In my professional life I am a senior equity analyst. In this role I am responsible for analyzing European listed companies and their peers on strategy and financial performance. In addition, I execute research in the field of finance and investing. I am especially interested in (back) testing the risk and rewards of value strategies.
I have completed several Master programs in the field of economics and finance, and I am a Certified European Financial Analyst (CEFA, this is the European equivalent of the CFA). Although I learned a lot and these studies form the basis of my knowledge and skills, many of the subjects were quite theoretical and not of much use for investing in practice (I had to learn the Greek alphabet to grasp all the unnecessary complicated math formulas…).
However, in one program at Columbia Business School (Value Investing) I learned about the simplicity and power of the value approach (invented by Benjamin Graham and further developed by Warren Buffett/Bruce Greenwald). So in my articles I will usually use the value approach to describe what I see as attractive or unattractive investments.
Personally I have been investing in equities for over 15 years and I focus primarily on value stocks that are listed in Europe.
I am a Civil Engineer, who is married with two young kids and a third on the way. In early 2013 I took a more active role in managing my IRA for retirement and decided to publicly share my experiences in building the portfolio as an example for the dividend growth investing strategy.
My interest in investing mostly began in 2005 when I started up an investment club with a few friends from college and has accelerated as I've been reading and learning along the way. Since then, investing and the stock market has become a passion and favorite hobby and I've enjoyed writing about stocks and sharing ideas I have here on Seeking Alpha.
My investing goals are to build a nest egg for retirement and fund college education accounts for my kids. I invest mainly in dividend paying stocks that have shown a history of consistent growth in earnings and dividend payouts.
If you are interested in any of my digital utility solutions to add to your investing tool box to improve your investment outcomes, please visit my site
You'll find elegant applications that make it simple for you to track your portfolio in real time, make a watch list to follow in real time, track your dividend income and growth, and other applications. These applications will allow you to set alerts at prices you choose in order to obtain the yield and income that you want. They function as real time trade assistants and will improve your investment performance. You can even mirror the successful FTG Portfolio with "My FTG Mirror Calculator", and subscribers can mirror the premium subscriber portfolio with "MY RODAT Mirror Calculator" if they wish to emulate the out performance we've achieved in capital and income growth.
I am a retired clinical psychologist, and administrator and owner of a rehabilitation clinic we founded 40 years ago. For over 55 years I have managed several portfolios composed of investments accumulated over our professional careers. Since the financial crisis of 2008, I have employed specialized, customized dividend growth strategies aimed at enhancing and growing a dividend income stream.
Since December 24, 2014, I have demonstrated on Seeking Alpha the ongoing construction and portfolio management of the Fill-The-Gap Portfolio aimed at highlighting strategies investors may utilize to close the gap between an average Social Security benefit and the much greater costs faced in retirement.
This portfolio has outperformed all of the broad market indexes by a very wide margin, growing dividend income and total portfolio value consistently while the broader indexes struggle in negative territory all year.
Aside from free articles available to the general public, additional early-access, value-added ideas and deep-dive articles are offered to paid subscribers on my premium SA platform, "Retirement: One Dividend At A Time"
Let me show you how to build and grow your portfolio and dividend income, step by step, towards a comfortable and secure retirement.
Bob is retired from a career in law enforcement including more than 20 years as an instructor of Investigative Interviewing. He is a Dividend Growth investor using dividend yield from low beta stocks for income and preservation of capital. Bob has self managed his portfolio since early in 2011. He hopes to encourage discussion among those already in retirement and receiving income from their portfolios.
My curent portfolio is available here:
I believe that everyone needs a portfolio business plan.
Here's a copy of ours:: http://seekingalpha.com/article/2426965-our-retirement-portfolio-business-plan-legacy-edition-part-two
A list of Dividend Growth Safety Superstars for the past decade is available here: http://seekingalpha.com/article/2255863-a-review-of-the-dividend-safety-superstars
Benjamin is the founder of ModernGraham.com, a website devoted to the study and modernization of the teachings of Benjamin Graham. Benjamin graduated cum laude with a J.D. and Certificate in Taxation from DePaul University College of Law, and a B.S. in Finance (Honors) from DePaul University College of Commerce.
