DG, quality health care REIT like OHI (with its high interest rate sensitivity and non-qualified dividends), in the exact same proportion as an AAA rated, 53 year DG, health care dividend superstar like JNJ? Interesting.

    Mike can answer for himself, of course, but I don't see him saying that his Role Players won't do a better job in the future of producing income. Just that they don't yet exhibit all the credentials (yield, DG track record, rating, etc.) that give him high confidence in that outcome.


    PS Long MSFT, COST and many of the Role Players here as well as many of the DGI superstars.
    Oct 5, 2015. 07:23 PM | 7 Likes Like |Link to Comment