Retirement Strategy: Oh My God, The World Is Ending!

Includes: BGCP, HCP, JNJ, KO, PG, T, XOM
by: Regarded Solutions


Yes, we are off to a lousy start in 2016.

Contrary to those scary emails you get, the world is probably not ending.

As a dividend growth investor, you should know why you are investing.

I figured that this might be a good way for me to get back to writing something while recuperating. Truth be told, this will be a rather simplistic article that will just cut to the chase about the current correction going on in the markets.

As you know, the markets will always go up, go down, and go sideways, and NOBODY knows what the next minute will bring. That being said, we cannot deny the fact that the market has been kicked on its butt this week, and panic is setting in.

^DJI Chart

^DJI data by YCharts

^NASD Chart

^SPX Chart

^SPX data by YCharts

These are pretty ugly charts, that is for certain, but how has this ugliness affected the Team Alpha Retirement Portfolio? As a dividend growth investor seeking income, let's take a look at MY favorite chart:

Things look the same to me. No company went out of business, no company cut or stopped its dividend, and the reduced risk from the oil patch by selling some Exxon Mobil (NYSE:XOM) before I had to take a break has given the portfolio a tad more cash, and reduced exposure to oil.

Not to mention the increase in income by several hundred dollars, which I was blasted for. Of course, the stocks I added shares to, BGC Partners (NASDAQ:BGCP) and AT&T (NYSE:T), have nothing to do with the oil patch, nothing to do with China, and long-term interest rates have actually gone down, which helps these stocks by having a lower cost of borrowing.

T increased its dividend, again - by one penny - but a raise is a raise, and I will take it!

It Is All About Income, Folks

growth income I am not thrilled with the way the market is acting, but it has created several opportunities for more income from accidental high yielding dividend aristocrats.

While I am not looking to load up here, as I think there is more downside, a little nibbling at some of the best companies on the planet that have paid and increased dividends for 25 consecutive years or more might be in order if you want to buy cheaper income.

Take a peek at these stocks that have hardly anything to do with China, interest rates, or oil:

Johnson & Johnson (NYSE:JNJ): $98.16/share with a 3% dividend yield and a 56% payout ratio.

Coca-Cola (NYSE:KO): $41.51/share with a 3.3% dividend yield and an 80% payout ratio.

Procter & Gamble (NYSE:PG): $75.97/share with a 3.4% dividend yield but a rather high 98% payout ratio. As for me, the cash flow generated by PG is ample to keep paying shareholders anyway.

HCP Inc. (NYSE:HCP): A healthcare REIT that IS a dividend aristocrat with a 6.3% yield and a current share price of $36.39.

There are others that are not in the TARP, of course, and you can find a listing of aristocrats right here. Quality will be quality; price is what you pay and value is what you get, with just about any of them!

If TARP had more cash, I would consider picking away at these stocks simply to own more income at sale prices. Think about it.

Do Not Do This

For many novice investors and momentum traders, these times can be very nerve wracking. Try NOT to do the following:

  • Do not panic sell great companies with the "herd."
  • Know your risk tolerance before you invest a dime.
  • Understand that markets will correct, and try to look for opportunities that fit your goals. In the case of TARP, it is all about income and that has gone UP.
  • Try not to buy just because a price has dropped. Your goal is income, and if you can get income at a reduced priced, then you are achieving a goal as a dividend growth investor and not just for the quick few bucks when the prices rebound.
  • Stay focused on your goal and know WHY you are investing, and cut expenses as much as you can!

Hopefully, I will be able to continue contributing, slowly, and hopefully help a few regular folks!

Why "Follow" Me?

The main reason for a subscriber to "Follow" me, especially for the model portfolios (TARP or otherwise), is to glean some knowledge to become a better investor and not simply place bets.

Money management is every bit as important as any other aspect of investing, and by following a portfolio and the actions taken, you can gain some insight into a somewhat higher level of investing acumen. There are no requirements, and this is not "rocket science" - it is simply a powerful way for you to put the money you have worked hard for to work even harder for you.

My message will be consistent, and my hope by doing this is to share my own experiences, illustrated in the model portfolios I build exclusively for Seeking Alpha.

Knowledge is power, and many folks shy away from the investing world because that very world makes it more confusing each and every day in an effort to sell you something: stock picks, technical strategies, books, videos, subscriptions with "secret ideas," gadgets, and even snake oil.

My promise to you is that my work here will remain free to all of my followers, with the hope of giving to you some of the things that took years for me to learn myself. That being said, let me reach out to you with my usual ending:

**One final note: The only favor I ask is that you click the "Follow" button so I can grow my Seeking Alpha friendships. That is my personal blessing in doing this, and how I can offer my experiences to as many regular folks as possible, who might not otherwise receive it.

Plus, it is free (and will continue to be) and does not cost one penny for anyone who reads me.

Disclaimer: The opinions and the strategies of the author are not intended to ever be a recommendation to buy or sell a security. The strategy the author uses has worked for him and it is for you to decide if it could benefit your financial future. Please remember to do your own research and know your risk tolerance.

Disclosure: I am/we are long BGCP, HCP, JNJ, KO, PG, T, XOM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.