Buy And Hold Isn't Dead, Just Misunderstood [View article]
Geordy Wang: Thank you for a good article
retailinvestor: "* Look at their use of the metric "current-yr-dividend / historical cost". They consider this metric to be an objective. A high value is interpreted as being 'proof' they are investing well." Well a DG investor who paid 20$ for INTC in 2002 with 8c annual dividends and have it now at about 20$ with about 70c annual dividend. (S)he has no capital gains but collected about 3.8$/share in dividends (19% return in "lost" decade) and keeps ability to collect more cash in future. "* Look at the articles that ignore survivor bias and compare a 'random' selected, and static portfolio of dividend stocks vs the index over some past (eg) 20 years." Actually Geordy Wang correctly wrote "Eventually, all companies must die." In contrast article "Investors Should Not Be Complacent About Dividend Champions" about survivor bias by James Kostohryz and comments /you probably refer to/ have obvious mathematical mistake. "* Look at their arguments for dividend-investing in your accumulation phase ("Divdend investors won't have to sell at retirement to switch into dividend stock --- thereby NOT triggering capital gains")." I have some of my DG stocks in regular 401k and I have to sell when I become 70-years-old (if current IRS rules will not change). I not have to sell if I happy with company & dividends and have their stock in non-regulated account and if dividends cover my cash need. "* Look at all the advice about the 'cost' of triggering capital gains tax by selling to buy another stock." Why do you want to support a broker and "Uncle Sam" when you change one stock to another equal? I'll support all "financial parasites" both ONLY if I change a bad stock (in my opinion) for a good one (again IMO). I'm trying to avoid bad stocks and hence to reduce my portfolio turnover but I agree with "buy-and-monitor" rather that with naive "buy-and-hold-forever".
David Fish: I think /not sure/ that SPY (to which Geordy referred to) includes dividends and their reinvestment.
Interview With Chuck Carnevale: Why Valuation Matters For Buy And Hold Dividend Investors [View article]
It would be nice if DVK and/or CC summarize constructive comments to this article (as well as to other their articles that have more than 100 /pick a number/ comments). Example is Five Plus Investor work - see http://seekingalpha.co...
"I apologize for the rather crude presentation and limited analysis" I like it more than articles with 10,000 words for an obvious idea and without new facts.
“$1000 Ltd” portfolio makes sense (I wish I had smaller expose to financials in 2007) but a bit artificial to compare with usually studied market (1 Share ea) and equally weighted ($1000 ea) portfolios. It seems that your conclusion coincides with Jeff Paul results (http://seekingalpha.co...).
"I'd be happy to provide my spreadsheet data but don't have a website to host it on to link to in the Instablog." Should it be added to Robert Allan Schwartz site?
Are Storm Clouds Gathering For Blue Chip Dividend Stocks? [View article]
Counterpoint, Thank you for the good article. Probably somebody already commented but anyway IMO stockholders should urge government keep 15% taxes on dividends beyond 2012. Sincerely SDS
Investors Should Not Be Complacent About Dividend Champions [View article]
ARTICLE James A. Kostohryz
As a scientist and native contrarian I enjoy the main job of scientists is to challenge existing point of view. As a dividend investor I enjoy your article at the same basis of Karl Popper philosophy (although I disagree with some numbers) and hope you will continue to challenge DGI.
Sincerely SDS
COMMENTS on COMMENTS
Folks, please “don't shoot the piano player; he is doing the best he can”. In this and many other cases SA authors share their ideas and knowledge with public for (almost) free. Anybody can have his/her opinion and others can just agree or disagree with arguments like (for example) David Fish did in comments to this article but without personal attacks. Robert Allan Schwartz – I often appreciate your comments but here you looks sometimes like a top fanatic from all DGI zealots. Why not to discuss such points with author by email in order not to spend readers’ time?
Any stock portfolio is required decisions, the hardest one is to “sit on your ass”, i.e. in DG stock case it is not always smart to sell at dividends freeze or cut. Simplest example: if yield on my cost reached 25% and company froze dividends I’d NOT care about the freeze as long as company in relatively good shape.
IMO any prediction of future is incorrect, so why to spend time to discuss it. If you have a free time and unbiased brain I can propose more productive ways to spend your energy for better investment decisions (just shut me email).
