The New Nifty Fifty, Part 2: Dividend Growth Investing's Greatest Hits [View article]

Six of the Top 10, Seven of the Top 12. I must be doing something right ('borrowing' ideas from the right folks anyway).

Thanks for compiling everything Mike, and many thanks to the DJs for contributing.

It would be interesting to see how that Top 10 portfolio has performed over the past 10/20/30 year periods, assuming equal weighting at the start of each period. Any guesses as to whether it would outperform the market or not?

The Bloggers' Dividend Growth Portfolio: Popular Dividend Growth Stocks Trading On U.S. Exchanges [View article]

Outstanding job compiling, comparing, and contrasting all these portfolios of stocks! Someone new to DGI would not go too far wrong by restricting themselves to the stocks on both of these lists and starting their research at that point.

One other key point to understand, which you pointed out, is to only buy these stocks at prices which offer a good value (or better). Buying right is nearly a necessary step in generating great performance going forward.

One other tool you might have mentioned is Chuck Carnevale's F.A.S.T. Graphs (TM):

The basic subscription is ~$10 per month and it can save a great deal of time when trying to assign a good value to most stocks. Many DGI adherents use it extensively.

I have on occasion reached the opposite conclusion. In early 2013 I did a 4-for-4 swap of stocks in order to boost my dividend income. I documented the details in an instablog here:

In my case it was a no-brainer to make the changes. That's not always the case, but it only takes a bit of simple math to work it out and decide how to proceed.

The New Nifty Fifty, Part 1 - Dividend Growth Style [View article]

"Lets pretend that you were a new dividend investor with 60K in cash. Starting today, would you "drop drip drip" and buy a few dividends a month? Or would you go crazy and use the 60K and load up in dividends right now?" - luckylalo

When I first started, I figured I was still learning and needed time to 'do the work', so I tried to find one stock to buy every month or so at a good value. That provided me with plenty of calendar to set aside the necessary time it required to find a bargain worth buying.

If you have a lot of time to devote to learning and researching, you can easily go faster. I was pretty busy doing other stuff like work back then, so I had to squeeze a spot into my schedule for DGI.

Chowder's list is a pretty good starting one. It can also pay to look for beaten down sectors and find a good DG stock that's "on sale" for the moment in that sector (that's why the oil companies are a good place to look now with the price of oil being weak).

Just keep in mind, there's no need to rush. If you aren't sure what to do, wait and keep learning. Great stocks may be cheaper tomorrow. There's almost always something worth buying at any point in time.

Solving The Mystery Of 10 By 10 - How Does A Dividend Growth Investor Get From Point A To Point B? [View article]

Many thanks DVK for providing the extra detail and making it clear how the double compounding of divided growth and reinvestment boosts income over time.

The same can be said for advantageous exchanges of overvalued DG stocks for undervalued DG stocks (presuming equal 'quality' of the two stocks).

If I buy a stock at $25 paying a $1 dividend (4% initial yield), DGR at 8%, and it runs up in price to $50 in 6 months, I can sell some or all of that stock and buy a different (equal quality) stock (paying >3% and growing at >9%). This will provide an immediate boost to the portfolio income and boost the portfolio DG rate since there will be more dividends to reinvest going forward.

I know many DGI'ers don't like making these kind of exchanges simply for the sake of making them, but the math holds and it's another way to boost the portfolio income in a shorter time, provided you don't have a personal reason against making the switch from stock A to stock B. Dividends are fungible after all.

I've done this a few times myself recently, and my 2014 dividend income will be significantly larger than my 2013 dividend income as a result. I also added some money, but I would estimate without those additions I'd be looking at a 18% increase in dividend income, where most of my stocks had sub-9% DG.

The New Nifty Fifty, Part 1 - Dividend Growth Style [View article]

"They just don't use it. It is ALL internet. ALL. They stream." - maybenot

My last payment to a cable company was made in 1992. Everything I watch now is over the internet for the low, low cost of a DSL subscription from my phone company, CenturyLink (CTL).

That, plus a land line, runs me a bit under $70/month. I don't miss TV a bit. For the record, I do have a digital TV receiver and can get 2 broadcast stations though I rarely use it.

It's nice to see that the youngsters are following in my footsteps. ;-)

The New Nifty Fifty, Part 1 - Dividend Growth Style [View article]

Thanks for the great article Mike. What a super idea!

