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+--- Thread: NEW portfolio - Taking the hit and cleaning out my garbage! (/showthread.php?tid=700)
NEW portfolio - Taking the hit and cleaning out my garbage! - DividendDragon - 10-13-2014
Ok so I came here knowing little about dividend growers if I'm honest.
After a while... I realised that my portfolio was WEAK!
I'd like to thank DividendWatcher and others for helping me out.
Here's a peak at my current portfolio. I know that GAZP and CRLL.N are not good but It's not really worth the fees to divest.
Worth = $4000
Stock name % Weight Sector
1 Exxon Mobil Corp. 21.4% [N/A]
2 Lloyds Banking Group 20.2% [N/A]
3 McDonalds Corp 19.0% [N/A]
4 GlaxoSmithKline 13.1% [N/A]
5 AFLAC 11.7% [N/A]
6 OAO GAZPROM 8.7% [N/A]
7 Carillion 5.7% [N/A]
Next on my list = UNILEVER and T.
Will have capital on January 5th.
Let me know if you think I'm in a stronger position now (See previous thread)
Annual dividend = $133
Yiled = 3.7%
The figures may be slightly out due to currency and rounding
RE: NEW portfolio - Taking the hit and cleaning out my garbage! - Dividend Watcher - 10-13-2014
Lewys, you're welcome for the help but it's not just me. Several others also offered helpful suggestions.
I like your new additions and I think you're getting to a portfolio that is a solid foundation. I do have one question, are you buying on the New York Stock Exchange or the London Exchange or both? The reason I'm asking is because I have no clue if the dividend yield in GBP is the same as the USD. I'm an old curmudgeon and can't quite grasp the conversion between Pound Sterling currency and the dollars & cents method we're using here. Hence, would it be better to buy ULVR on the London Exchange or UL on the New York Exchange?
I especially like the XOM and MCD additions.
GSK has a spotty dividend record but the high yield can compensate for some of that. AFLAC has transitioned to slower growth due to, in my opinion, the Yen/Dollar disparity, U.S. tax code and overall financial malaise in the world this decade. They may return to faster growth in the long term if some of these factors get resolved but, in the meantime, you will get a regular check from them.
UL and T are also both slow growers but, again, reliable dividend payers building a foundation for your cash stream.
I also encourage you to look at a little faster growing dividend growth companies. At your age, you can take advantage of time and compounding to really grow your wealth. Amongst them, to me, would be examples like AAPL, BDX, CHD, PH, TJX and even CL. The yield sucks for me right now (and some are overvalued) since I have less than a decade before I'm going to need some of those dividends but I think in 20 years, you'd really be smiling.
Don't forget to come back here and ask questions.
RE: NEW portfolio - Taking the hit and cleaning out my garbage! - Roadmap2Retire - 10-13-2014
Looking good, Lewys. I have been passively following your other thread...the one comment I have is that your portfolio is still quite concentrated. You should be looking at diversifying your portfolio a bit more. Studies have shown that as little as 12 stocks can achieve enough diversification to reduce risk significantly. See here.
Like DW mentioned above, you have a good base of high yielders...given your time horizon, you should look at low-yield-high-growers for the long term. The ongoing correction should provide with some decent entry points.
cheers
RE: NEW portfolio - Taking the hit and cleaning out my garbage! - DividendDragon - 10-13-2014
RoadMap - Thanks for your commentary and advice. To clarify I'm intending to buy another 4 positions at $1000 a piece ($4000) up to June 2015 and then another 4 $1000 a piece up to June 2016.
My main problem is finding enough capital to invest and get a decent holding (I pay $18 share comission)
DividendWatcher - Exxon and MCD are bought in $ on the American stock exchange and are held in a Tax Free NISA. The only tax I would pay on these are if I were to sell them and make a profit (Capital gains tax). I pay no tax on the dividend as all dividends are re-invested. I am charged a 1% reinvestment fee. E.g value of re-investment is $100 I pay $1.
I would only be charged an exchange rate if I were to receive the dividends as cash payments. All other stocks are LSE stocks bought in £ sterling bar GAZP which is an ADR.
Hope this clears things up
RE: NEW portfolio - Taking the hit and cleaning out my garbage! - Jimbo - 10-13-2014
lewys,
Dont know what the amount or quantity you have of the gazp or crll, but with ameritrade i had several stocks that did some massive reverses and lost almost everything (except the .10 for the entire position) I spoke with a specialist at a trade desk and they sold the "losses" for free for me.
That might help you dump them.
The $18.00 commision hurts up front but if you are patient, the cost gets buried in the dividends and growth and wont hurt in a few years.
Jim
RE: NEW portfolio - Taking the hit and cleaning out my garbage! - daat99 - 10-14-2014
(10-13-2014, 01:58 PM)Lewys120 Wrote: My main problem is finding enough capital to invest and get a decent holding (I pay $18 share comission)
In my opinion this is very bad.
Considering $1000 per order and dividend yield ~3% per year this means you are paying for the first 6 months of dividend in advance.
My suggestion is to look for another broker.