“uuuummm - … dropped their dividend last June 30 when they declared it was going to be 25 cents instead of the previous 50 cents...” Folks, often the cause is 2:1 stock split – check before panic……
Jeff Paul: From UK paper you reviewed (thank you – I was not aware about it) it was clear that “mechanical” DG stocks portfolio did NOT always beat wide UK stock index and the number of UK companies with 10,15, 20 years of growing dividends decreased with DG period. “….given that is amounts to ~3% turnover per year” As far as I remember S&P500 average turnover is also in this range… what is about UK index? BTW, their “mechanical” selection method might be incompatible with some David Fish’s claims – I think it worse to discuss outside this tread.
Dividending: I use Google alerts “COMPANY Dividend and (Decrease or Cut or Reduce)” – noise/signal ratio is quite high but I think they are useful.
James A. Kostohryz: “What I have said is that ALL equity investing, including dividend investing will become more difficult.” I think dividend investing will be even more difficult than any other style as soon as majority of investors will participate in dividend investing
Uain53: “I want to be rich and I want it NOW!” Play lotto or go to Las Vegas….. There are several method to “become rich now” – they are different in speed of loosing money….
James A. Kostohryz/ Robert Allan Schwartz/ "In fact, it appears that many corporations have become sensitive to the need for more dependable, rising dividends." /” I believe that more and more corporations will begin to pay dividends, or raise their dividends, because more and more retirees will want dividend income, and will choose to invest in companies that pay dividends” / “The demographics of the "Baby Boomers" should provide a powerful incentive for companies to raise dividends...not reduce them.” Another factor is: many US companies become more mature and (according to company life cycle theory) are able to pay dividends, e.g. semiconductor and software companies. Baby Boomers should demand dividends from companies Boards and should demand low dividend taxes from government.
Navigating The Wild, Wonderful World of Canadian Corporations, Part 2: Reader Comments [View article]
Five Plus Investor
Thank you very much for excellent comments digest. I think it is perfect example of SA author responsibility and I wish to see such summaries after each actively discussed article.
A Simple Dividend Strategy That Will Get You 4%, Lower Volatility and More Sleep Part 1 [View article]
"In my research, we found just 40 dividend cuts from 1997-2010 for non-financial U.S. firms with $500MM+ market cap and at least seven consecutive years of dividend increases prior to the cut. "
Is this research published? I counted more cuts but I didn't limit for market cap .....
Dividend Skeptics: Here's How Dividend Champions Fared During The Last Recession [View article]
Folks, I own NLY and appreciate all your opinions about this and any other company but I just think it not productive to read irrelevant comment to an article. SA has stocks, instablog, my feed, articles etc.. sections that can be used differently.
John Bogle's Advice For Retirement Investors [View article]
I'm reading Don't count on it! : reflections on investment illusions, capitalism, "mutual" funds, indexing, entrepreneurship, idealism, and heroes / John C. Bogle and it is really good book I'd recommend.
Dividend Skeptics: Here's How Dividend Champions Fared During The Last Recession [View article]
Norman Tweed Comments (3877) " mbkelly75--I see you own NLY. What do you think of AGNC? The yield is higher and it appears to be in the same business."
Folks! We have email within SA. I think it is more appropriate channel for such messages. Why hundred peoples who are interested in Robert's research should spend their time reading this? BTW, I'm doing the same mistake - see my early irrelevant comment there I discussed another company (BP). LET SAVE OUR AND OUR FRIENDS /OPPONENTS TIME and use appropriate SA methods for communications!
Dividend Skeptics: Here's How Dividend Champions Fared During The Last Recession [View article]
mbkelly75, “When a company cuts it's dividend, the stock price tends to fall like a stone, and I see no reason to ride it down when you can sell right away and keep that cash safe for re-investing later.”
I agree, indeed let’s assume that price falls down 50% before you recognize that happens (I assume you do not monitor market closely on hourly basis). Lot of scholar papers show that after a dividend cut earnings and prices recovered in about 3-5 years. I'll show that the similar recovery happens with dividends. So I think it is often more wise to wait let's say 5 years and to have price and dividends recovery to pre-cut levels than loose 50% of money and re-invest the second half into another stock.
Dividend Skeptics: Here's How Dividend Champions Fared During The Last Recession [View article]
Jeff Paul I asked about "We pulled all U.S. non-financials (and non-LP/REIT), with minimum market cap of $500MM and 7+ years of div growth from 1997-2010. We looked at rolling 7-yr periods...."
"financials because their financial statements (business model) is different from other sectors." Yep it is common and valid argument but from your description I do not see such obstacles - any dividend is real money. Anyway I'd appreciate your results.