I am pleased to report that 13 of my 32 holdings are in your list of Fifty and one of Miz's 'bonus' holdings is in there too.

Some of my remainders are kissing cousins of the widely chosen variety (HAS, AVA, SXL) or small stretches for yield with REITs, BDCs, or MLPs (DLR, VNR, TCAP). Even after three-plus years I still consider this portfolio "experimental", so holding the outliers helps me evaluate them as a possible permanent addition.

I'm thinking you might consider having a naming event for your compiled list as 'New Nifty' seems a bit stuffy for the DGI magic pants crowd. Maybe you can collect suggestions from the SA DGI Zealots, whittle down to a small list, and have a vote.

I'm thinking maybe the "Fervent Fifty" to reflect our 'zealous' adherence to the DGI methodology. :-)

Is There A Relationship Between The Dividend Growth Rate And A Stock's Return? [View article]

Good idea PTI, but I believe there is a simpler way to look at the data and make a meaningful point.

Eliminate the linear fit. You cannot expect an exact proportional result in this case. In fact, your investment results would be better off if every stock showed a total return CAGR that was nearly double the DGR with a wide variance rather than a CAGR that matched the DGR exactly. If that were the case then your linear fit would stink, but your investment returns would be much better, and that's the 'alpha' most folks are looking for.

Change your plots to show the initial DGR on the X axis and the 10 year CAGR (dividends reinvested) on the Y axis. Draw a line through the X,Y points which are equal ( 0, 0 / 5, 5 / 10, 10 / etc). Calculate how many points are plotted on or above the line as a percentage of the total number of points, where each point is an individual Champion / Aristocrat.

Ideally you would want to see a high percentage of all the stocks on or above the line. This would imply that the total return CAGR going forward would be very likely to exceed the DGR at the time of purchase. It's likely that the relationship would hold reasonably well at lower DGRs and not quite so well at higher DGRs.

Of course you'd have to repeat the process on a rolling 10 year period starting each year for as far back as you can get initial data. You could then plot the percentage of stocks vs. starting year to show how well the relationship holds over various market conditions.

Based on an unscientific eyeball fit I'd say it appears that the percentage for the data you show above would be in the 70+% range.

If someone had told me 30 years ago that buying blue chips with DGRs between 8 and 15% would give me a 70+% chance of compounding my money at around 10% CAGR or better, I'd probably be a much wealthier man now.

"Are you sure dividends are added to the ending value in the calculations?" - BoomBoom99

I haven't verified any of the data Netterho provided. Ideally you would want to have a dollar amount at the start, at the end, and all the dividends reinvested in between (which is the assumption used by the calculators you noted). All I had were the starting and ending prices and the amount of the dividends as provided by Netterho.

If the starting price were actually $25.00 as you indicate, then the CAGR would be as you show, around 2.8% annually, though even that is an estimate as Netterho did not indicate how many shares were held at each point in time, nor whether the dividends were reinvested back into the stock for the entire time period.

"CAGR isn't the actual return in reality." - BoomBoom99 & netterho

CAGR is the measure of the average percentage growth per year. It is a useful way to compare the relative performance of several approaches over a long time frame.

CAGR can be calculated using the following formula:

X = Starting Value Y = Ending Value Z = Time Period (in years)

CAGR = 100 * [ { ( Y/X ) ^ ( 1/Z ) } - 1 ]

(the ^ symbol denotes raising to a power, so 3 squared would be 3^2 and the square root of 3 would be 3^(1/2))

Using netterho's numbers as an example, and assuming he invested on Jan 1, 1999:

Let's Talk About The Nifty Fifty And Dividend Growth Investing [View article]

"If most of the professional money managers underperform, and most of the retail investors underperform, who exactly IS beating the averages"

Warren Buffett, obviously. The performance of BRK is so good that it covers all the errors made by everyone else in the market and brings the average up into positive territory. (sarcasm off)

Retirement Strategy: ETF Only Portfolio Vs. Buy The Dips Portfolio - A Dreary September Update [View article]

"got any stocks you like?"

For your purposes, my thoughts would run along using the accumulated dividends to add to your smaller positions and move things toward a more even balance in each stock.

