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  • Selling Dividend Growth Stocks: Reluctantly Ending 'Forever' Marriages  [View article]

    <<< I like the advice you received, and I got a lot out of your comment. I think your personal situation and history would make a good article; you should consider writing it! >>>

    Thanks, but I think I'll leave that to the folks who really know what they're talking about. Maybe in about 5 more years, I will, too - ha!

    Jan 20, 2016. 10:30 AM | Likes Like |Link to Comment
  • Selling Dividend Growth Stocks: Reluctantly Ending 'Forever' Marriages  [View article]

    Excellent retrospective. Very eye-opening, not just to your readers (with 200+ comments already, clearly this strikes a nerve), but also to you as a DG investor. Kudos! And thanks.

    I've been at this SDI stuff 4 years now. Among the most valuable lessons I learned early on – starting with Bob Wells’ excellent advice to Have A Plan – was the suggestion (by Chowder, I think) to record the reasons behind each sale. So I've been doing just that for the past 4 years, via a tab in my Excel so I can view/sort by ticker, date, etc. In addition to gain/loss and income impact for each sale, there’s a Notes column where I record (briefly) what was behind each decision.

    Mainly, I started doing this because I was so uncertain as a new SDI and DGI. I wanted to (1) learn from my mistakes (especially early on while still getting the hang of it) , (2) see if a change in strategy or plan was warranted (it was, in many cases) and (3) understand the bigger trends and impacts on our portfolio over time (patterns starting to emerge now).

    Unlike you, I'm in the distribution phase. We’ve taken money out (dividends only) but not added one dime to the portfolio in 4+ years. So, this was more than just an exercise to watch dividend income rising each year. I also wanted to track the quality and stability of the holdings on our income. So basically, like you, over time I’ve been ditching or reducing non-core positions in favor of better stocks.

    I don't consider myself a "reluctant seller" so much as a "prudent seller." While the reasons for selling may change over time, I remain aware always there is really no such thing as set -it- and-forget- it portfolio in a changing, global economy. Having tracked behaviors causing me to sub-optimize the plan, I now don't hesitate to sell if there's a better way to achieve it.

    I don’t track what a stock did since a sale. I do track what has happened with whatever I bought to replace it.

    While I was initially shocked at how much selling I did, the themes from my "reasons" data were clear: too many holdings; not enough quality; reaching for yield; not enough growth.

    So there are plenty of familiar names among the stocks I owned and subsequently sold (most with gains, some with losses): BAX, BBL, BXLT, CSX, BWP, DRI, INTC, LEG, RCI, SDRL, SJR, SYY, VOD, WM.

    Also plenty of familiar names among those I replaced them with: ADP, BDX, CL, CVX, D, GIS, JNJ, KMB, KO, LMT, MCD, MSFT, MO, NEE, O, PG, PEP, SO, T, VZ, XOM.

    No excuses. No regrets.

    Thanks again for a thought-provoking piece!

    Jan 19, 2016. 03:54 PM | 6 Likes Like |Link to Comment
  • 2016 Market Meltdown - Panic Time?  [View article]

    <<< That, in a nutshell, is why the market's lousy start to 2016 does not bother me very much. The income approach does not turn me into a forced seller.>>>

    That sums it all up for me, right there. Not having to be a "forced seller" in what could be an extended down market is my personal formula to SWAN.

    While I have executed a couple of small add-on buys this month, mostly I'm just letting the excess dividends accumulate. Currently sitting on about 7.5% cash waiting for some better valuations on the quality companies that inevitably get sold off with the not- so- quality companies. Then I might just have to become a "forced buyer." :)

    Great article and a valuable reminder about what income investing is primarily about.

    Jan 18, 2016. 06:43 PM | 5 Likes Like |Link to Comment
  • Dividends & Income Digest: 'Retirement Investing... The Final Frontier'  [View article]
    Thanks for making this happen and congrats on reaching (exceeding) the 1K mark. Your followers (myself included) do indeed have excellent taste. :)

    Love the suggestions so far and I'm sure you'll get many more. For myself, 4 years (early) retired and still transitioning, I'd love to see more on strategies and tactics around balancing the need for income vs. growth in retirement. Many of us in transition will experience retirements of 20, 25 years or even more - conceivably longer than our working lives. So, while we're "buying income" during the transition from accumulation to distribution, that income needs to preserve its purchasing power and keep pace with inflation over what could be a very long time - and one not likely to continue to exhibit the relatively low inflation we've seen in the recent past.

    When I initially launched myself into the fray I was too focused on current income. I have since started to modify my approach - but not without some dumb moves along the way. I was lucky to have the generally positive market of the first few years in which to "unwind" my mistakes, but 2015, 2016 and beyond don't appear to be so forgiving. Still learning, want to learn more.

    Thanks for all you do, and happy investing to all!

    Jan 11, 2016. 10:50 AM | 1 Like Like |Link to Comment
  • Managing Risk To Help Achieve Long-Term Goals  [View article]

    <<< ...given KMI's recent crash & burn...most MLP investors are nervous right now, with good reason.>>>

    Ain't that the truth! I'd be content if the MLP's I own, including EPD, held their distributions flat in 2016.