Dividend Skeptics: Here's How Dividend Champions Fared During The Last Recession [View article]
Robert, Thank you for this valuable analysis. Just couple points for perfection: There are CBx and DBx type companies using your terms now (at least in modern David Fish list) that had “dividend wells” and I guess there were in 2010. Column F title is "cagr_from_then_to_2007" in your spreadsheet. I guess CAGR should be mentioned in the article. BTW, Do you own stocks beyond your disclosure for the article?
COMMENTS:
David Van Knapp: "Would it be possible for you to simply list the Champion banks that cut, froze, and continued raising their dividends in 2008-09-10?" Such data can be found at http://bit.ly/qRCNMM
David Fish "I'm not against your idea of a library..." I think archive of your spreadsheets will be useful for researches.
Jeff Paul Are you going to publish the results? I tried to convince few academics to expand their dividend research to financial companies but they are reluctant to break this scholar tradition. I believe it would be useful to perform research like you’re described on whole universe of stocks.
Dividend Inc "Without an indication of the actual total return of the stocks in question, the fact of maintaining, increasing or decreasing the dividend becomes less important as an investor seeking above average total return." For me and some other dividends investors price of shares isn't important at least in such short period as 2008-2011 (my holding period is longer and I can wait the stock prices recovery to pre-2008 level as long as I get my dividends). Can you post the Russell paper and shut me email with link, please? “As a side bar, I have the dividend aristocrats and achievers from 1995 to the present.” It will be useful to Excel these data for research.
Rhianni32 I still hold BP because I think they were forced to cut dividends by Obama administration and I hope their dividends will recover within 3-5 years
La Marque “I like about owning DG stocks is that one can sell immediately when the dividend is cut.” It is NOT wise to sell every DG stock when the dividend is cut. I hope to write instablog this November/December to prove this statement if my schedule allows.
No Free Cake “But, this says nothing about how much your income would have changed over this period. The ones that increased may have been sufficient to overcome the lost income from the cutters or the ones that kept it steady. But, we can't draw any conclusion about this from the data as presented.” Good point. If income is only due to dividends you can calculate from Robert’s spreadsheet. Historically an average dividend cut is about 35% and average annual growth rate is about 8%, so with Robert’s calculation for 71% the total result should be a small negative number in order of 10% (I just estimated, exact number depends on portfolio construction –e.g. equal weight, same number of shares, capital weight, etc…).
Buy And Hold Isn't Dead, Just Misunderstood [View article]
Thank you for a good article
retailinvestor:
"* Look at their use of the metric "current-yr-dividend / historical cost". They consider this metric to be an objective. A high value is interpreted as being 'proof' they are investing well."
Well a DG investor who paid 20$ for INTC in 2002 with 8c annual dividends and have it now at about 20$ with about 70c annual dividend. (S)he has no capital gains but collected about 3.8$/share in dividends (19% return in "lost" decade) and keeps ability to collect more cash in future.
"* Look at the articles that ignore survivor bias and compare a 'random' selected, and static portfolio of dividend stocks vs the index over some past (eg) 20 years."
Actually Geordy Wang correctly wrote "Eventually, all companies must die." In contrast article "Investors Should Not Be Complacent About Dividend Champions" about survivor bias by James Kostohryz and comments /you probably refer to/ have obvious mathematical mistake.
"* Look at their arguments for dividend-investing in your accumulation phase ("Divdend investors won't have to sell at retirement to switch into dividend stock --- thereby NOT triggering capital gains")."
I have some of my DG stocks in regular 401k and I have to sell when I become 70-years-old (if current IRS rules will not change). I not have to sell if I happy with company & dividends and have their stock in non-regulated account and if dividends cover my cash need.
"* Look at all the advice about the 'cost' of triggering capital gains tax by selling to buy another stock."
Why do you want to support a broker and "Uncle Sam" when you change one stock to another equal? I'll support all "financial parasites" both ONLY if I change a bad stock (in my opinion) for a good one (again IMO). I'm trying to avoid bad stocks and hence to reduce my portfolio turnover but I agree with "buy-and-monitor" rather that with naive "buy-and-hold-forever".
David Fish:
I think /not sure/ that SPY (to which Geordy referred to) includes dividends and their reinvestment.
Sincerely
SDS
The Dumb Dividend Idea [View article]
Interview With Chuck Carnevale: Why Valuation Matters For Buy And Hold Dividend Investors [View article]
Example is Five Plus Investor work - see http://seekingalpha.co...
Dividend Champions During Recession [View instapost]
Thank you for the analysis.
"I apologize for the rather crude presentation and limited analysis"
I like it more than articles with 10,000 words for an obvious idea and without new facts.
“$1000 Ltd” portfolio makes sense (I wish I had smaller expose to financials in 2007) but a bit artificial to compare with usually studied market (1 Share ea) and equally weighted ($1000 ea) portfolios.