Articles posted on Seeking Alpha are a sample of the articles posted on ModernGraham.com. Please visit the website for more ModernGraham content.
First, the good stuff. Here's my portfolio ...
Consumer Discretionary: MCD, NKE, SBUX, TGT
Consumer Staples: COST, GIS, KHC, KO, MO, PEP, PG, PM, RAI, WBA
Energy: CVX, KMI, XOM
Health: ABBV, AMGN, GILD, JNJ, MCK
Industrial: BA, DE, EMR, LMT, MMM
REITs: HCN, NNN, O, OHI, VTR
Technology: AAPL, MSFT, QCOM
Telecom: BCE, T, TU, VZ
Utilities: AVA, D, SCG, SO, WEC
ALSO: small stakes in 23 additional companies held in the Dividend Growth 50 portfolio (http://seekingalpha.com/article/2764265-its-new-its-nifty-its-the-dividend-growth-50): ADP, AFL, BAX, BDX, CAT, CL, CLX, COP, GE, GPC, HCP, HSY, IBM, KMB, MKC, NEE, SHPG, SJM, UTX, V, WFC, WMT.
Now, a little about me:
I am a 50-something former sportswriter who was sent on a permanent vacation during the Great Recession. That sucked, but my story is not a sad one. Unlike many folks who lost their jobs, I am not in financial distress, I am not depressed and I am not bored.
My wife is a pediatric nurse with a bullet-proof job and decent benefits. So after supporting her and our two kids (now grown) for most of three decades, the least she can do is support my semi-retired keister!
Because of Roberta's job situation, because we have zero debt (not even mortgage debt), because we no longer have any dependents and because we have been pretty diligent savers over the years, we are comfortable (though nowhere near rich).
Although we hold some funds, bonds and cash, my investing philosophy leans heavily toward Dividend Growth Investing. By early next decade, we want to live entirely off of our income stream, Social Security and pension payments - and therefore will not have to spend down the principal one iota. To accomplish this, we invest mostly in blue-chip companies with long track records of growing dividends. As of mid-2016, we are well ahead of pace to reach our goal.
When not researching investments and writing for Seeking Alpha and other Web sites, I coach middle-school girls basketball at Metrolina Regional Scholars Academy, the top charter school in the Charlotte metro area; in March 2016, we won the first conference championship in school history! I also umpire youth baseball and referee youth basketball.
My wife and I dote on our 5-year-old pup, Simmie, and keep up on the doings of our now-grown kids, Katie and Ben. And we love to cheer on the basketball team of our alma mater, Marquette University, where we both majored in Journalism. Go Warriors! Also big fans of the Carolina Panthers.
I still occasionally post to the blog I initiated in 2007 -- lots of sports stuff, some politics, some personal junk -- at www.TheBaldestTruth.com.
Time management is essential to monitoring a 47 position portfolio. My 1st comment concludes with "Rich-unck:xx hrs"; I uncheck from the article to avoid repetitive comments, nonsense, and (most) arguments. I extend another XX hrs when I respond to a question or comment...I also respond to all PMs.
BACKGROUND My journey as a self-directed investor (SDI) began in 1973, and resulted in financial independence at age 52, which also allowed me to retire from corporate life the following year (Feb 1995).
I have no special knowledge not attainable by others who also dedicate themselves to the study of the economy, market, and stocks...I could cease all portfolio management today, and place it with a professional manager; however, I enjoy the psychic and financial rewards. Alternatively, I could become a passive investor via mutual funds and/or index ETFs (those works too! ). With few exceptions, As a rule, Rich only discusses his IRA here--it is only a portion of his and Joyce’s investment assets.
INVESTMENT PHILOSOPHY If you ‘lived for today’ over the past 5 or 6 decades, you better invest in lottery tickets. The most probable path to a financially secure retirement is the product of an investment program (either active or passive) started when relatively young; living on less than all your after-tax income (saving means delayed gratification); and either self-directed or via professional management, adopting a sensible strategy suitable to age and comfort zone. There is wisdom in flexibility, diversification, and not being life-long wed to any strategy. It is appropriate to take greater risk for greater rewards (sensible growth stocks) when younger, as those are our lowest earnings years combined with our highest expense years--in the years between early investment and retirement, investments in solid growth companies can double 8 times or more.