What I think you should look for in a broker is the following:
1. Reduced commissions - $6 is the max I would go here, you can get lower than $1 in some brokers.
2. How high is the "Maintenance fee" or "Inactivity fee" - I prefer no fee at all but up to $10 is acceptable if it is an improvement over what you are paying now.
3. Make sure the broker does NOT charge dividend fees (A friend of mine had a brokerage account where he got $1.35 in dividend and was charged $4 in commission for it.. he PAID for the dividend more than twice the dividends worth! you probably guessed that he switch brokers).
4. The ability to communicate with someone if you have any issues (you shouldn't have any but just in case).
5. A thing to note is if you are getting charged for corporate actions like splits.
What I would ignore if I were you:
1. "Fast executions" - this apply for day-traders that want to execute orders in real time.
As a buy-and-never-sell you pick your entry using limit orders (you shouldn't chase stocks in real time) and let it either hit your price or let it go moving to the next stock on the list.
2. "Direct access" - this allows trades you to send orders to specific exchange instead to their brokerage.
As a dividend investor you don't care which exchange fills your order and takes $0.00121 per share from the exchange they used instead of giving it to you.
The only thing you care about is that your order will be filled at the price you chose.
3. "Advice/Research" as a Dividend growth investor you have different approach to the market than the brokerage analysts and advisers.
They are focusing mostly on "growth" and you should focus on "viable dividend growth".
They will usually tell you to buy or sell something just to get you to do more transactions and that is the opposite of what you need.
Basically I recommend that you calculate how many transactions you are planning to do in the next 12 months, add to that the "monthly fee" for 12 months and get a number which represents how much you'll pay your broker during the next 12 months.
Do the same for the other candidates you have and sort them in a table.
Once you get that sorted out you can compare them and decide if you want to pay more for something the more expensive brokerage firms are offering.
RE: NEW portfolio - Taking the hit and cleaning out my garbage! - DividendDragon - 10-14-2014
Hi Daat I agree with what you're saying but here are a couple of problems;
1. UK brokerage is not as competitive as US brockerage. The 'going rate' for non frequent traders around here is around £10.
2. My broker has no inactivity fee and only a 0.45% yearly administration fee
3. I receive a monthly magazine which gives helpful tips and advice.
4. My major gripe though is that I pay 1% to re-invest dividends
- Looking at competition this also seems to be the norm with brokers who don't charge charging a quarterly 'subscription fee' of around £20
5. Cheap brokers around here have a record of poor customer service.
6. My broker offers comprehensive analysis of all company financials, p/e, divgrowth, cover e.t.c in a convenient easy to use service.
I totally agree with your advice though, it just doesn't seem like the rates are competitive here in the UK! I have E-mailed my broker asking for a concession on free trades as this has just been offered to new customers
I should get paid for being loyal right
Thanks
Lewys
RE: NEW portfolio - Taking the hit and cleaning out my garbage! - daat99 - 10-19-2014
(10-14-2014, 08:36 AM)Lewys120 Wrote: Hi Daat I agree with what you're saying but here are a couple of problems;I'm not living in the US and not a US citizen and the brokerages in my country charge even more than yours do.
1. UK brokerage is not as competitive as US brockerage. The 'going rate' for non frequent traders around here is around £10.
2. My broker has no inactivity fee and only a 0.45% yearly administration fee
3. I receive a monthly magazine which gives helpful tips and advice.
4. My major gripe though is that I pay 1% to re-invest dividends
- Looking at competition this also seems to be the norm with brokers who don't charge charging a quarterly 'subscription fee' of around £20
5. Cheap brokers around here have a record of poor customer service.
6. My broker offers comprehensive analysis of all company financials, p/e, divgrowth, cover e.t.c in a convenient easy to use service.
I totally agree with your advice though, it just doesn't seem like the rates are competitive here in the UK! I have E-mailed my broker asking for a concession on free trades as this has just been offered to new customers
I should get paid for being loyal right
Thanks
Lewys
This is why I chose to use international broker account in Interactive Brokers.
I know that ThinkOrSwim also offers international accounts.
It's true that their customer service is lacking but to be honest with you, I don't see the need to use it.
When I had a few questions (regarding regulations) I used their online chat support and it was just fine.
Please keep in mind that I'm a technical person so I didn't had a lot of problems understanding how to use their platform for my needs (selling put options for stocks I want to buy).
The 0.45% administration fee turns out to a lot of money when your account grows (and it should grow if you believe in DGI investing).
I know Interactive Brokers has business relations with brokerage dealers world-wide where the brokerage dealers provide the service to the customers and IB provides the trading account with the platform so that might be a possible alternative.
I use such dealer myself (and pay almost twice more in commissions compared to normal IB customer) but I can talk to someone in my own language over the phone if I need something.
They helped me fill out all the forms when I started out, haven't used them since.
They also send a "weekly market update report" but those most of the time contain a lot of noise and intended to make you want to trade more - this is the opposite of what DGI is all about and I avoid it like a plague.
It all turns out to how much you are willing to pay for what you are getting.
My advice to you is to summarize your (expected) expenses in a full year using different brokers and then decide if you want to pay the price of what you are getting or not.
In my opinion, making a decision before comparing all the facts isn't a very good practice.