BGCP, XOM, or MO would top the list on that basis. Maybe add about $1,000 to each of those three, or scale the amount each receives based on some valuation metric.

## The New Nifty Fifty, Part 2: Dividend Growth Investing's Greatest Hits [View article]

## The New Nifty Fifty, Part 2: Dividend Growth Investing's Greatest Hits [View article]

Thanks for compiling everything Mike, and many thanks to the DJs for contributing.

It would be interesting to see how that Top 10 portfolio has performed over the past 10/20/30 year periods, assuming equal weighting at the start of each period. Any guesses as to whether it would outperform the market or not?

## The Bloggers' Dividend Growth Portfolio: Popular Dividend Growth Stocks Trading On U.S. Exchanges [View article]

One other key point to understand, which you pointed out, is to only buy these stocks at prices which offer a good value (or better). Buying right is nearly a necessary step in generating great performance going forward.

One other tool you might have mentioned is Chuck Carnevale's F.A.S.T. Graphs (TM):

http://bit.ly/t3XFTe

The basic subscription is ~$10 per month and it can save a great deal of time when trying to assign a good value to most stocks. Many DGI adherents use it extensively.

## What To Do With Capital Gains? [View article]

http://seekingalpha.co...

In my case it was a no-brainer to make the changes. That's not always the case, but it only takes a bit of simple math to work it out and decide how to proceed.

## The New Nifty Fifty, Part 1 - Dividend Growth Style [View article]

Or would you go crazy and use the 60K and load up in dividends right now?" - luckylalo

When I first started, I figured I was still learning and needed time to 'do the work', so I tried to find one stock to buy every month or so at a good value. That provided me with plenty of calendar to set aside the necessary time it required to find a bargain worth buying.

If you have a lot of time to devote to learning and researching, you can easily go faster. I was pretty busy doing other stuff like work back then, so I had to squeeze a spot into my schedule for DGI.

Chowder's list is a pretty good starting one. It can also pay to look for beaten down sectors and find a good DG stock that's "on sale" for the moment in that sector (that's why the oil companies are a good place to look now with the price of oil being weak).

Just keep in mind, there's no need to rush. If you aren't sure what to do, wait and keep learning. Great stocks may be cheaper tomorrow. There's almost always something worth buying at any point in time.

## Solving The Mystery Of 10 By 10 - How Does A Dividend Growth Investor Get From Point A To Point B? [View article]

The same can be said for advantageous exchanges of overvalued DG stocks for undervalued DG stocks (presuming equal 'quality' of the two stocks).

If I buy a stock at $25 paying a $1 dividend (4% initial yield), DGR at 8%, and it runs up in price to $50 in 6 months, I can sell some or all of that stock and buy a different (equal quality) stock (paying >3% and growing at >9%). This will provide an immediate boost to the portfolio income and boost the portfolio DG rate since there will be more dividends to reinvest going forward.

I know many DGI'ers don't like making these kind of exchanges simply for the sake of making them, but the math holds and it's another way to boost the portfolio income in a shorter time, provided you don't have a personal reason against making the switch from stock A to stock B. Dividends are fungible after all.

I've done this a few times myself recently, and my 2014 dividend income will be significantly larger than my 2013 dividend income as a result. I also added some money, but I would estimate without those additions I'd be looking at a 18% increase in dividend income, where most of my stocks had sub-9% DG.

## Another Boring Dividend Increase For Omega Healthcare Investors [View article]

Doesn't get much better than that. IMHO the LAST thing it could be is boring. I prefer "Dependable".

## The New Nifty Fifty, Part 1 - Dividend Growth Style [View article]

My last payment to a cable company was made in 1992. Everything I watch now is over the internet for the low, low cost of a DSL subscription from my phone company, CenturyLink (CTL).

That, plus a land line, runs me a bit under $70/month. I don't miss TV a bit. For the record, I do have a digital TV receiver and can get 2 broadcast stations though I rarely use it.

It's nice to see that the youngsters are following in my footsteps. ;-)

## The New Nifty Fifty, Part 1 - Dividend Growth Style [View article]

I am pleased to report that 13 of my 32 holdings are in your list of Fifty and one of Miz's 'bonus' holdings is in there too.

Some of my remainders are kissing cousins of the widely chosen variety (HAS, AVA, SXL) or small stretches for yield with REITs, BDCs, or MLPs (DLR, VNR, TCAP). Even after three-plus years I still consider this portfolio "experimental", so holding the outliers helps me evaluate them as a possible permanent addition.

