6 Lessons Learned From Up And Down Markets [View article]
Larry, Thank you for good lessons. PLease define "dominant" company. How to know that e.g. industry leader in the past will continue to be industry leader in future? SDS
Russell 1000 Dividend Portfolio That Has Outperformed By A Big Margin [View article]
Arie, Thank you for good article.
It is known that high yield low payout portfolio outperformed market in 1990-2008 and it seems that your work is kind continuation of this fact.
Let me ask first: How this approach worked for companies only S&P 500? Can time frame be expanded?
Although your selection criteria except #6 are valid, let me comment: The annual rate of dividend growth over the past five years is greater than the dividend growth of the industry. + Average annual earnings growth for the past 5 years is greater than the average annual earnings growth of the industry. Well you selected proven leaders
Average annual earnings growth estimates for the next 5 years is greater than 10%. Well you selected expected leaders.
All these together remind me momentum investing at long scale (5 -10 years vs, ~ 1 year for pure momentum strategy)
6) The 8 stocks with the highest yield among all the stocks that complied with the first five demands. Sounds to me as "reverse engineering" Why not 7, why not 10, why not reasonable wide (30+ stocks) portfolio?
Screened in stocks had higher price volatility than S&P500 (I guess because very concentrated portfolio), so might make some investors too nervous.
D4L, Good article -thanks! I started to invest in 1997 shortly after I came into US. I was mostly index investor in mutual funds (MFs) at that time but also played with some stocks. I took all my money from the market in Feb 2000 and use them for our 1st house down-payment. I returned to stock market in October 2003 to continue to make mistakes 8-). I became a dividend growth (DG) investor in 2006/7 mostly due to Miller Lowell "The single best investment" book. I sold almost all stocks/MFs in May 2008, parked money in 1year CD with good interest rate, was so stupid not to break the contract and kept money on CD till May 2009, jumped back to stocks in June 2009, and mostly invest in wide portfolio of DG and HY stocks. I'd not claim that I was VERY succeed at investing but due to my good education /PhD/, luck with market timing (note "“Diligence is the mother of good luck.” - B. Franklin) and dividend investing I can retire in less than 20 years after I started to invest. I think 3 more factors should be added to you list that investor should do: a) diversify (IMO dividend investor should keep 100+ stocks - I wrote many times in comments why); b) partner with dividend-friendly executives / BoD - actually I consider promotion of dividend culture (http://bit.ly/I73GqU) to management as a part of dividend investor job; c) recognize the value of doing nothing.
My 5 Points For Managing My Retirement Investing Behavior [View article]
58 Chevy Impala for $2800 at <I assume> average US salary $100 a week means that <I assume> average car price was equal 6 month salary in 1958. Now in 2013 average US household income is about 50K$ (see http://bit.ly/12zXZJo) and average car price (something like 2013 Toyota RAV4 for 25K$ - see http://bit.ly/10RnsNR) is again equal 6 months of income. I guess government would like to call this "inflation" SDS
What Will $2 Million Get You In Retirement? [View article]
Folks, Thanks for good article and discussion. Let me add my 2 cents: 1). Politics I lived more than half of my life in socialist/communist country, there are some cons and pros but US even now is much better.
I really surprise that you re-elected Clinton - it was clear after 4 years that his moral is not the top; G. Bush (Jr) - it was clear after 4 years that he is a shine idiot; Obama - it was clear after 4 years that he is a hidden socialist (BTW almost nobody force him to finish so-called affirmative action law in next 5-7 years regards to race because so-called minorities got ~ 50 years of privileges and are able to become US president. IMO this law is racist against Asians and Whites - see http://bit.ly/17U18L1) If you feel that 4 years is not enough - let make President term 6 or even 8 years (and change archaic vote system) - it safe lot of money for political propaganda during (re)election and add stability to economy.
2) Retirement and 2 M$ I doubt government inflation data - I think 2 different approaches to calculate inflation http://bit.ly/lmDmS2 and http://bit.ly/11wVI7A reflect reality better. Most US residents are brainwashed by advertisements to have a lot of useless things (and useful thing a lot bigger/expensive they really need), so they safe rates are too low. One good advise I read on SA is: safe at least 50% of your salary rise - you was able to leave without this rise. NO calculator can predict reality (e.g., a spike of inflation to 25% /remember we print tons of greens not covered by goods and then these greens {I dislike to name them money} reach average Joe pocket he has to pay much more for goods than now/ OR urgent medical expenses at Joe age 75 not covered even by best insurance). All numbers 1M$ or 3M$ should be considered as estimations not as exact goal.
