Equity Investing Or Index Investing [View article]

Chowder --

Thanks for giving your reasons for using 5 years in your Chowder Rule.

Speaking of consistency, two columns in David Fish's CCC list that don't get the attention they deserve are BV and BW: average percent of dividend increase for the past 13 years and standard deviation. For me, consistent increases are when the average is at least two times the standard deviation. This indicator points to winning dividend growth stocks like PG, JNJ, KO, CVX, OMI, UTX, ADP and WTR.

Equity Investing Or Index Investing [View article]

Chowder -

I've been a long-time fan of your comments on this site and join others in praise for your first article.

Since you're kindly responding to so many readers, I have a question: Because dividend growth rates are calculated using only two data points -- current year and a previous year (1 year ago, 3 years ago, 5 years ago, etc.) -- what is the rationale for using 5 years in the Chowder Rule? It seems to me using a more recent time frame, such as last dividend increase, would be more pertinent.

Searching For A Dividend Growth Utility Stock [View article]

Bruce, Before 2012, ADA's dividend did not change for the past several years. Also, Eastern Oregon's population isn't growing much; most growth is west of the Cascades.

For a Northwest utility with a growing dividend and reliance on hydo, look at AVA out of Spokane.

Dividend Growth Investing: DCA Vs. Timing Technique [View article]

Doctor, your analysis interests me because I'm facing a somewhat comparable question: how to best convert stocks from a Traditional IRA to a Roth IRA in the next five years before RMDs kick in.

The Traditional IRA has 20 positions and is currently worth $400,000. Not all positions are equal, but I've intended to mix and match stocks to transfer approximately $80,000 per year, executing when each stock's price was below its 50- or 200-day average.

Your article makes me consider converting $1,000 per stock each quarter. This would require the same number of conversions as the above method, but would be much easier than daily monitoring each stock's performance.

Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]

The practice of selling part of a holding after its share price increased to equal several years of dividends sounds prudent, but it may lead to selling a good thing too soon. For example, a $50 stock with a 3.25% yield pays $1.625 per share in dividends. If the dividend growth rate is 10%, four years of dividends will total around $8.00/share. Wouldn't it seem rash to sell shares of a carefully chosen stock when it jumped to only $58?

How Reinvesting Dividends Accelerates Yield on Cost [View article]

Thanks to helpful comments from CPA and both Davids, I've corrected my spreadsheet. Before reading David Van Knapp's recent articles, I'd never considered yield on cost and never worried about calculating share-split data because the stocks are in IRAs.

How Reinvesting Dividends Accelerates Yield on Cost [View article]

David, I've become a fan since I began reading your articles several months ago. Your latest, "How Yield On Cost Works" is no exception.

I created spread sheets modeled on your example for dividend stocks that I own. My entries are quarterly when dividends are received, rather than annually, as you show. In your table, prices are only going up and the current yield is constant. In my real-life portfolio, the share price swings up and down on the day the company figures its dividend, so the annual yield also swings, even when dividends are steady or increasing. Of course, this is expected, but it is striking to compare it to the results in the adjacent column on my spread sheet, where the yield on cost goes steadily up as dividends increase.

In my spread sheets, I calculated my yield on cost by dividing the most recent four quarterly dividends by the share price of my original purchase. This process went well for me until I started a spread sheet for Caterpillar, a stock I've owned since 2004. The stock split 2:1 in July 2005. It seemed reasonable to calculate YOC for subsequent quarters using 1/2 the value of my original share price.

I calculated the DRYOC (dividend reinvested yield on cost) by dividing the quarterly reinvested dividend by the total cost of my original purchase. In 2006, I sold some CAT shares. I deducted the proceeds of my partial sale from the cost of my original purchase to calculate subsequent DRYOC in my spread sheet. In 2007, I sold more CAT shares. In fact, the combined sales exceeded the number of shares I originally purchased.

Now my question is: What is the math to figure DRYOC, when my cost of the remaining shares is less than zero?

Thanks for your helpful analysis of CAT, one of my favorite holdings.

The current stock price is not yet near an all-time high. The stock closed over $100 on several days in June 2005 and at $99.84 on July 13, 2005, the day before its 2:1 split.

Your interesting article has led to many comments regarding YOC.

My question is: Do you calculate the YOC of long-held stocks based on your initial cost-to-buy or do you increase your cost basis every quarter that you reinvest dividends?