It seems that your conclusion coincides with Jeff Paul results (http://seekingalpha.co...).
"I'd be happy to provide my spreadsheet data but don't have a website to host it on to link to in the Instablog."
Should it be added to Robert Allan Schwartz site?
Sincerely
SDS
Are Storm Clouds Gathering For Blue Chip Dividend Stocks? [View article]
Thank you for the good article. Probably somebody already commented but anyway IMO stockholders should urge government keep 15% taxes on dividends beyond 2012.
Sincerely
SDS
Investors Should Not Be Complacent About Dividend Champions [View article]
James A. Kostohryz
As a scientist and native contrarian I enjoy the main job of scientists is to challenge existing point of view. As a dividend investor I enjoy your article at the same basis of Karl Popper philosophy (although I disagree with some numbers) and hope you will continue to challenge DGI.
Sincerely
SDS
COMMENTS on COMMENTS
Folks, please “don't shoot the piano player; he is doing the best he can”. In this and many other cases SA authors share their ideas and knowledge with public for (almost) free. Anybody can have his/her opinion and others can just agree or disagree with arguments like (for example) David Fish did in comments to this article but without personal attacks. Robert Allan Schwartz – I often appreciate your comments but here you looks sometimes like a top fanatic from all DGI zealots. Why not to discuss such points with author by email in order not to spend readers’ time?
Any stock portfolio is required decisions, the hardest one is to “sit on your ass”, i.e. in DG stock case it is not always smart to sell at dividends freeze or cut. Simplest example: if yield on my cost reached 25% and company froze dividends I’d NOT care about the freeze as long as company in relatively good shape.
IMO any prediction of future is incorrect, so why to spend time to discuss it. If you have a free time and unbiased brain I can propose more productive ways to spend your energy for better investment decisions (just shut me email).
“uuuummm - … dropped their dividend last June 30 when they declared it was going to be 25 cents instead of the previous 50 cents...”
Folks, often the cause is 2:1 stock split – check before panic……
Jeff Paul: From UK paper you reviewed (thank you – I was not aware about it) it was clear that “mechanical” DG stocks portfolio did NOT always beat wide UK stock index and the number of UK companies with 10,15, 20 years of growing dividends decreased with DG period.
“….given that is amounts to ~3% turnover per year”
As far as I remember S&P500 average turnover is also in this range… what is about UK index?
BTW, their “mechanical” selection method might be incompatible with some David Fish’s claims – I think it worse to discuss outside this tread.
Dividending: I use Google alerts “COMPANY Dividend and (Decrease or Cut or Reduce)” – noise/signal ratio is quite high but I think they are useful.
James A. Kostohryz: “What I have said is that ALL equity investing, including dividend investing will become more difficult.”
I think dividend investing will be even more difficult than any other style as soon as majority of investors will participate in dividend investing
Uain53: “I want to be rich and I want it NOW!”
Play lotto or go to Las Vegas….. There are several method to “become rich now” – they are different in speed of loosing money….
James A. Kostohryz/ Robert Allan Schwartz/
"In fact, it appears that many corporations have become sensitive to the need for more dependable, rising dividends." /” I believe that more and more corporations will begin to pay dividends, or raise their dividends, because more and more retirees will want dividend income, and will choose to invest in companies that pay dividends” / “The demographics of the "Baby Boomers" should provide a powerful incentive for companies to raise dividends...not reduce them.”
Another factor is: many US companies become more mature and (according to company life cycle theory) are able to pay dividends, e.g. semiconductor and software companies. Baby Boomers should demand dividends from companies Boards and should demand low dividend taxes from government.
Good luck!
SDS
Navigating The Wild, Wonderful World of Canadian Corporations, Part 2: Reader Comments [View article]
Thank you very much for excellent comments digest. I think it is perfect example of SA author responsibility and I wish to see such summaries after each actively discussed article.
Good luck with Canadian and other investments.
Sincerely
SDS
A Simple Dividend Strategy That Will Get You 4%, Lower Volatility and More Sleep Part 1 [View article]
I see....
My list of the firms that cut is at
http://seekingalpha.co...
Sincerely,
SDS
A Simple Dividend Strategy That Will Get You 4%, Lower Volatility and More Sleep Part 1 [View article]
Is this research published?
I counted more cuts but I didn't limit for market cap .....
Dividend Skeptics: Here's How Dividend Champions Fared During The Last Recession [View article]
I own NLY and appreciate all your opinions about this and any other company but I just think it not productive to read irrelevant comment to an article.