What Will $2 Million Get You In Retirement? [View article]
Bennytschet, This approach IMO should be modified as: Between age 20-30 keep 0.5 years worth of living expenses in cash; age 30-40 keep 1 years worth of living expenses in cash (rise gradually from 0.1 to 1 and the same later); 40-50 - 2 years worth of living expenses in cash; 50-60 - 3 years worth of living expenses in cash. Become DGi ASAP. Retire @ 60. Never trade stock for living expenses till retirement. Try not to use capital at least during first 15 years of retirement. SDS
Survey Says... These Are Dividend Growth Investors' Most Widely Held Stocks [View article]
From David Fish's CCC list we can easily see that most companies there are big caps but there are few small caps even in Champions list (>25 years). I pretty sure that number of DGis who have these small caps is significantly lower that the number of DGis who have big caps with less impressive dividend histories (i.e. below 25 years). So the survey is very useful but results should be taken with grain of salt. SDS
Are Streaks And Current Yields The Best Metrics For Dividend Growth Investors? [View article]
Craig,
Thank you for good article. Before I discuss some of your statements, let me point that I consider myself as eclectic dividend investor (about 70% DG and 30% HY).
"I am going to argue that they leave many stones unturned" I literary checked up today 25624 stocks (US/non-US) and selected about 1000 for my watch list (e.g., I consider "slow growers" - see http://bit.ly/10kl7Pa).
"automatically excluded from consideration by investors who never consider purchasing a stock whose dividend has not increased every year, because of that one year without a dividend increase." Not for me.
David Fish has very consistent rules for CCC list (compare with S&P/Mergent) and his list is the best I know. But I invest beyond CCC list.
Robert Allan Schwartz noted bumpy dividends from some DG companies, some DG companies had (and hopefully will have) quite simple dividends patterns (http://bit.ly/Vn25UO). Anyway for a long-term investor (and IMO any DGi should understand that this style of investing required at least 20 years of commitment) CAGR reflects quite good his/her results although more precise model (http://bit.ly/GSO5xF) can be used.
Although normal fluctuations of dividends for companies typical to dividend investors portfolios are smaller then earnings and stocks prices fluctuations, pattern of dividends fluctuation rather remind me telegraph noise than white noise (typical for prices), so diversification is the MUST for dividend investors and it should be wider than for "capital gain" investors (IMO at least with 100+ stocks). On another hand, it might be simpler to make risk coherency for dividends than for prices (http://bit.ly/102frew) but this work is in progress. BTW, non-white noise of dividends makes "the standard deviation" concept not straightforward and you cannot apply Gaussian statistics 101 to dividend changes.
"But 7.5% is not an unreasonable target dividend CAGR for a conservative investor. The average 10-year growth rate for the 111 dividend champions is 7.9% " Well, probably 7.5% is possible for an investor, but note that 7.9% number is biased (only companies NOT excluded from CCC list). More real expectation is probably 6%-7% (http://bit.ly/PSYFbn)
"15% is also not an unreasonably high target" Not for long run, Robert Allan Schwartz demonstrated that only 1 company sustained DGR=8% for 25 years in the past. IMO anything above 10% is an unsupported dream.
The Most Misleading Words In Investing: You Can't Go Broke Taking A Profit [View article]
IMO there are different companies - for stocks of majority it is wise to take profit and have "fool-free-money" (http://seekingalpha.co...), for stocks of minority (mostly DG companies) it is wise to stay almost "forever". I use almost because a) the longest dividend streak known now is less that 100 years and b) the oldest company has less than 500 years history - both are flashes in Earth or Galaxy histories. SDS
Income Criteria For Fear And Loathing Stocks [View article]
We know in May 2013 that few companies from this May 2012 list reduced/suspended their dividends. I don't want to say that method is bad and I still believe that the article is good, but facts tell me that market is quite effective esp. for big companies SDS
Looking At Fundamental Questions In MLP Investment [View article]
nstollon, Thank you for good article. I'd not qualify myself to answer your concerns but I think management of good MLPs takes care at least about some of them.
Quote of the day: "When a stock doesn’t pay dividends, there really isn’t a whole lot of difference between a share of stock and a baseball card.” - Mark Cuban (the owner of the National Basketball Association's Dallas Mavericks).