    That being said, I'm fully expecting PAA to follow the same path as KMI, and the others to deliver minimal distribution increases, if any.

    The pain in midstream MLP's is far from over.

    Like Chowder and others, I trimmed just enough KMI in our taxable account this month to harvest losses to offset unplanned capital gains (like KHC) in 2015. A small silver lining in an otherwise big dark cloud.

    Long midstream MLP's EPD, MMP, PAA, ETP, and (C Corp) KMI

    Dec 28, 2015. 08:11 PM | Likes Like |Link to Comment
  • Dividends & Income Digest: 2015 Retrospective And 2016 Outlook  [View article]

    Thanks for a great wrap up on a volatile year. I guess based on the composite of interviewees, we can expect more of the same in 2016.

    Thanks also to all the knowledgeable authors who replied to Robyn's interview questions. Great observations and food for thought, both backward and forward looking.

    2015 provided many valuable (and some painful) lessons for newer SDI's, myself included. My personal "flight to quality" over the past 1 1/2 years saved me from truly severe losses in 2015 (portfolio only down 2.4% this year), and my overall portfolio income rose, but that's not to say I enjoyed the roller coaster or was immune to losses in energy and midstream MLP's. I expect we'll feel more pain in that particular area in 2016, and even early 2017.

    The bigger question for me in 2016 is whether the energy crisis, combined with even modest interest rate increases and China's slowing economy, might create a bigger tipping point in an otherwise fragile global recovery. I'm hedging my bets by holding more cash than usual, and continuing to shift into more financially sound, defensive stocks, as well as more lower yield/higher dividend growth. Valuations are stretched, no question, but I added during every dip in 2015 and expect to do the same in 2016.

    Please add my vote to the excellent suggestions above for a forum focused on the transition from accumulation to distribution phases. Seems to be a great deal of interest by near- and new-retirees, and the excellent give-and-take conversations and sharing of experience has been a godsend, to me at least.

    Happy New Year and happy investing to all.

    Dec 28, 2015. 07:59 PM | 5 Likes Like |Link to Comment
  • Retirement Date Vs. Financial Independence - What's Your Strategy?  [View article]

    Great article. New follower here.

    I love your logical, straightforward approach and the diversity and composition of your resulting portfolio. I own 37 of your 75 here. Formerly owned about 10 others (at its peak, my portfolio was 74 stocks), but after a few years as a new SDI, I determined I was actually more di-worsified than diversified and have since been consolidating into fewer, higher quality stocks, e.g., "best ideas" to meet my own goals.

    No exact target number of end state holdings in mind (currently 58) as long as the overall portfolio delivers the income and income growth needed to cover our expenses in retirement. Including some additional to reinvest and keep the "compounding machine" going. As an early retiree, it's definitely a balancing act between income for now and growth of income for later. That's why I especially like your mix of higher yield / lower growth and lower yield / higher growth DG stocks.

    Anyway, very impressed with how you went about your transition. Sound goals and process all around.

    Thanks for sharing. And kudos on having laid out a step by step plan to achieve your FI goals and then executing on that plan.

    Hope to see more articles from you in future!

    Dec 24, 2015. 12:17 AM | Likes Like |Link to Comment
  • Dividend Growth 50: A Very Happy Anniversary  [View article]

    Awesome update, keeping it real : the good, the bad, and the ugly. Love the premise behind the DG50 portfolio and, like others, can't believe it's a year old already!

    I own 36 of the original 50 (plus spinoff BXLT). Had a few more but sold them while consolidating our portfolio earlier this year. No question, the overall results to date are solid. Certainly speaks to the merits of diversifying across sectors and industries, and to your point that even a few bad apples (yep, I hold WMT and that stinker KMI, among others) don't necessarily spoil the whole bunch. And also that the shiniest gems may not always be apparent at the outset.

    Among my many learnings in this volatile year is keeping The Long View, i.e., not letting a few poor quarters or even a bad couple of years by a subset of companies send me into panic (or excessive trading) mode. Especially if the company isn't "broken" but is reacting to external factors. Yes, energy prices are at a generational low due to global politics and an imbalance of supply and demand. But it's not a forever scenario and my retirement portfolio is going to be around a long, long time. So I need to be patient. A lot more patient.

    Like most here, I'm quite pleased to see the DG50 portfolio is off to such a great start. But what I'm really interested to see is how it performs over the the next 3-5 years and longer as a bona fide buy and hold experiment.

    Hopefully you'll still feel like keeping track, and we'll all continue to cheer you on from the sidelines. :)

    Go, DG50!

    Dec 17, 2015. 08:20 PM | 4 Likes Like |Link to Comment
  • Kinder Morgan: What Should I Do?  [View article]

    << Now I will "reinvest" all the time I won't have to spend reading the thousands of comments and hundreds of articles on KMI (except for DVK's article, of course).>>

    Too true. Reading and agonizing over what to do with my full size position in KMI has been a major time sink!