SA has stocks, instablog, my feed, articles etc.. sections that can be used differently.
Sincerely
SDS
John Bogle's Advice For Retirement Investors [View article]
Don't count on it! : reflections on investment illusions, capitalism, "mutual" funds, indexing, entrepreneurship, idealism, and heroes / John C. Bogle
and it is really good book I'd recommend.
Dividend Skeptics: Here's How Dividend Champions Fared During The Last Recession [View article]
" mbkelly75--I see you own NLY. What do you think of AGNC? The yield is higher and it appears to be in the same business."
Folks!
We have email within SA. I think it is more appropriate channel for such messages. Why hundred peoples who are interested in Robert's research should spend their time reading this? BTW, I'm doing the same mistake - see my early irrelevant comment there I discussed another company (BP). LET SAVE OUR AND OUR FRIENDS /OPPONENTS TIME and use appropriate SA methods for communications!
Sincerely
SDS
Dividend Skeptics: Here's How Dividend Champions Fared During The Last Recession [View article]
“When a company cuts it's dividend, the stock price tends to fall like a stone, and I see no reason to ride it down when you can sell right away and keep that cash safe for re-investing later.”
I agree, indeed let’s assume that price falls down 50% before you recognize that happens (I assume you do not monitor market closely on hourly basis).
Lot of scholar papers show that after a dividend cut earnings and prices recovered in about 3-5 years. I'll show that the similar recovery happens with dividends.
So I think it is often more wise to wait let's say 5 years and to have price and dividends recovery to pre-cut levels than loose 50% of money and re-invest the second half into another stock.
Sincerely
SDS
Dividend Skeptics: Here's How Dividend Champions Fared During The Last Recession [View article]
I asked about "We pulled all U.S. non-financials (and non-LP/REIT), with minimum market cap of $500MM and 7+ years of div growth from 1997-2010. We looked at rolling 7-yr periods...."
"financials because their financial statements (business model) is different from other sectors."
Yep it is common and valid argument but from your description I do not see such obstacles - any dividend is real money. Anyway I'd appreciate your results.
Sincerely
SDS
Dividend Skeptics: Here's How Dividend Champions Fared During The Last Recession [View article]
Thank you for this valuable analysis.
Just couple points for perfection:
There are CBx and DBx type companies using your terms now (at least in modern David Fish list) that had “dividend wells” and I guess there were in 2010.
Column F title is "cagr_from_then_to_2007" in your spreadsheet. I guess CAGR should be mentioned in the article.
BTW, Do you own stocks beyond your disclosure for the article?
COMMENTS:
David Van Knapp:
"Would it be possible for you to simply list the Champion banks that cut, froze, and continued raising their dividends in 2008-09-10?"
Such data can be found at http://bit.ly/qRCNMM
David Fish
"I'm not against your idea of a library..."
I think archive of your spreadsheets will be useful for researches.
Jeff Paul
Are you going to publish the results? I tried to convince few academics to expand their dividend research to financial companies but they are reluctant to break this scholar tradition. I believe it would be useful to perform research like you’re described on whole universe of stocks.
Dividend Inc
"Without an indication of the actual total return of the stocks in question, the fact of maintaining, increasing or decreasing the dividend becomes less important as an investor seeking above average total return."
For me and some other dividends investors price of shares isn't important at least in such short period as 2008-2011 (my holding period is longer and I can wait the stock prices recovery to pre-2008 level as long as I get my dividends).
Can you post the Russell paper and shut me email with link, please?
“As a side bar, I have the dividend aristocrats and achievers from 1995 to the present.”
It will be useful to Excel these data for research.
Rhianni32
I still hold BP because I think they were forced to cut dividends by Obama administration and I hope their dividends will recover within 3-5 years
La Marque
“I like about owning DG stocks is that one can sell immediately when the dividend is cut.”
It is NOT wise to sell every DG stock when the dividend is cut. I hope to write instablog this November/December to prove this statement if my schedule allows.
No Free Cake
“But, this says nothing about how much your income would have changed over this period. The ones that increased may have been sufficient to overcome the lost income from the cutters or the ones that kept it steady. But, we can't draw any conclusion about this from the data as presented.”
Good point. If income is only due to dividends you can calculate from Robert’s spreadsheet. Historically an average dividend cut is about 35% and average annual growth rate is about 8%, so with Robert’s calculation for 71% the total result should be a small negative number in order of 10% (I just estimated, exact number depends on portfolio construction –e.g. equal weight, same number of shares, capital weight, etc…).
Sincerely
SDS