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+--- Thread: I Love This Dividend Investing Thingie (/showthread.php?tid=427)
RE: I Love This Dividend Investing Thingie - cannew - 05-13-2014
It's been mentioned before, but the concerns I'm hearing are from Short Term results. DG is a Long Term strategy, provided you stick with a select group of companies who have a history of paying and increasing dividends. You have to select the stocks you feel comfortable with and meet your investment goals.
Comparing to an index or market should not be a concern. Those returns are based on short term and don't reflect real dollars to the investor. Only dividends received are real, unless you wish to try the Buy Low, Sell High strategy or some other active trading strategy.
The question should not be matching market or index performance but: "Is the income from my investments growing at a reasonable rate" If the income grows so will the value of your investment, eventually.
RE: I Love This Dividend Investing Thingie - WRXodus - 05-13-2014
Thanks cannew. I've been reading the SA articles mentioned previously in this thread, and the "Fool's Errand" article was especially helpful. The F.A.S.T. graphs are great visual aids. Would you recommend paying for the basic membership?
RE: I Love This Dividend Investing Thingie - fiveoh - 05-14-2014
(05-13-2014, 01:32 PM)WRXodus Wrote: 5o, how have you been the last couple months? I've been having the same concerns myself, and trying to find a balance between dividend and index investing while "getting my feet wet".
(05-13-2014, 04:45 PM)cannew Wrote: It's been mentioned before, but the concerns I'm hearing are from Short Term results. DG is a Long Term strategy, provided you stick with a select group of companies who have a history of paying and increasing dividends. You have to select the stocks you feel comfortable with and meet your investment goals.
Comparing to an index or market should not be a concern. Those returns are based on short term and don't reflect real dollars to the investor. Only dividends received are real, unless you wish to try the Buy Low, Sell High strategy or some other active trading strategy.
The question should not be matching market or index performance but: "Is the income from my investments growing at a reasonable rate" If the income grows so will the value of your investment, eventually.
I do not agree with most DG investors that "Comparing to an index or market should not be a concern." As I've stated numerous times it is way easier to buy the index and if total return is greater from the index, you are losing INCOME and appreciation from going with a DG strategy. This is only relevant to someone in the accumulation phase like me. Once retired, I will agree that DG is a superior strategy and you shouldn't be comparing to the index.
WRXodus: My investment dollars are split between DG and index ETFs. Mainly because in my 401k I can only hold index and mutual funds. I like this because it doesn't put all my eggs in one investing strategy. If my DG portfolio underperforms for 5 years I will switch it to index funds as well.
As far as this year goes... the S&P is around a a 3.3% return and my DG portfolio is around 6.3%. Most of the gains came in the last few months when the S&P was down or flat for the month. Some will argue that is when the DG portfolio is supposed to shine and I hope that's the case. However, it may just be a few lucky months.
RE: I Love This Dividend Investing Thingie - WRXodus - 05-14-2014
I agree with you 5o. Since I'm (early) in the accumulation phase, I feel more comfortable having at least some funds invested for total return. I have about 10% of my portfolio invested in DG stocks for now, but I'd like to work up to 25% or even 50%. With all the talk of a pending correction, or worse, it doesn't hurt to have some DG investments to help at least smooth out an otherwise rougher downturn that a total return portfolio would feel.
What's your ratio of equities to fixed income for the index funds? Since I'm in my late 20s, I think I'm at about 10-12% bonds (45% 5-year duration, 45% new markets income, 10% corporate high-yield)
RE: I Love This Dividend Investing Thingie - fiveoh - 05-14-2014
(05-14-2014, 09:10 AM)WRXodus Wrote: I agree with you 5o. Since I'm (early) in the accumulation phase, I feel more comfortable having at least some funds invested for total return. I have about 10% of my portfolio invested in DG stocks for now, but I'd like to work up to 25% or even 50%. With all the talk of a pending correction, or worse, it doesn't hurt to have some DG investments to help at least smooth out an otherwise rougher downturn that a total return portfolio would feel.
What's your ratio of equities to fixed income for the index funds? Since I'm in my late 20s, I think I'm at about 10-12% bonds (45% 5-year duration, 45% new markets income, 10% corporate high-yield)
I'm 100% in equities. No bonds at all. I may rotate into some in the future(probably about 10% like you) but at this point they are not attractive to me. In fact I'm 80% in one fund.(VFINX)
RE: I Love This Dividend Investing Thingie - WRXodus - 05-14-2014
I've been thinking about getting out of bonds, especially the corporate grade and total bond but I like having something to balance out of. I guess time will tell with the tapering of QE! The new market income is pretty enticing, especially with the turn around it's made the last couple years.
Have you been to the Bogleheads' forum at all? It's tough being on both their forum and this one because since they are so gung-ho on indexing, they pretty much mute and poo-poo DG'ers..which can lead to some over-thinking.
RE: I Love This Dividend Investing Thingie - fiveoh - 05-14-2014
(05-14-2014, 10:39 AM)WRXodus Wrote: I've been thinking about getting out of bonds, especially the corporate grade and total bond but I like having something to balance out of. I guess time will tell with the tapering of QE! The new market income is pretty enticing, especially with the turn around it's made the last couple years.
Have you been to the Bogleheads' forum at all? It's tough being on both their forum and this one because since they are so gung-ho on indexing, they pretty much mute and poo-poo DG'ers..which can lead to some over-thinking.
Yes, I'm a member over there as well. I don't go on it much since indexing requires no analysis.(past the initial fund choice)
Everyone has their favorite investing technique. I'm not sure that there is one that is better than the other for me. I see the merits of both. That's why I'm tracking the index to see how my DG portfolio performs.
Good luck to you!
RE: I Love This Dividend Investing Thingie - WRXodus - 05-14-2014
You too!
RE: I Love This Dividend Investing Thingie - earthtodan - 05-14-2014
(05-14-2014, 10:02 AM)fiveoh Wrote: I'm 100% in equities. No bonds at all. (VFINX)
I too have no bonds. It's a whole body of knowledge I don't have to wrap my head around.
RE: I Love This Dividend Investing Thingie - WRXodus - 05-14-2014
Ain't nobody got time for that! I use AGG, the iShare's Total Bond Market ETF. Easy peasy. However, now may be a questionable time to start getting into them with the tentative rate increases in the next year or two.