09-01-2018, 04:01 PM (This post was last modified: 09-01-2018, 04:06 PM by fenders53.)
I won't rewrite all of my investing novel as I already shared some on my new member thread yesterday. I'd be much appreciative for any advice. For the past 30 years I have purchased 90% growth stocks or index funds. I got by with it mostly but need to lessen my overall risk now. I am not at all comfortable with current valuations. It will end bad eventually, just like always. Not overly concerned with immediate diversification because I can grab some index funds if the DGI thing goes too slow. I am too old to wait for dividend compounding magic so this will be a hybrid portfolio. I want to make an honest effort at a good DGI port though. I thought I would begin with about 4-5 DG sectors to keep this less overwhelming. That's already too much. Several stocks per sector would make me more comfortable. If you think any of these stocks are a real bad idea please speak up. I'm open to alternatives to research. Most of these are perhaps only worth an entry position, but perhaps a few are close enough to good value to make a serious investment. I'd be happy if this port was somewhat defensive for now.
Retail- WMT, and discount retailer perhaps? Or maybe WBA?
I am pretty firm on WMT as at least an entry position. Owned it long ago in an investment club.
Healthcare- ABT and another position. I owned JNJ for over 20 years but just sold it in another account. I'll nibble JNJ when the time is right. It always pulls back.
Restaurants- MCD seems obvious for hard times. I'm open to other suggestions.
Consumer non-cyclicals, beveragerages, food etc.- PEP and KHC look interesting. KO looks way expensive. So do many of the usuals for this sector. PG and CL look like utility companies to me now. Owned some of these in the investment club but SO long ago and things have changed.
Utilities- Great experiences in the past. I am emotionally attached to XEL (previously NSP) as it gave me a 500% gain over 20 years. SO dividend and price looks really good now. Might add a third utility. It's an age appropriate sector.
TECH- Going slow on this sector but I will take some reasonable risk. I just know most of the FANG stocks are an accident waiting for a place to happen. I somehow survived the 90s tech bubble (sorta). AAPL looks attractive on a pullback but not so sure for a 10 year play without caution. MSFT was a great mistake for me due to bubble timing. Paid way too much and rode that sick horse for well over ten years. Then it finally recovered and I got out $60 ago. Ugg! Owned Cisco during the glory days. I see it pays a DIV now. Bet they aren't even the same hardware company I once owned. Haven't researched any of these techs in earnest lately. Hate to stay out of tech but may grab a tech EFT while I study my options. It may be more appropriate for my age?
As I stated, any and all advice welcomed as I know some of you guys own these.
Here is my quick 2 cents. So take it for what it's worth. aka not much
Since you said that you're old and don't have time for the dividend compounding magic to work, I would avoid tech. I think AAPL is fairly priced, but the dividend is too low for you IMO.
I would focus on the other sectors and add REITs and T. Though T acts like a utility, it is attractively priced and it pays a great dividend. You might also want to check out PM & MO too. If you are wanting some exposure to Tech, you might want to look at DLR for a tech REIT.
I do like the stocks that you mentioned. Keep us up to date on what you end up purchasing.
For one, you said that you are too old to wait for compounding. If I remember correctly, you're 56 now? I wouldn't consider that too old, you will hopefully have another 20 or 30 good years ahead of you. That is plenty of time, even if you want to start cashing in on parts of your portfolio sooner rather than later.
But you said that you want something relatively safe and a decent dividend. I would definitely agree with Chad: AT&T has some issues and risks but I'd say it's worth it at this price. As for REIT sector... it has been a difficult one to navigate for me but there are a lot of stable companies with exceptionally good dividend yields.
I'm personally a big fan of water utilities when it comes to stability. You can't really get much more stable than this. No one is going to build a second pipe next to the existing one (it just makes no sense, financially or otherwise) and I find it very unlikely that anyone finds a way to transport water without pipes. At least not a way that could work in a large scale while being cost effective. And it's pretty much recession proof, people might be a bit more careful about how much water they spend but that's it. I own WTR but any of the big ones should be a good investment in the long run, though you need to be careful with the current valuations.
09-04-2018, 07:02 PM (This post was last modified: 09-04-2018, 07:16 PM by fenders53.)
Sorry my thread title was a bad call. Yes I am 56. I intend to fully retire at 60. I will keep cash set aside for year 60 and 61. I have pensions that start between now and 62. One even starts next month. I was 90% invested in equities for 30+ years. I can't do that anymore. Thankful I got by with it but I am too near retirement for that going forward. Hopefuly that all made sense. Bottomline is six years from now it would be nice if my port wasn't devasted because I will need to take a LOT of income, or perhaps some income and sell some positions. I know I need to spill too much personal info for this to make complete sense, but a 4% OVERALL average return the next 6 years and I am good. Get that closer to 6% and I get a brand new fishing boat and nice used pickup truck. I would like an outside shot at that. Those numbers become harder when half your port is drawing 2%. That's the reality until the market has a serious pullback and who knows when that is.
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I feel like I can keep some money in tech (and pharma) but I will go easy on individual stocks. A modest investment in some EFTs for the more volatile sectors works to keep me patient. I nibbled today. I do want some individual tech stocks but I see nothing high quality that screams anything near must buy it now. I'll nibble on a dip and be patient before I do something aggressive like grab 100 shares of AAPL. I do feel comfortable with a position like that but it's not likely I am not going to buy a half dozen tech stocks. Those days are gone if I am not reckless. I'm not afraid of tech but I best keep it a under 10% of my port IMO.
