My portfolio exceeds 100 dividend stocks I cherry picked from 2006.
Some folks complain that it is too hard to monitor more that dozen stocks and I disagree (see also Chowder blogpost seekingalpha.com/instablog/728729-chowde...).
I beleive that I'm at the end of information chain and almost everything I can read is already priced. Because of my investment goal (return on capital rising in time) and vehicle I choose (mostly DG stocks) I monitor:
I have Excel marcos (footnote 1) that scan prices of all stocks I have and report ONLY
a) stocks which price change for more than 5%-10% in a single day (limit depend on stock volatility). I usually do this scan at morning and after market closed. In normal day I got nothing and it takes me less than 15 minutes/day to check if something happens (usually company missed earnings expectations for few cents and it is irrelevant for me).
b) stocks which price drops to 50% or 30% of my purchase price. I know that price I paid is irrelevant but I need a point to compare. I the case of significant price reduction I check priceces of country/industry ETFs and if they are not in synx with my stock I do deep analysis company and put it in APPROBATION list (see below) if something seems fishy. I didn't count time but I guess in average it required less than 2 hours/month.
c) stocks which price rises to 200% of my purchase price (in this case I do financial analysis of company, sometimes apply "fool money" approach - see seekingalpha.com/instablog/725729-sds-se... or decide to wait and change limit from 200% to higher value up to 10X). Stock splits create false signal but it is easy to handle them. I didn't count time but I guess in average it required less than 1 hour/month.
I do not have good macro to deal with Jeff Paul's observation on dividend predictor (seekingalpha.com/article/299601-why-divi...) for price drop below -20% for at least 1 month to compare with index (e.g. S&P500 ) but I think it would be useful to re-analyze such stocks with slowly degrading prices.
a) I watch dividends closely almost at daily basis (weekly basis is probably enough but I did almost daily in 2008-2011 and at the end of 2012 - see b) below). I use WSJ Web page about dividend changes and Excel macro allows me to focus only on stocks in my portfolio. I'm happy if company I own increases dividends (it happens quite often) and not so happy if company I own decreases dividends (I faced such situation few times). In the last case if it is not expected (see APPROBATION section below) I verify information (I had few wrong signals during last 4 years mostly because of special dividends) and try to figure out why BoD reduced dividends (footnote 3) and decide if I want to keep the stock (sometimes yes in contrast with most DGis - see why in seekingalpha.com/instablog/725729-sds-se...). It takes me about 1 hour/week.
b) I play sometimes (quite often at the end of 2012) in dividend capture with 2% of my capital and trade stocks with significant special dividends.
c) Most foreign companies pay annual or semiannual dividends. For many foreign companies dividends are voted at shareholders meetings and in this case I get information about dividend proposals ahead of meeting (usually shareholders support BoD proposal). For other foreign companies I make monthly schedule for dividends announcement and I check dividends directly at company WWW site (I check and bookmark dividend page before I purchase stock). It takes me in average about 20 minutes/month but there are more and less busy periods.
d) I thought that a smart BoD can freeze dividends in 2008-2012 and did nothing in this case. I don't know yet about 2013 but David Fish's CCC list provide good information about dividend actions. I might put company to APPROBATION if dividend freeze is too long.
I do annual check based on companies 10-K or similar reports. I do not read the reports but Excel macro extracts numbers I need. I keep numbers for last 3 years and if trend is negative I update other relevant information I use in proprietary metrics for dividend reliability. Most companies demonstrate that their dividends are stable but some have problems for 2 consecutive years and I moved that into APPROBATION list. It takes me 2-3 days/year.
Any company I own that had 2 consecutive years of bad financials or significant structural changes that might affect their dividend is in the approbation list. I monitor their financials on quarterly basis and watch the language of their dividend announcements. It hard to estimate time here I had about 15 companies in this list in 2009-2011 and it took me about 1 hour/week for close monitoring.
1. I will not share my macros not because I'm greedy but because I want you to learn how to write them (They are quite simple). I use Yahoo for stock prices.
2. I can sustain 50-70% price drop due to wide diversification and quasi-equal spent of my capital in each company I own - see seekingalpha.com/instablog/725729-sds-se....
3. Usually I see a dividend reduction from the price drop (see point a) in PRICES) before I check WSJ dividend page (and I believe that market always obtain such news before I get information). Dividend increase is usually not so visible from my price monitoring, so I please myself mostly checking WSJ dividend page.
17 April 2013