## Equity Investing Or Index Investing [View article]

Thanks for giving your reasons for using 5 years in your Chowder Rule.

Speaking of consistency, two columns in David Fish's CCC list that don't get the attention they deserve are BV and BW: average percent of dividend increase for the past 13 years and standard deviation. For me, consistent increases are when the average is at least two times the standard deviation. This indicator points to winning dividend growth stocks like PG, JNJ, KO, CVX, OMI, UTX, ADP and WTR.

Mike

## Equity Investing Or Index Investing [View article]

I've been a long-time fan of your comments on this site and join others in praise for your first article.

Since you're kindly responding to so many readers, I have a question: Because dividend growth rates are calculated using only two data points -- current year and a previous year (1 year ago, 3 years ago, 5 years ago, etc.) -- what is the rationale for using 5 years in the Chowder Rule? It seems to me using a more recent time frame, such as last dividend increase, would be more pertinent.

Mike

## What Stocks Are Most Commonly Held By Dividend Growth Investors? [View article]

Stocks I own that aren't on your list:

APD, AVA, BCE, BKH, CAT, COP, DRI, EPD, FLO, GPC, ITW, NEE, NHI, NOC, NSC, NU, O, OMI, RCI, SJR, UNS.

Stocks I own that are your list:

ABT, AFL, MO, ADP, KO, EMR, HAS,INTC, JNJ, MCD, MDT, PEP, PG, RTN, SYY, WAG.

Mike

## 5 Stocks To Replace H.J. Heinz In Your Portfolio [View article]

P/E = 16.5x;

Yield = 2.96%;

5-YR CAGR = 10.8%;

Payout Ratio = 46%

All these are better numbers than HNZ.

## Searching For A Dividend Growth Utility Stock [View article]

Before 2012, ADA's dividend did not change for the past several years. Also, Eastern Oregon's population isn't growing much; most growth is west of the Cascades.

For a Northwest utility with a growing dividend and reliance on hydo, look at AVA out of Spokane.

## Dividend Growth Investing: DCA Vs. Timing Technique [View article]

The Traditional IRA has 20 positions and is currently worth $400,000. Not all positions are equal, but I've intended to mix and match stocks to transfer approximately $80,000 per year, executing when each stock's price was below its 50- or 200-day average.

Your article makes me consider converting $1,000 per stock each quarter. This would require the same number of conversions as the above method, but would be much easier than daily monitoring each stock's performance.

What do you think?

mikeim1st

## Building a Dividend Portfolio: How Many Stocks Are Enough? [View article]

## How Reinvesting Dividends Accelerates Yield on Cost [View article]

## How Reinvesting Dividends Accelerates Yield on Cost [View article]

I created spread sheets modeled on your example for dividend stocks that I own. My entries are quarterly when dividends are received, rather than annually, as you show. In your table, prices are only going up and the current yield is constant. In my real-life portfolio, the share price swings up and down on the day the company figures its dividend, so the annual yield also swings, even when dividends are steady or increasing. Of course, this is expected, but it is striking to compare it to the results in the adjacent column on my spread sheet, where the yield on cost goes steadily up as dividends increase.

In my spread sheets, I calculated my yield on cost by dividing the most recent four quarterly dividends by the share price of my original purchase. This process went well for me until I started a spread sheet for Caterpillar, a stock I've owned since 2004. The stock split 2:1 in July 2005. It seemed reasonable to calculate YOC for subsequent quarters using 1/2 the value of my original share price.

I calculated the DRYOC (dividend reinvested yield on cost) by dividing the quarterly reinvested dividend by the total cost of my original purchase. In 2006, I sold some CAT shares. I deducted the proceeds of my partial sale from the cost of my original purchase to calculate subsequent DRYOC in my spread sheet. In 2007, I sold more CAT shares. In fact, the combined sales exceeded the number of shares I originally purchased.

Now my question is: What is the math to figure DRYOC, when my cost of the remaining shares is less than zero?

## Gaining Traction with Caterpillar? [View article]

Thanks for your helpful analysis of CAT, one of my favorite holdings.

The current stock price is not yet near an all-time high. The stock closed over $100 on several days in June 2005 and at $99.84 on July 13, 2005, the day before its 2:1 split.

## Portfolio Forensics [View article]

Your interesting article has led to many comments regarding YOC.

My question is: Do you calculate the YOC of long-held stocks based on your initial cost-to-buy or do you increase your cost basis every quarter that you reinvest dividends?