I am good with my utility thoughts. I sleep well at night and if you average in on dips buy the stock price appreciates well enough to add to great dividends you can count on. Utilities have made many of my other ideas look bad for 30 years. Just can't buy the annual highs, and try to buy companies that can navigate tough times.
Yeah I know I type too much. I am pretty motivated right now. More on topic for this forum is the DGI. I am struggling with current valuations. My mind changes some with the wind. I've looked hard at these consumer staples. The warhorses of DGI. 2% growth during a good economy with near zero interest and favorable taxes. Longterm dividend growth looks real sketchy now as there will be recessions. Tel me why a huge peanut butter company is a good idea?
I'm more comfortable with some of my other ideas. WMT is going to fight AMZN hard and they will be OK. Feeling some comfort with PEP. Just need a dip for a real entry. I'll nibble on a few others on my list on the right day. I am uneducated on REITs. I'll address that.
I could ramble another page but that's enough for now.
I was sleepy last night and forgot an obvious addition.
Big Canadian Banks.
Much much safer than their US counterparts, though quite a few of the Canadian ones also have operations in the USA (and other countries) which might increase their expose a bit. But the Canadian side, even with the housing bubble in some of the major cities, is on a solid foundation. That housing bubble can be seen as a medium sized risk, another one would be a massive drop in oil prices as the Canadian economy is still quite tied to it. And then there is of course a global recession but then everything comes down.
CIBC is my favourite and not that far back you could grab it at ridiculously low valuations. It's not expensive now either. But do research on all of the big 5 and I'm sure you'll find one that fits you. In the current environment you're looking at a 3% - 5% yield with nice increase in the dividend each year.
Thanks. I will definitely research them. I have seen Canadian banks mentioned a few times as good dividend growers. I have not made a lot of investments in CA but the regulations in place tend to make some of their industries more stable. US bank stocks will be a great investment one day but there may be more years to go before trust is fully restored. I know I consider them largely responsible for the last market meltdown.
Picked up an entry position in CVX Chevron today. It dropped on an analyst downgrade that doesn't alarm me long term. So I have CVX and KHC in the port now. Almost fell asleep typing in the orders but both of these stocks pay great dividends.
(09-06-2018, 03:56 PM)EricL Wrote: Don't know what your thoughts are on tobacco companies, but MO recently announced a 14.3% dividend increase, and is currently yielding 5.26%.
I'm not exactly sure either Eric but I appreciate the recommendation. Lung cancer took a few of my relatives including my father. They were warned the last half of their smoking "careers" and intentionally deceived by tobacco companies the first half. I'll leave it right there and don't want to judge anyone's investment decisions. I drink alcohol and that kills people too. No judgement from me for those who decide to invest in those companies. I hope this doesn't discourage you from participating further in my thread as I proceed building a DGI portfolio.
(09-06-2018, 03:56 PM)EricL Wrote: Don't know what your thoughts are on tobacco companies, but MO recently announced a 14.3% dividend increase, and is currently yielding 5.26%.
I'm not exactly sure either Eric but I appreciate the recommendation. Lung cancer took a few of my relatives including my father. They were warned the last half of their smoking "careers" and intentionally deceived by tobacco companies the first half. I'll leave it right there and don't want to judge anyone's investment decisions. I drink alcohol and that kills people too. No judgement from me for those who decide to invest in those companies. I hope this doesn't discourage you from participating further in my thread as I proceed building a DGI portfolio.
No offense taken, I understand completely, which is why I mentioned "your thoughts" in my post. Both of my grandparents and several aunts and uncles smoked most of their lives. While none of them died from lung cancer, I know their health probably wasn't as good as it would have been otherwise had they not smoked.
09-07-2018, 09:31 AM (This post was last modified: 09-07-2018, 10:00 AM by fenders53.)
(09-07-2018, 08:55 AM)EricL Wrote: My parents recently rolled over a 401k and were looking for income ideas.
Here is a list of dividend stocks I put together for them for a shopping list:
Sounds like they are in the same current situation, and you and I seem to think alike based on your list. I want to own some of those companies soon. Market is heading down slowly and good for nibbling. I can't sit on my hands forever. This is fun and like my wife shopping at the mall until I run out of money to invest.
Today's moves so far...
I have always desired to own MMM but never pulled the trigger due to PE. It was a lost opportunity for a stable stock in retrospect. Just sold an OCT 19th 210 put today while it is trading around 212 today. Maybe l will own 100 shares soon, and if not there is $410 sitting in my account that is mine. I am very comfortable with this decision longterm. I'll probably continue to sell puts until the market turns against me and I am "forced" to own MMM on my terms.
SO ran away from me yesterday. I have little confidence in share price appreciation so I hope it pulls back and I will grab that awesome dividend. I love 4.5% dividends but SO competes with XEL for my utility money. XEL dividend is rarely at 4% but without looking up the stats I think I can safely say XEL price appreciation exceeds SO by 3X and that includes some hard times. I prefer some diversity rather than go all in on XEL for my total utility investments. XEL is high now so I wait for a good decision. SO is clearly being daytraded by speculators now. Random utility companies with no big news do not swing 2%+ per day when the sector is otherwise somewhat stable. Tempted to place my buy orders at my price and go just fishing lol.
I continue to watch T like a hawk. Let it have another bad week and I will sell a put quick and get in where I want.
I would like an outside shot at that. Those numbers become harder when half your port is drawing 2%. That's the reality until the market has a serious pullback and who knows when that is. 