There is time to adjust allocations to a more conservative strategy when closer to retirement. Never assume you have an information edge over the professionals. Time-in-the-market is your principle advantage. When/if you become interested in dividend stocks, never forget both price return and dividends compound, and price more so.
Financial independence is achieved when one has sufficient confidence his/her lifestyle will not change significantly, regardless of the potential depth or breadth of decline suffered by their portfolio--including a prolonged series of bear markets such as 1929-37. True, the recent 18-month bear market ending mid-2009, was deep--but also too brief to consider its lack of widespread dividend cuts to be as proof a portfolio of dividend-payers won't suffer income losses in a more prolonged decline (i.e., no portfolio is "dividend bulletproof").
The balance of this profile is lengthy, and likely not helpful to passive investors who simply go along for the ride, their portfolios bobbing up and down like flotsam in the ocean; their course always subject to the whims of winds, waves, and trends...THIS IS YOUR ONLY WARNING!
PORTFOLIO GOALS Now in my 70s, it’s no longer appropriate to engage in the growth strategies applied in wealth accumulation. As a more conservative investor, 100% of his portfolio consists of dividend-payers. 95% of positions have investment grade credit ratings (the lone exception is a REIT).This combination, along with having companies in 10 of the 11 S&P GICS sectors (none in Materials at this time) provide a measure of diversification. This IRA portfolio holds no bonds, though bonds and other investments are held elsewhere.
Maximizing total return and wealth preservation are mutually exclusive. A key observation: Having the capacity for risk is not the same as having the tolerance for it!
Rich’s objective is now a ‘smoother-ride’ that levels out the market’s peaks and valleys (limit losses, trim notable excess valuation). That smoother ride in an all-equity portfolio cannot be achieved without active management and continuous monitoring of positions--therefore TIME is an essential input to his portfolio management. Active management does not’ means frequent changes, as it is not unusual for a quarter or more to pass between a trimming or sale (nonetheless, when a company fundamentals change, or a mistake is made, corrective action is taken.)
STRATEGY SINCE 2008 Rich targets both legs of TOTAL RETURN (distributions + price change). His Growth & Income strategy often focuses on VALUE investing tactics applied to dividend-payers. Value investors seek out unpopular, companies most investors are avoiding (i.e., fundamentals have declined but credit rating is strong, BoD has implemented a rational recovery plan, and the dividend not in danger). Value investors seek to be paid to wait for other investors to recognize the stock’s value and assign it a greater share price. In any event, value stock or growth stock, Rich always seeks a ‘margin of safety’--no shares are bought at prices >FV, and his margin of safety is derived from dividends paid, price appreciation, and rising FV over time.
In all cases, value or growth, Rich selects well-established dividend-paying companies having a high-probability of growing earnings (growth of earnings is ESSENTIAL to growth of price and dividends). He tends to be flexible, forward looking, reactive to changing fundamentals, and willing to admit a mistake so action follows.
SDI is not easy, success is not assured, and in recent decades, advice from academics, and investment coaches, almost universally recommend index funds. Those NOT having the prerequisite time and interest are unlikely to develop the requisite skills for stock investing--thus the probability strongly suggests most newbies would be better served by indexing (Ben Graham wrote favorably of indexing). However, when done successfully, self-directed stock investing can offer rich psychic and financial rewards.
CORE PORTFOLIO Presently, +/-30 equities. Core holdings dominate at about 65% of total portfolio positions. Favored are traditional, large- and mid-cap, low-beta, best/near-best in class, institutional-owned, moaty, dividend-paying, value and growth stocks, having investment-grade debt ratings, and representing the consumer staples, healthcare, utilities, and telecom sectors.
OPPORTUNISTIC PORTFOLIO The remaining 15+ positions consist of equally well-known dividend-payers found among widely-owned cyclicals, such as financial, industrials, consumer discretionary, technology, real estate, and energy sectors are sensitive to the economy. In an expanding economy, cyclicals typically grow their earnings (and dividends) faster than do the typically slower-growing core companies. But because the reverse is also true, in a contracting economy, these positions are intended to be heavily trimmed to preserve gains as the economy peaks and shows evidence of decline. Some are susceptible to quite significant price declines when Mr. Market assumes their will suffer reduced earnings, and sometimes dividend-freezes/cuts, in anticipation of those events.
