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+--- Thread: How much is enough?(buying stocks) (/showthread.php?tid=653)
How much is enough?(buying stocks) - TopRamenTrader - 08-19-2014
This is for the young guns out there.
So as i search the interwebs for stocks with dividends in my range or purchase. (looking to put in 500 - 1000 a month?) i save a large portion of my paycheck and fight the temptation of a new car and reckless spending.
But what i was looking at was buying a stock like
SDT
@ 5.13
Div & Yield: 1.71(26.80)
EPS: 2.00
P/E: 2.56
Sounds nice. But as i read in another thread about " how long could they possibly keep that up?"
as someone who is on the lower end buying spectrum, is something like SDT that is considered high yield / risky even worth purchasing?
also does it have a place in a long term investors portfolio?
or would i be better off putting money in a pricier stock like aapl, VZ.
does more mean better or does it make sense to roll with quality over quantity.
Thanks for any future input.
I know its a lot to look at sorry but ive been battling with this idea for the past week.
RE: How much is enough?(buying stocks) - EricL - 08-19-2014
(08-19-2014, 10:22 PM)TopRamenTrader Wrote: This is for the young guns out there.
So as i search the interwebs for stocks with dividends in my range or purchase. (looking to put in 500 - 1000 a month?) i save a large portion of my paycheck and fight the temptation of a new car and reckless spending.
But what i was looking at was buying a stock like
SDT
@ 5.13
Div & Yield: 1.71(26.80)
EPS: 2.00
P/E: 2.56
Sounds nice. But as i read in another thread about " how long could they possibly keep that up?"
as someone who is on the lower end buying spectrum, is something like SDT that is considered high yield / risky even worth purchasing?
also does it have a place in a long term investors portfolio?
or would i be better off putting money in a pricier stock like aapl, VZ.
does more mean better or does it make sense to roll with quality over quantity.
Thanks for any future input.
I know its a lot to look at sorry but ive been battling with this idea for the past week.
I wouldn't touch SDT with a 10' pole, there is a reason its yielding 26.8%, and its not a good one.
Run away.
Fast.
Here is a recent article by a good contributor on Seeking Alpha talking about reserve write downs and reduced distributions. You don't want any part of these trusts (CHKR is another) as they were basically financial spin-offs from parent companies as a way to avoid adding more debt to the books when trying to fund drilling to hold production on leases.
If you are serious about dividend growth investing, stick to high quality companies with a good track record of increasing dividends. I know the allure of high yields is appealing, I am a former CHKR share holder and learned my lesson the hard way.
RE: How much is enough?(buying stocks) - TopRamenTrader - 08-19-2014
" I wouldn't touch SDT with a 10' pole, there is a reason its yielding 26.8%, and its not a good one. "
Ok so definitely Quality over Quantity.
you just see the numbers and get all googly eyed. Thanks for the reply i'll take the lesson you learned to heart.
RE: How much is enough?(buying stocks) - Turvok - 08-20-2014
Exactly. DGI is not a get rich quick scheme. Stick with the quality stocks and in 10 years, you'll see the compounding effect and appreciate it
RE: How much is enough?(buying stocks) - ronn38 - 08-20-2014
The whole point of DGI is to allow younger investors with limited investment cash to allow time and compounding "interest" (DRIP) to do the work of a larger initial cash investment. Not knowing you situation, I would venture a "guess" that the only higher yield stocks you should consider are bellwethers like AT&T and some strong utilities like Southern. You need your money safe and growing for the next 20-40 years. And to my thinking, a stock like Coke or P&G, etc. are virtually as sure a bet as a bank.*
Its worth considering some higher yield investment AFTER you core is set. I have 40 buy and hold positions constituting over 90% of my equity portfolio. THEN I started dabbling in BDC and the likes. I have about 8% there, great interest--but talk about volatile! My Buy and Hold Portfolio has gain almost 12% in value over the last 2.5 years, my higher yield has lost 1.7% even after drips.
