(01-12-2016, 04:10 PM)ClockworkDividends Wrote: Furthermore, and maybe you guys would like to chime in on this, it would be interesting to see how dividend stocks compare to capital growth stocks. It seems to me that DG stocks are a bit like having your cake and eating it too, but there must be something I'm missing. perhaps capital gains grow more quickly?

(01-12-2016, 04:38 PM)Kerim Wrote:

(01-12-2016, 04:10 PM)ClockworkDividends Wrote: Furthermore, and maybe you guys would like to chime in on this, it would be interesting to see how dividend stocks compare to capital growth stocks. It seems to me that DG stocks are a bit like having your cake and eating it too, but there must be something I'm missing. perhaps capital gains grow more quickly?

My answer to this one is that I would gladly switch to growth investing in a heartbeat, if someone would just lend me their crystal ball for a little while. If you can consistently pick the right growth stocks, and buy and sell them at the right time, you'll trounce dividend growth investing (and most other strategies as well). But it is a nearly impossible task, and even more so for those of us with families and jobs and the such. One of the main advantages of DGI is that it is a fairly easy and forgiving strategy that can be successfully used by us mortals.

(01-12-2016, 05:02 PM)ClockworkDividends Wrote:

(01-12-2016, 04:38 PM)Kerim Wrote:

(01-12-2016, 04:10 PM)ClockworkDividends Wrote: Furthermore, and maybe you guys would like to chime in on this, it would be interesting to see how dividend stocks compare to capital growth stocks. It seems to me that DG stocks are a bit like having your cake and eating it too, but there must be something I'm missing. perhaps capital gains grow more quickly?

My answer to this one is that I would gladly switch to growth investing in a heartbeat, if someone would just lend me their crystal ball for a little while. If you can consistently pick the right growth stocks, and buy and sell them at the right time, you'll trounce dividend growth investing (and most other strategies as well). But it is a nearly impossible task, and even more so for those of us with families and jobs and the such. One of the main advantages of DGI is that it is a fairly easy and forgiving strategy that can be successfully used by us mortals.

Ah that makes sense. I was reading the other day that DGI companies tend to do well as far as capital growth goes as well, since we aim to choose companies that have solid fundamentals and consistently grow their dividends (which is supported by consistent growth in earnings). What if one say, sold off a portion of their biggest growers (in terms of stock price) and used those to buy more undervalued growth stocks. Wouldn't that theoretically grow real returns over time by leveraging both the compound growth of reinvesting dividends AND the capital gains of the stocks themselves? Why not leverage both strategies?

(01-13-2016, 09:17 AM)Roadmap2Retire Wrote: Hi CD,
To answer your other question on how much will you bring in at the start and how long will it take to reach $10K or $20K...it depends (as is the answer usually).

To start off, your dividend will be very low - so the first year or two can be a bit discouraging and it might seem like its not worth it. But as you build your portfolio - your income will grow and gets compounded over time. Addition of new money coupled with the increase in dividends will keep that income growing.

When I started off, I used a rule of thumb for projections (just for the sake of managing my expectations) as an average starting dividend yield of 3% and growing at 7-8% per year. So, for e.g., if you invest $10K now, with those assumptions you can expect to make $300 in dividends the first year, $324 next year etc. Hope that gives you an idea.

I also made sure that I had a wide spectrum of dividend payers in my portfolio. Some companies with low starting yield but high growth of dividend rate (look at companies like SBUX, V, DIS etc), and some companies with a high starting yield and low dividend growth rate (companies like T, VZ, SO etc) and then some companies which fit right in the middle with decent starting yield and decent dividend growth rate (companies like JNJ, WFC etc).

Read as much as you can. Pay close attention to diversification and never put eggs in one basket no matter how lucrative an investment might seem and may appear to be a once-in-a-lifetime opportunity.
Hope that helps.

(01-13-2016, 11:28 AM)crimsonghost747 Wrote: Welcome. Glad to see yet another young person joining us, it's best to start early!

One thing I would like to correct you on though. You said that everything seems to be on sale... well yeah it looks like that when looking at the past few months or a year but when you take a look over a longer timeframe you will see that a lot of the numbers don't seem that cheap afterall. Sure there are some good ones but in general the P/E doesn't seem to be that cheap compared with historical P/E numbers. Most of us tend to buy a little all the time but of course be careful not to spend too much right now because it looks cheap.

I started when I was 23 and been doing this a few years now. I didn't have as much as $2k per month to invest so you can expect your dividends to grow a little faster than mine did. Here is how it went for me.
2012: 111.60 euros
2013: 993.47 euros
2014: 1557.78 euros
2015: 1783.10 euros
2016: estimate is around 2100 euros.

All of that is before taxes. So as you can see it goes up, you will probably manage it faster than I did as you have more capital to invest but that should give you some example of what it can look like.
Good luck with it and keep us updated!

Quote:Thanks for the tips. So when you look at the dividend growth rate, is that something that the company reports or do you calculate it using historical data? I tried to run some projections of portfolio growth with those average growth rates (so, "If I invest xx/year, 3% div, these divs grow at 7-8%/yr) but I'm not sure what that equation needs to look like. Will do some digging.