Rich is sometimes fully-invested, but unlike some, observes no such rule. Building a large cash cushion at the front-end of a correction/bear market (-20%) provides the dry powder required to both cushion the market's decline, and also creates the cash required to purchase excellent companies at below FV prices (without having to sell a position he wants to keep!).
TRIMMING POSITIONS When positions in either portfolio become significantly overvalued, they are trimmed by 5-10%, and the proceeds applied to fairly valued companies before the (almost always) temporary gift of over-valuation reverts to the price mean. If the position continues to advance, and absent other information, the position will be trimmed again. Added benefits to selective trimming include (1) serves as a more sensible method of rebalancing (as opposed to automatic--professionals do not use such a meat cleaver); (2) reduces the position's remaining Capital at Risk (which may suggest room for additional shares within an otherwise full position), and (3) provides the necessary dry powder to buy other shares at FV or below.
OTHER INTERESTS As we age, the importance of family grows. Rich has long volunteered in his community; over the years has served with distinction as member/chair of a number of advisory committees. Assisting others on SA is also a source of satisfaction and fulfillment.
Finally, having been blessed by years of excellent investment performance, Joyce and Rich have long been avid world travelers, and have visited over 60 countries over a span of 30 years (his SA avatar reflects the Taj Mahal in his sun glasses). They reside in Michigan--for 9 months of beauty, bliss, and family, and thoroughly enjoy wintering in equally beautiful Naples FL--for 3 months of sunny warmth and relaxation.
Life is good--it's been an unbelievably awesome ride!
Brad Thomas is a research analyst and he currently writes weekly for Forbes and Seeking Alpha where he maintains research on many publicly-listed REITs. In addition, Thomas is the Senior Analyst at iREIT Forbes and Editor of the Forbes Real Estate Investor, a monthly subscription-based newsletter.
Thomas has also been featured in Forbes Magazine, Kiplinger’s, US News & World Report, Money, NPR, Institutional Investor, GlobeStreet, and Fox Business. He was the #1 contributing analyst on Seeking Alpha in 2014 (as ranked by TipRanks) and he is currently writing a book on the legendary investor Donald Trump.
Thomas has co-authored a book (The Intelligent REIT Investor) that is available on Amazon.
Thomas received a Bachelor of Science degree in Business/Economics from Presbyterian College where he played basketball. He resides in South Carolina with his wife and kids.
.. boring Progressive, another Atheist, fading Proletarian, yes-LGBTQ, and usual DGIer .. **26Sep Long Idea: CAH** .. Last week I bought and sold none. This week I have bought and sold none.
> Core: GIS .. KMB .. KHC .. HRL .. PG .. CLX .. MO .. PM .. KO .. CCE .. MCD .. JNJ .. XOM .. CVX .. T .. VZ .. SO .. XEL .. SCG .. LNT .. D .. WTR .. NEP .. HCP .. VTR .. O .. PSA .. MSFT .. UNP .. GE .. COST .. V
> Non-Core: AGNC .. MTGE .. LNCO .. TCRD .. PSEC .. MAIN .. BP .. COP .. KMI .. PAA .. TU .. SJR .. QCOM
> Core / wife's - not in my Core: NEE .. SRE .. WEC .. AWR .. CL .. CHD .. PEP .. HSY .. SHW .. CVS .. CAH .. ABT .. HCN .. NNN .. WPC .. NSC ..
.. Holds the following from my positions: D .. NEP .. SCG .. SO .. WTR .. T .. VZ .. GIS .. KMB .. KHC .. KO .. HRL .. CCE .. PG .. JNJ .. PM .. MO .. VTR .. KMI .. XOM .. UNP .. COST .. V
-- 15Sep2016: Bought CHD & WEC. New full positions for wife's Fidelity.
-- 14Sep2016: Bought KMB & WTR. New full positions.
-- 09Sep2016: Bought KMB & WTR. New full positions for wife's Fidelity.
-- 26Aug2016: Trimmed MSFT (107% total return) & VTR (41% total return). Back to full positions.
-- 18Aug2016: Bought HRL. New full position.