But hey, MORL is a little better bet than the lottery ;-)
Look for Companies that have a history of increasing dividends over decades, buy on the dip, and then let the decades work for you ;-)
You've probably already seen this, but this thread is an interesting introductory discussion http://dividendgrowthforum.com/showthread.php?tid=652
Ronn
*PLEASE NOTE I SAID VIRTUALLY: stocks are NOT federally insured deposits (disclaimer--gotta have 'em ;-) )
RE: How much is enough?(buying stocks) - Roadmap2Retire - 08-20-2014
(08-19-2014, 10:36 PM)EricL Wrote:(08-19-2014, 10:22 PM)TopRamenTrader Wrote: This is for the young guns out there.
So as i search the interwebs for stocks with dividends in my range or purchase. (looking to put in 500 - 1000 a month?) i save a large portion of my paycheck and fight the temptation of a new car and reckless spending.
But what i was looking at was buying a stock like
SDT
@ 5.13
Div & Yield: 1.71(26.80)
EPS: 2.00
P/E: 2.56
Sounds nice. But as i read in another thread about " how long could they possibly keep that up?"
as someone who is on the lower end buying spectrum, is something like SDT that is considered high yield / risky even worth purchasing?
also does it have a place in a long term investors portfolio?
or would i be better off putting money in a pricier stock like aapl, VZ.
does more mean better or does it make sense to roll with quality over quantity.
Thanks for any future input.
I know its a lot to look at sorry but ive been battling with this idea for the past week.
I wouldn't touch SDT with a 10' pole, there is a reason its yielding 26.8%, and its not a good one.
Run away.
Fast.
Here is a recent article by a good contributor on Seeking Alpha talking about reserve write downs and reduced distributions. You don't want any part of these trusts (CHKR is another) as they were basically financial spin-offs from parent companies as a way to avoid adding more debt to the books when trying to fund drilling to hold production on leases.
If you are serious about dividend growth investing, stick to high quality companies with a good track record of increasing dividends. I know the allure of high yields is appealing, I am a former CHKR share holder and learned my lesson the hard way.
Couldnt have put it better myself. When I first started looking into dividend stocks and funds, I was attracted to closed end funds yielding 10% and I started buying up. The price kept going down and I kept buying. Eventually, I learned my lesson and sold the position and eventually came out with a small loss even after the 10% dividends.
RE: How much is enough?(buying stocks) - TomK - 08-20-2014
Agree completely with all of the advice you've gotten in this thread so far.
Once you've built up a good core pile of high-quality dividend growth stocks and are comfortable with the investing style and the process, then (and only then), I think it is not a bad idea to take a very very small chunk of your new money (like 1 or 2%) and put it into more speculative stocks. Done well, the early years of DG investing is like watching paint dry (though later, once the compounding machine really gets going, it becomes quite fun). So during the boring phase, I think it can make sense to have a very small stash of play money to scratch the trading and speculation itch -- so long as you know that you have the discipline to not let it mess up your core strategy.
That said, I'm not sure I'd put even my tiny amount of play money into SDT. High-yield is one thing, and the market can certainly be wrong and irrational, but no way the market overlooks a 26% yield if there is any chance of a turnaround there.
RE: How much is enough?(buying stocks) - Dividend Watcher - 08-20-2014
I'm a ditto to the above also.
I don't mean to criticize but it seems some of you new-to-investing-for-the-long-term youngsters here are trying to swing for the fences. Unfortunately, I, for one, tried that too. Some years were OK and some really stunk. It wasn't until the magic of the Internet and sites like this, Seeking Alpha, Dividend Mantra's site, Tim McAleenan's site, David Fish's CCC list and a bunch of other miscellaneous sites came along that I got my act together much later than many of you. I didn't have family that were big into investing. My own parents, born at the tail end of the Great Depression, gave up on in investing during the market downturn of 73-74. Fortunately, they had nice pensions to rely on.
If you're really interested in building wealth for the long-term, then dividend growth investing or buy, hold & monitor seems to me to be the most reliable method of doing so. Unfortunately, it's boring as hell until the time comes that they keep throwing enough money at you that you can't sensibly spend it all.
Tim McAleenan has a good example of how boring this can be. The article, about MCD, is here.