Hopefully DGI is not a cult and there are not strong rules to be qualified as DGi. I combine HY+DG styles and buy/sell ONLY after my own analysis. Let me quote “When a stock doesn’t pay dividends, there really isn’t a whole lot of difference between a share of stock and a baseball card.” - Mark Cuban (the owner of the National Basketball Association's Dallas Mavericks). SDS
6 Lessons Learned From Up And Down Markets [View article]
SDS
6 Lessons Learned From Up And Down Markets [View article]
Thank you for good lessons.
PLease define "dominant" company. How to know that e.g. industry leader in the past will continue to be industry leader in future?
SDS
Russell 1000 Dividend Portfolio That Has Outperformed By A Big Margin [View article]
Thank you for good article.
It is known that high yield low payout portfolio outperformed market in 1990-2008 and it seems that your work is kind continuation of this fact.
Let me ask first:
How this approach worked for companies only S&P 500?
Can time frame be expanded?
Although your selection criteria except #6 are valid, let me comment:
The annual rate of dividend growth over the past five years is greater than the dividend growth of the industry.
+
Average annual earnings growth for the past 5 years is greater than the average annual earnings growth of the industry.
Well you selected proven leaders
Average annual earnings growth estimates for the next 5 years is greater than 10%.
Well you selected expected leaders.
All these together remind me momentum investing at long scale (5 -10 years vs, ~ 1 year for pure momentum strategy)
6) The 8 stocks with the highest yield among all the stocks that complied with the first five demands.
Sounds to me as "reverse engineering" Why not 7, why not 10, why not reasonable wide (30+ stocks) portfolio?
Screened in stocks had higher price volatility than S&P500 (I guess because very concentrated portfolio), so might make some investors too nervous.
SDS
A Winning Investment Strategy [View article]
Good article -thanks!
I started to invest in 1997 shortly after I came into US. I was mostly index investor in mutual funds (MFs) at that time but also played with some stocks. I took all my money from the market in Feb 2000 and use them for our 1st house down-payment. I returned to stock market in October 2003 to continue to make mistakes 8-).
I became a dividend growth (DG) investor in 2006/7 mostly due to Miller Lowell "The single best investment" book. I sold almost all stocks/MFs in May 2008, parked money in 1year CD with good interest rate, was so stupid not to break the contract and kept money on CD till May 2009, jumped back to stocks in June 2009, and mostly invest in wide portfolio of DG and HY stocks. I'd not claim that I was VERY succeed at investing but due to my good education /PhD/, luck with market timing (note "“Diligence is the mother of good luck.” - B. Franklin) and dividend investing I can retire in less than 20 years after I started to invest.
I think 3 more factors should be added to you list that investor should do:
a) diversify (IMO dividend investor should keep 100+ stocks - I wrote many times in comments why);
b) partner with dividend-friendly executives / BoD - actually I consider promotion of dividend culture (http://bit.ly/I73GqU) to management as a part of dividend investor job;
c) recognize the value of doing nothing.
SDS
My 5 Points For Managing My Retirement Investing Behavior [View article]
Thank you for good article. I'd recommend to read The Little Book of Behavioral Investing: How not to be your own worst enemy / James Montier
SDS
My 5 Points For Managing My Retirement Investing Behavior [View article]
Now in 2013 average US household income is about 50K$ (see http://bit.ly/12zXZJo) and average car price (something like 2013 Toyota RAV4 for 25K$ - see http://bit.ly/10RnsNR) is again equal 6 months of income.
I guess government would like to call this "inflation"
SDS
What Will $2 Million Get You In Retirement? [View article]
Thanks for good article and discussion.
Let me add my 2 cents:
1). Politics
I lived more than half of my life in socialist/communist country, there are some cons and pros but US even now is much better.
I really surprise that you re-elected
Clinton - it was clear after 4 years that his moral is not the top;
G. Bush (Jr) - it was clear after 4 years that he is a shine idiot;
Obama - it was clear after 4 years that he is a hidden socialist (BTW almost nobody force him to finish so-called affirmative action law in next 5-7 years regards to race because so-called minorities got ~ 50 years of privileges and are able to become US president. IMO this law is racist against Asians and Whites - see http://bit.ly/17U18L1)
If you feel that 4 years is not enough - let make President term 6 or even 8 years (and change archaic vote system) - it safe lot of money for political propaganda during (re)election and add stability to economy.