-- 03Aug2016: Bought KHC. Added to my current position.
-- 02Aug2016: Bought SHW. New full position for wife's Fidelity.
-- 01Aug2016: Sold CVX(to reduce raw energy exposure) +29.75 cap gains(not div's) for 10 months. Sold HCP(due to spin-off concerns) +9.75 cap gains(not div's) for 10 months. Sold CMI(to reduce industrial exposure) +9.4% cap gains(not div's) for 6 months. All 3 in wife's Fidelity.
--29Jul2016: Bought MO & HRL. New full positions for wife's Fidelity.
--28Jul2016: Sold BCE(due to no auto-reinvest @ Schwab). +2.75% cap gains(not div's) for 38 months.
-- 25Jul2016: Bought CCE. Added to my current position.
-- 20Jul2016: Bought NEP. Added to my current position.
-- 15Jul2016: Bought V. New position(cash from rare coin trade-in).
-- 13Jul2016: Sold RCI(due to no auto-reinvest @ Schwab). +2.25% cap gains(not div's) for 36 months.
-- 28Jun2016: Bought KO & PEP. New full positions for wife's Fidelity.
-- 27Jun2016: Sold ABBV(due to exposure to Humira and lack of moat-type replacements). In wife's Fidelity. +5% cap gains(not div's) for 9 months.
-- 24Jun2016: Bought CCE. New full position for wife's Fidelity.
-- 06Jun2016: Bought D. Added to my current position. (cash came from CCE special dividend -- due to merger/buyout)
-- 10May2016: Bought PG. Added to my current position.
-- 28Apr2016: Bought ABT & CAH. New full positions for wife's Fidelity.
-- 1Apr2016: Bought CVS. New full position for wife's Fidelity.
-- 28Mar2016: Bought KHC. Added to wife's current Fidelity position.
-- 18Mar2016: Bought AWR. New full position for wife's Fidelity.
-- 17Mar2016: Bought KHC. New full position for wife's Fidelity.
-- 9Mar2016: Bought NEP. New 3/4x position for wife's Fidelity.
-- 19Feb2016: Bought NEP. New 3/4x position for my and wife's IRA.
-- 11Feb2016: Bought GIS, JNJ, UNP. Added to my current positions.
-- 9Feb2016: Trimmed MO. Trim from 3.5x to a 2x position. +65% cap gains(not divs) for 30 months.
-- 4Feb2016: Bought GIS, PM, D. New full positions for wife's Fidelity.
-- 3Feb2016: Bought GIS, PM, D. Added to my current positions.
-- 1Feb2016: Sold STR(due to cash buyout by D). +28.5% cap gains(not div's) for 43 days.
-- 28Jan2016: Trimmed T. Trim from 3x to a 2x position. +16.5% cap gains(not div's) for 48 months.
-- 4Jan2016: Bought JNJ & STR. Added to my positions.
-- 30Dec2015: Bought D. New full position.
-- 17Dec2015: Bought STR & LNT. New 1/2 positions each.
-- 14Dec2015: Sold WPC(possible split-up of company). -2% cap gains(not div's) for 5 months.
-- 10Dec2015: Sold BAX/BXLT(company split / too low of dividend now). +19% cap gains(not div's) for 24 months.
-- 10Dec2015: Sold CCP(too low of credit rating: BB+). +6% cap gains(not div's) for 3 months.
-- 03Nov2015: Bought HSY & NNN. New full positions for wife's Fidelity.
-- 02Nov2015: Bought VTR. Additional shares to an already full position.
-- 02Nov2015: Bought HCN. New full position for wife's Fidelity.
-- 27Oct2015: Bought STR. New full position for wife's Fidelity.
-- 12Oct2015: Bought CMI. New full position for wife's Fidelity.
-- 05Oct 2015: Bought ABBV. New full position for wife's Fidelity.
-- 17Sep2015: Bought PG, NSC. New full positions for wife's Fidelity.
-- 15Sep2015: Bought SO, T, VZ, CVX, NEE, VTR, WPC, KMI, SCG. New full positions for wife's Fidelity.
-- 10Sep2015: Bought XOM, JNJ, UNP, HCP. New full positions for wife's Fidelity.
