DGI For The DIY

[ken-do-nim]

(02-23-2023, 11:59 AM)EricL Wrote: Here's my latest portfolio update, published a few days ago on Seeking Alpha.

It was a good year in a tough market. Portfolio dropped a bit but beat the market. Income was up 14.27%.

My favorite part is the chart on your target income vs. actual income by year; congrats that you beat the target every year! Given that you are already ahead of next year's target, are you going to readjust the numbers?

I sat down to do a similar chart for my own portfolio, but then I ran into a distinction I needed to make of fixed dividend payers vs. variable dividend payers.  Maybe you don't have any variable dividend payers; by far my biggest both position-wise and payment-wise is ZIM, a shipping company who pays a percentage of their net profits every quarter as a dividend.  I ran into some other challenges that you don't probably have.

1) HTGC does this little numbers game where every quarter they announce 2 payouts; the actual dividend payment, and a bonus dividend payment.  By just looking at the actual dividend payment, they are a true DGI company, and they just raised the dividend from 0.36 to 0.39 for the next payout.  However, they lowered the bonus they'd been giving from 0.15 to 0.08, so my net payout will be smaller.

2) I count SCHD as a variable dividend payer, but the payout is definitely getting larger over time.

3) I don't know how much new money I'll be able to contribute in any given year yet. Your 10% increase every year seems to imply that you don't have any new money coming in.

[EricL]

(02-27-2023, 02:46 PM)ken-do-nim Wrote:

(02-23-2023, 11:59 AM)EricL Wrote: Here's my latest portfolio update, published a few days ago on Seeking Alpha.

It was a good year in a tough market. Portfolio dropped a bit but beat the market. Income was up 14.27%.

My favorite part is the chart on your target income vs. actual income by year; congrats that you beat the target every year!  Given that you are already ahead of next year's target, are you going to readjust the numbers?

I sat down to do a similar chart for my own portfolio, but then I ran into a distinction I needed to make of fixed dividend payers vs. variable dividend payers.  Maybe you don't have any variable dividend payers; by far my biggest both position-wise and payment-wise is ZIM, a shipping company who pays a percentage of their net profits every quarter as a dividend.  I ran into some other challenges that you don't probably have.

1) HTGC does this little numbers game where every quarter they announce 2 payouts; the actual dividend payment, and a bonus dividend payment.  By just looking at the actual dividend payment, they are a true DGI company, and they just raised the dividend from 0.36 to 0.39 for the next payout.  However, they lowered the bonus they'd been giving from 0.15 to 0.08, so my net payout will be smaller.  

2) I count SCHD as a variable dividend payer, but the payout is definitely getting larger over time.

3) I don't know how much new money I'll be able to contribute in any given year yet.  Your 10% increase every year seems to imply that you don't have any new money coming in.

I don't plan to readjust numbers, I kind of enjoy seeing how far beyond the original target I am.

The one variable payer I have is EOG, which pays a special dividend on top of its base dividend. It was a big reason why I did as well as I did last year, so I'm hoping they don't see too much of a dropoff this year in the payout.

You are correct that there is no new money coming into the portfolio. Other than dividends being paid, that is.

[EricL]

Here's my new post on the top buys from my portfolio watch list.

Top Stocks To Buy From My Watch List

[EricL]

Here's this week's updated list, showing stocks with projected annual returns >15%.

   

[EricL]

For my latest article, I took a closer look at XLU to see how its top ten holdings look on a valuation and income basis.

Utilities Have Corrected, But Is XLU A Buy?

[EricL]

My latest blog post looks at companies that have grown dividends for 10+ years at 10%+ for the past 1, 5, and 10 years and are also trading at a 10%+ discount to my fair value target.

10 Quadruple-Double Dividend Growth Stocks

[ken-do-nim]

I feel there is sometimes an over-emphasis on dividend growth, because as MasterCard and Visa demonstrate, it's far easier to grow a dividend that started very small at double digit rates for a while. Fascinating that on your list only OZK and WSO are even over 3% yield. Now granted if a stock's price keeps increasing at a high rate, the yield will always remain low, but I don't think that's the case for all of these. It will be interesting to see if some of these slow down in the future as their yield reaches into the 2-3% range.

I remember when I compared HD to LOW, I liked HD better and have stuck with that. It currently wins the yield competition 2.95 to 2.19 as well. Do you think LOW is actually the better dividend growth stock?

[EricL]

I do like LOW over HD today.

Over the last decade:

LOW has produced 19.12% annualized total returns vs. 17.87% for HD.

LOW has grown EPS by 18.99% vs. 14.39% for HD.

LOW currently trades at a 13.9 PE vs. 17.9 for HD and has a payout ratio of 30.4% vs. 52.9%.

Its lower valuation and lower payout ratio also allow it to have a more effective share buyback program.

LOW has reduced its share count by 40.5% over the ten years compared with 28.3% for HD.

Yes, Home Depot has the better yield, but unless you are needing that income to live on, Lowe's wins on most other metrics.

[ken-do-nim]

(03-29-2023, 08:57 PM)EricL Wrote: I do like LOW over HD today.

Over the last decade:

LOW has produced 19.12% annualized total returns vs. 17.87% for HD.

LOW has grown EPS by 18.99% vs. 14.39% for HD.

LOW currently trades at a 13.9 PE vs. 17.9 for HD and has a payout ratio of 30.4% vs. 52.9%.

Its lower valuation and lower payout ratio also allow it to have a more effective share buyback program.

LOW has reduced its share count by 40.5% over the ten years compared with 28.3% for HD.

Yes, Home Depot has the better yield, but unless you are needing that income to live on, Lowe's wins on most other metrics.

Thanks that's really helpful.  The whole article you wrote was really helpful too; didn't mean to come across otherwise.

[EricL]

Here's this week's updated watch list for anyone interested.

   

The above list only shows the stocks with projected returns >15%.
 
You can download a PDF of the entire 113 stock list here.  

[Kerim]

Thanks Eric -- just curious, how did you end up watching these particular stocks on the watch list? I'm guessing that (like mine) it has just kinda accumulated over time as different names came to your attention in various ways, and of course with an emphasis on many of the classic DG names. But maybe you took a more rigorous approach...

[EricL]

(04-01-2023, 02:40 PM)Kerim Wrote: Thanks Eric -- just curious, how did you end up watching these particular stocks on the watch list? I'm guessing that (like mine) it has just kinda accumulated over time as different names came to your attention in various ways, and of course with an emphasis on many of the classic DG names. But maybe you took a more rigorous approach...

Yes, I mostly just accumulated them over time as ones I've either owned formerly or consider owning one day. Most of the DGI ones are just from scanning the CCC list and looking for stocks with 10%+ annual growth. The pure growth names come from screenings I've done or from pulling names from higher-growth ETFs.

I'm open to other ideas if anyone has names they think should be included. I'm up to 113 total names already, but it doesn't take much work to add more. Once I get the basic info added to the spreadsheet it just comes down to updated EPS estimates and dividends as they are declared.