    Your "sell it all" decision sounds like the right one for you. I am still on the fence and am adopting more of a reverse-DCA approach. Sold 10% last week in the taxable account - just enough to harvest tax losses sufficient to offset this year's cap gains. Will hold the rest for now (about 2/3 in the taxable account and the rest in an IRA).

    Since I already have unused cash to reinvest, and the hit to my income was only 5% (though the hit to my confidence was a lot more), I'll probably exit KMI slowly over the next year.

    On a brighter note, I did exit BBL completely early this year, thereby avoiding compounding losses from the energy sector with losses from the basic materials sector. :)

    Dec 14, 2015. 06:09 PM | 3 Likes Like |Link to Comment
  • Managing Risk To Help Achieve Long-Term Goals  [View article]

    << By the way, I just looked up the fair value price from Conrad's Utility Investor newsletter and he has NEE a buy up to $100. I just went 'whoa' when I saw that. ... Ha!

    Some price targets he suggests on some other of our favorite utilities:

    D ... buy under $77
    SO ... buy under $47
    WEC ... buy under $50
    XCEL ... buy under $32
    LNT ... buy under $65
    SRE ... buy under $95
    T ... buy under $37
    VZ ... buy under $52 >>

    Thanks for sharing this, also your thinking on NEE and other utilities. Like you, I don't need a "hero" price, however, Conrad's buy prices are about 10% higher than mine across the board. Maybe he knows something I don't? LOL.

    Utes are around 20% of our retirement portfolio - a solid anchor. NEE is my highest priority add, too, due to its fuel mix and healthy growth projections. While I'd like to see NEE below $90 before adding substantially, I'd certainly nibble around $93. If that actually happens following FED action, of course....

    Long SO, D, WEC, NEE, LNT, AVA, XEL and DNP.


    Dec 14, 2015. 05:46 PM | 3 Likes Like |Link to Comment
  • Project $3 Million - Portfolio Management, New Purchase  [View article]
    I have been following the tax loss harvesting thread above with great interest. Thanks to all who posted. Very helpful.

    Not sure if it was already mentioned, but it's not as simple as just summing up and netting cap gains vs. cap losses. There is also a timing match up (short vs long term) decision to be made from a tax loss harvesting standpoint.

    See below from Fidelity's web site:

    Prioritizing your tax savings
    To help maximize your tax savings, you should apply as much of your capital loss as possible to short-term gains, because they are taxed at a higher marginal rate. This is particularly true for high-income investors.

    For example, if you’re in the top tax bracket, the difference between short- and long-term gains can be as high as 19.6% (43.4% versus 23.8%). However, if you’re in the 25% tax bracket—$74,901 to $151,200 for joint filers and $37,451 to $90,750 for singles—the difference between the short- and long-term gains rate is 10% (25% versus 15%).

    According to the tax code, short- and long-term losses must be used first to offset gains of the same type. But if your losses of one type exceed your gains of the same type, then you can apply the excess to the other type. For example, if you were to sell a long-term investment at a $15,000 loss but had only $5,000 in long-term gains for the year, you could apply the $10,000 excess to any short-term gains.

    Realizing a capital loss can be effective even if you didn’t have realized capital gains of either type this year. The tax code allows you to apply up to $3,000 a year in capital losses to reduce ordinary income, which is taxed at the same rate as short-term capital gains and nonqualified dividends. If you still have capital losses after applying them first to capital gains and then to ordinary income, you can carry them forward for use in future years.

    The least effective implementation of a tax-loss harvesting strategy, on the other hand, would be to apply short-term capital losses to long-term capital gains. But, depending on the circumstances, that may still be preferred over paying the long-term capital gains tax.


    Happy harvesting... or not...
    Dec 8, 2015. 01:50 PM | 3 Likes Like |Link to Comment
  • Dividends & Income Digest: Regarded Solutions Dishes About Div Stocks, Portfolio Management And His Predictions For 2016  [View article]
    I give complete credit to SA, its generous, knowledgeable authors, and this community of commenters for setting me squarely on the SDI path 3 1/2 years ago. Thanks to you all, I took charge of our retirement investments. Made mistakes along the way, learned a ton, but never looked back. As a result, we are now living comfortably and confidently on the growing dividend income from our DG portfolio and one Social Security check.

    Robyn, you have been a tremendous addition to the Dividends and Income section of SA. Thanks for all you do to give a voice and added visibility (and links) to the fine work being done here by so many good authors.

    RS, you are truly a standout among many great DG authors here, and your no-nonsense, "it's not rocket science, folks" approach is so helpful to those of us fed up, exasperated or just plain confused by the mountain of expensive (and often conflicting) advice out there, institutional and otherwise. While not all may agree with your stock selections or buy-sell decisions, there's no denying the power of your core messages about spending less, saving more, and investing sensibly for the long term. Bravo!

    Nov 30, 2015. 10:31 AM | 6 Likes Like |Link to Comment
  • 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