2) Retirement and 2 M$
I doubt government inflation data - I think 2 different approaches to calculate inflation http://bit.ly/lmDmS2 and http://bit.ly/11wVI7A reflect reality better.
Most US residents are brainwashed by advertisements to have a lot of useless things (and useful thing a lot bigger/expensive they really need), so they safe rates are too low. One good advise I read on SA is: safe at least 50% of your salary rise - you was able to leave without this rise.
NO calculator can predict reality (e.g., a spike of inflation to 25% /remember we print tons of greens not covered by goods and then these greens {I dislike to name them money} reach average Joe pocket he has to pay much more for goods than now/ OR urgent medical expenses at Joe age 75 not covered even by best insurance). All numbers 1M$ or 3M$ should be considered as estimations not as exact goal.
SDS
What Will $2 Million Get You In Retirement? [View article]
This approach IMO should be modified as:
Between age 20-30 keep 0.5 years worth of living expenses in cash;
age 30-40 keep 1 years worth of living expenses in cash (rise gradually from 0.1 to 1 and the same later);
40-50 - 2 years worth of living expenses in cash;
50-60 - 3 years worth of living expenses in cash.
Become DGi ASAP. Retire @ 60.
Never trade stock for living expenses till retirement. Try not to use capital at least during first 15 years of retirement.
SDS
Are Streaks And Current Yields The Best Metrics For Dividend Growth Investors? [View article]
SDS
Survey Says... These Are Dividend Growth Investors' Most Widely Held Stocks [View article]
SDS
Are Streaks And Current Yields The Best Metrics For Dividend Growth Investors? [View article]
Thank you for good article. Before I discuss some of your statements, let me point that I consider myself as eclectic dividend investor (about 70% DG and 30% HY).
"I am going to argue that they leave many stones unturned"
I literary checked up today 25624 stocks (US/non-US) and selected about 1000 for my watch list (e.g., I consider "slow growers" - see http://bit.ly/10kl7Pa).
"automatically excluded from consideration by investors who never consider purchasing a stock whose dividend has not increased every year, because of that one year without a dividend increase."
Not for me.
David Fish has very consistent rules for CCC list (compare with S&P/Mergent) and his list is the best I know. But I invest beyond CCC list.
Robert Allan Schwartz noted bumpy dividends from some DG companies, some DG companies had (and hopefully will have) quite simple dividends patterns (http://bit.ly/Vn25UO). Anyway for a long-term investor (and IMO any DGi should understand that this style of investing required at least 20 years of commitment) CAGR reflects quite good his/her results although more precise model (http://bit.ly/GSO5xF) can be used.
Although normal fluctuations of dividends for companies typical to dividend investors portfolios are smaller then earnings and stocks prices fluctuations, pattern of dividends fluctuation rather remind me telegraph noise than white noise (typical for prices), so diversification is the MUST for dividend investors and it should be wider than for "capital gain" investors (IMO at least with 100+ stocks). On another hand, it might be simpler to make risk coherency for dividends than for prices (http://bit.ly/102frew) but this work is in progress. BTW, non-white noise of dividends makes "the standard deviation" concept not straightforward and you cannot apply Gaussian statistics 101 to dividend changes.
"But 7.5% is not an unreasonable target dividend CAGR for a conservative investor. The average 10-year growth rate for the 111 dividend champions is 7.9% "
Well, probably 7.5% is possible for an investor, but note that 7.9% number is biased (only companies NOT excluded from CCC list). More real expectation is probably 6%-7% (http://bit.ly/PSYFbn)
"15% is also not an unreasonably high target"
Not for long run, Robert Allan Schwartz demonstrated that only 1 company sustained DGR=8% for 25 years in the past. IMO anything above 10% is an unsupported dream.
Good luck!
SDS
The Most Misleading Words In Investing: You Can't Go Broke Taking A Profit [View article]
SDS
Income Criteria For Fear And Loathing Stocks [View article]
SDS
Looking At Fundamental Questions In MLP Investment [View article]
Thank you for good article. I'd not qualify myself to answer your concerns but I think management of good MLPs takes care at least about some of them.
Quote of the day: "When a stock doesn’t pay dividends, there really isn’t a whole lot of difference between a share of stock and a baseball card.” - Mark Cuban (the owner of the National Basketball Association's Dallas Mavericks).
SDS
Don't Panic If Dividends Were Cut [View instapost]
SDS