I'm thinking you might consider having a naming event for your compiled list as 'New Nifty' seems a bit stuffy for the DGI magic pants crowd. Maybe you can collect suggestions from the SA DGI Zealots, whittle down to a small list, and have a vote.

I'm thinking maybe the "Fervent Fifty" to reflect our 'zealous' adherence to the DGI methodology. :-)

## Is There A Relationship Between The Dividend Growth Rate And A Stock's Return? [View article]

Eliminate the linear fit. You cannot expect an exact proportional result in this case. In fact, your investment results would be better off if every stock showed a total return CAGR that was nearly double the DGR with a wide variance rather than a CAGR that matched the DGR exactly. If that were the case then your linear fit would stink, but your investment returns would be much better, and that's the 'alpha' most folks are looking for.

Change your plots to show the initial DGR on the X axis and the 10 year CAGR (dividends reinvested) on the Y axis. Draw a line through the X,Y points which are equal ( 0, 0 / 5, 5 / 10, 10 / etc). Calculate how many points are plotted on or above the line as a percentage of the total number of points, where each point is an individual Champion / Aristocrat.

Ideally you would want to see a high percentage of all the stocks on or above the line. This would imply that the total return CAGR going forward would be very likely to exceed the DGR at the time of purchase. It's likely that the relationship would hold reasonably well at lower DGRs and not quite so well at higher DGRs.

Of course you'd have to repeat the process on a rolling 10 year period starting each year for as far back as you can get initial data. You could then plot the percentage of stocks vs. starting year to show how well the relationship holds over various market conditions.

Based on an unscientific eyeball fit I'd say it appears that the percentage for the data you show above would be in the 70+% range.

If someone had told me 30 years ago that buying blue chips with DGRs between 8 and 15% would give me a 70+% chance of compounding my money at around 10% CAGR or better, I'd probably be a much wealthier man now.

## Young Canadian Portfolio [View article]

I haven't verified any of the data Netterho provided. Ideally you would want to have a dollar amount at the start, at the end, and all the dividends reinvested in between (which is the assumption used by the calculators you noted). All I had were the starting and ending prices and the amount of the dividends as provided by Netterho.

If the starting price were actually $25.00 as you indicate, then the CAGR would be as you show, around 2.8% annually, though even that is an estimate as Netterho did not indicate how many shares were held at each point in time, nor whether the dividends were reinvested back into the stock for the entire time period.

## Young Canadian Portfolio [View article]

CAGR is the measure of the average percentage growth per year. It is a useful way to compare the relative performance of several approaches over a long time frame.

CAGR can be calculated using the following formula:

X = Starting Value

Y = Ending Value

Z = Time Period (in years)

CAGR = 100 * [ { ( Y/X ) ^ ( 1/Z ) } - 1 ]

(the ^ symbol denotes raising to a power, so 3 squared would be 3^2 and the square root of 3 would be 3^(1/2))

Using netterho's numbers as an example, and assuming he invested on Jan 1, 1999:

X = 10.00

Y = 10.92 + 26.78 = 37.70

Z = 14.75

CAGR = 100 * [ { ( 37.70/10 ) ^ ( 1/14.75 ) } - 1 ] = 9.41%

This means his initial $10.00 investment compounded at a pace equivalent to 9.41% every year over the entire 14.75 years.

As a comparison SPY grew at about 4.87% CAGR over the same span, per longrundata.

## American Capital Agency (AGNC) Goes Monthly [View instapost]

Hope you get a chance to enjoy the leaves changing color in the coming weeks.

## Let's Talk About The Nifty Fifty And Dividend Growth Investing [View article]

Warren Buffett, obviously. The performance of BRK is so good that it covers all the errors made by everyone else in the market and brings the average up into positive territory. (sarcasm off)

## Retirement Strategy: ETF Only Portfolio Vs. Buy The Dips Portfolio - A Dreary September Update [View article]

For your purposes, my thoughts would run along using the accumulated dividends to add to your smaller positions and move things toward a more even balance in each stock.

BGCP, XOM, or MO would top the list on that basis. Maybe add about $1,000 to each of those three, or scale the amount each receives based on some valuation metric.