-- 06Aug2015: Bought MAIN. Additional shares to a now full position.
-- 22Jul2015: Bought WPC. This is a new position.
-- 10Jul2015: Bought UNP. Additional shares to a now full position.
-- 6Jul2015: Bought KHC on first day of merger of Kraft & Heinz.
-- 6Apr2015: Bought JNJ. Additional shares to current position.
-- 26Mar2015: Sold LO(did not want RAI). +50.47% cap gains(not div's) for 24 months.
-- 28Jan2015: Bought T. Additional shares to a full position.
-- 26Jan2015: Sold NHI(no credit rating). +43% cap gains(not div's) for 25 months.
-- 8Jan2015: Bought UNP as a new near full position. Added to CCE to make it a full position.
-- 2Jan2015: Sold LTC(failed to raise dividend). +16% cap gains(not div's) for 11 months.
** the sun is a star? we are primates? when I die I'm dead? --- just another little tidbit we all learned in middle school. :)
PRIMARY OBJECTIVE: ... Income Replacement!
Escape velocity is the speed that an object needs to be traveling to break free of the planet's gravitational pull and leave it without further propulsion.
This portfolio is looking for the point where the income being generated can allow the holder of this portfolio to escape the gravitational pull of the market and economic forces of worrying about share prices.
The objective is to generate enough income from assets that the only selling of shares will become an option, not a necessity to survive. Therefore, with enough income being generated, it minimizes the fear of meaningful market corrections as dividends are based on the number of shares owned, not the share price.
I am a retired investor with market experience going back to the 1960s. I was a software engineer for 42 years, and currently do some part-time consulting, which lets me contribute to a Roth IRA. I am not an accountant and not a financial professional.
My wife and I have established a set of guiding principles for our investment life:
• Change is the only constant in life. Everything in this plan is subject to change.
• Never touch your principal. Wealth is built and maintained by not spending it. Wealth is the primary buffer between ourselves and blind chance.
• Exploit folly, do not participate in it (thank you, Chuck Carnevale). Do not follow the crowd, which is more often than not wrong.
• A portfolio is like a bar of soap – the more you touch it, the smaller it becomes. Do not be a trader.
• Own assets, avoid liabilities. Assets generate income. Liabilities generate expenses.
Based on these principles, we have established two investing goals: 1) sufficient current income with a comfortable buffer, and 2) increasing future income to maintain our buffer.
Our primary investing goal is to generate sufficient current income to cover that part of our living expenses not covered by pensions, with a comfortable buffer. We are retired and depend on investment income to meet a significant minority of our living expenses.
As we age and get closer to the end, current income becomes ever more valuable, and future income becomes ever less valuable. This reality informs all of our investing decisions. However, we know that inflation will cause our income needs to rise, so we also plan for increased future income, which is our second investing goal.
To meet our current and future income needs, we rely on 2 Social Security pensions, 1 private pension, income generated by investments, and fully paid up long term care insurance.
It is common to allocate a retirement investment portfolio with some percentage in stocks and the balance in fixed income, such as 60/40. We look upon our pension income as the equivalent of fixed income, with the added benefit that Social Security is indexed to the CPI. In the past we owned no fixed income and had no plans to do so in the future. The future has arrived and we have discovered baby bonds and preferred stocks, and we like the higher current income we can get from these investments. We have therefore started to redirect some of our investment capital into these investments, and as a result our investment income is now greater than it would have been otherwise.
We categorize dividends and interest as income, and capital gains as return of capital, not income. Therefore, our goals are to be met from dividends and interest only.
Investment income currently meets our primary investing goal. We invest in a blend of mostly medium yield (3%-6%) stocks with medium dividend growth, a few high yield (>6%) instruments with no dividend growth, low yield (<3%) stocks and funds with high dividend growth. and fixed income securities with yields in the range of 5%-8% with no growth.
We expect our medium yield and low yield stocks and funds to provide the income growth needed for the future, our second investing goal.
We currently own common stocks, preferred stocks, and bonds. Our portfolio requires regular attention to avoid possible dividend cuts and deletions. As we age, our mental faculties are in decline, and we will become increasingly less able to perform portfolio monitoring intelligently. There will come a time when we will need to use some form of income oriented index ETFs to carry the income generating burden.
We want to behave like landlords and collect rents, but without the risks and demands of owning real estate directly. Dividends and interest are our rental income, and as once-removed landlords we expect to own real estate investment trusts (REITs).
We want our non REIT income to be generated by long-lived, steady companies that provide products and services that we all need regardless of the economy, and thus can be relied upon to provide steady, and steadily growing, income. This requirement points primarily at consumer staples stocks. We own some of the best consumer staples stocks, such as mighty MO, and plan to own one or more ETFs that concentrate on the consumer staples sector of the S&P 500. Our preferred shares are almost all in the REIT sector.
• Some of my investing history
During much of my working years I used technical analysis (TA) to invest in individual stocks (I was an early fan of Joseph Granville and I bought an Apple II in 1980 because Granville brought out OBV software for the Apple at that time), and I speculated with short selling and commodity trading. Later I invested in stock mutual funds and ETFs for total return, with inconsistent results, and no comprehensive plan. Being a software engineer in a lead position left little time or energy for serious investing skills development. In 2005 I had pretty much given up on getting market beating results, and felt that I was getting too old and too close to retirement to continue swinging for the fences, so I decided to buy a variable annuity that guaranteed a minimum return of 6% per year, compounded, with the upside limited only by the performance of the mutual funds offered for investment. I decided to let the insurance company bear the market risk for me. I also had a 401k plan at work to which I contributed the maximum and got the company match. A year or so before 2008 I used a retirement investing projection tool provided by Fidelity, which said the worst returns I could expect in retirement were positive but not spectacular, and the best were hard to believe. At that time I was invested in mutual funds and ETFs through my 401k and the variable annuity and had not directly owned stocks since shortly before the start of the great bull market in 1982 (Granville famously missed the whole thing). I thought, with a bit of skepticism but not much, that I was set. We all know what happened in 2008-09. That experience put me off Monte Carlo simulations and Modern Portfolio Theory for life.
When I retired I converted my 401k to a rollover IRA brokerage account and invested in ETFs. I thought I was being appropriately conservative but also ready to capture capital gains by investing in VIG and VCSH.
Then I found Seeking Alpha, and then - thank my lucky stars - David Van Knapp, and the DGI light went on. I had spent most of my adult life thinking I was smarter than most people by relying on TA, and then later letting the insurance company assume market risk. I remember learning about the 200 DMA when I was in my 20s, which is a long time ago, and thinking how revolutionary this idea was and how I should be able to use it to my advantage. Fortunately for me and my family, I also was pretty good at software engineering, so I had a reasonable retirement nest egg accumulated when the time came. With the concepts and methodology of dividend growth investing, I now have sleep well at night investments that just keep on churning out increasing income, something that could never be said about using TA.
I started with DGI too late in life to commit totally to low yield, high growth stocks. I hope to capture the double compounding of DRiP investing with that part of my portfolio that is low yield, high growth.
We have recently (Nov 2014) rolled over all of the variable annuities into brokerage accounts. We now believe that we can get sufficient income from our dividend investing strategy, and we want to retain ownership of the annuity capital.
• Tools and Teachers
Tools I use include the CCC list, F.A.S.T. Graphs, Morningstar Premium, BigCharts, the EDGAR web site, longrundata.com, and Excel. I get ideas from the many informative articles by (among others) the following (in no particular order): Chuck Carnevale, Brad Thomas, Ron Hiram, David Van Knapp, David Fish, Robert Allan Schwartz, Dividend Growth Investor, Dividends4Life, David Crosetti, Tim McAleenan Jr., Reel Ken, Bret Jensen, Alan Brochstein, Chowder, Dane Bowler, Bob Wells, BDC Buzz, Scott Kennedy, Bill Maurer, Darren McCammon, Richard Shaw, Bruce Miller. Favorite commentators who are not yet authors include Elliot Miller, Paul Leibowitz, mbkelly75, surfgeezer.
Useful shortcuts to dividend stock valuation are the Tweed Factor and the chowder rule. Like F.A.S.T. Graphs, 'a tool to think with', these are 'rules to think with'.
Tweed Factor: fair P/E = yield + 5 year dividend growth rate
chowder rule: current yield + 5 year DGR >= 12%; 8% for utilities, MLPs, REITs
The best investment advice outside of Seeking Alpha has been 'The Intelligent Investor', ‘Securities Analysis’, and 'The Single Best Investment'.
• Some historical portfolio stuff
My DGI portfolio was started on 2011/4/20 with CTL, which I have since sold. It was a beginner's mistake. Subsequent mistakes were MLPs, and to a lesser extent, mortgage REITs. I did not allow for any circumstance that could cause WTI to fall as far and as fast as it has, so I lost money on MLPs. The prolonged flattening of the yield curve, plus the persistent markdown from NAV for the mortgage REITs, has made these unappealing as long term investments. Now I keep my distance from anything that is dependent on commodity pricing, and I invest very little in the carry trade. A glaring mistake was selling JNJ when it languished for several years.
• Some ongoing portfolio stuff
The target dividend growth rate for our entire portfolio is 5%.
I use yield on cost to allocate our investments so that each position in aggregate generates approximately the same amount of income. I learned the basic method for doing this from a comment on a SA article. SA is a wonderful resource! I have published an SA Instablog that describes the method: http://seekingalpha.com/instablog/902946-be-here-now/4581516-portfolio-allocation-for-equal-income-from-each-position-using-excel
• Current portfolio:
equity REIT: CCP, DLR, EPR, HTA, LTC, O, OHI, STAG, VTR, WPC
consumer staples: GIS, MO, PEP, PM
financial: GBDC, GSBD, HTGC, MAIN, TCPC
baby bonds: HTGX, NEWTL, TCCA, TPVZ
preferred: AGNCB, DFT-C, GAB-G, GGZ-A, HT-D, PSA-C
consumer staples: RHS, XLP
equity REIT: ESS, SKT
Technology: ADP, MSFT
Industrial: APD, MMM, RTN
baby bond: ARU, MSCA, TCCB, VTRB
preferred: DLR-G, STAG-B, VER-F
I am an individual investor and the author of seven eBooks on dividend growth investing. I try to help self-directed individual investors profit from stock investing. I contribute articles and studies to both Seeking Alpha and Daily Trade Alert. I hold an undergraduate degree in physics from Holy Cross College and a JD from Georgetown University. My wife Sue and I live in beautiful Canandaigua, NY.
Charles (Chuck) C. Carnevale is the creator of F.A.S.T. Graphs™. Chuck is also co-founder of an investment management firm. He has been working in the securities industry since 1970: he has been a partner with a private NYSE member firm, the President of a NASD firm, Vice President and Regional Marketing Director for a major AMEX listed company, and an Associate Vice President and Investment Consulting Services Coordinator for a major NYSE member firm. Prior to forming his own investment firm, he was a partner in a 30-year-old established registered investment advisory in Tampa, Florida. Chuck holds a Bachelor of Science in Economics and Finance from the University of Tampa. Chuck is a sought-after public speaker who is very passionate about spreading the critical message of prudence in money management. Chuck is a Veteran of the Vietnam War and was awarded both the Bronze Star and the Vietnam Honor Medal.
Dave Fish is Executive Editor for The Moneypaper and co-manager (since 1999) of the MP 63 Fund (Symbol: DRIPX), a fund that invests exclusively in companies that offer Direct Investment (or Dividend Reinvestment) Plans. He is also the author of the U.S. Dividend Champions spreadsheet (and PDF), which is updated at the end of each month...and lists companies that have increased their dividend payout for at least 25 consecutive years. (Separate tabs list "Contenders" that have increased their payouts for 10-24 years and "Challengers" that have increased their payouts for 5-9 years.) http://dripinvesting.org/Tools/Tools.asp
The writer is a long term value investor and M.Sc graduate in Financial Markets with over 10 years experience. Value can be found in both long and short ideas and uses options to enhance the risk-return profile of investment ideas.
Disclaimer: This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. Do your own research or obtain suitable personal advice.
On October 31st, 2014, I retired. Turned in the keys to the company car, gave them my computer and my account lists and joined the ranks of those who "slipped off into the sunset." I never thought in retirement that I would be this busy. It's fun. Time with the grandkids, time to perfect my cooking skills, and time to travel and check off the things on my bucket list. I should have done this a long time ago.