Posts: 72
Threads: 14
Joined: Apr 2015
Reputation:
0
Hello everyone!
A new member of the forum. Glad to be here.
I'm a 40 yr. (little late to the game), but do want to do the best I can.
Little bit about my financial background: No loans/mortgages/credits, just a rent. I am almost maxing out pension plans and a Roth IRA. I do want to start getting into Dividend Growth stocks; I am planning to open a brokerage in the next few days and start with a seed of 3K, and I am able to allocate at least $1,000/month to start with.
I am a newbie here, but have been educating myself in the last month. I looked into the dividend champions list and other valuation criteria and came up with the following list to choose from:
Johnson & Johnson (JNJ)
Wal-Mart (WMT)
Altria Group Inc (MO)
Aflac Incorporated (AFL)
ConocoPhillips (COP)
Chevron Corporation (CVX)
Procter & Gamble (PG),
Philip Morris International Inc. (PM)
Realty Income Corp. (O)
Kinder Morgan Inc. (KMI)
Royal Dutch Shell plc (ADR)
I would like your input and suggestions if this is appears to be a good start list to pick from. Or if there is a something I am totally missing.
Thanks a lot.
Paul
Posts: 744
Threads: 51
Joined: Apr 2014
Reputation:
10
Welcome, Paul.
That is a great set of stock you've picked to begin with. All strong names that have a proven record. One thing you would want to keep in mind is diversification - youve picked some names from For the most part, if you have all stocks mentioned there - you are pretty good, but companies are missing from Indsustrials, Utilities for e.g.
Be sure to check out the CCC list put together and updated (every month) by Dave Fish. Its one of the best resource to narrow things down and then provides you a starting point for your research.
http://www.dripinvesting.org/tools/tools.asp
cheers
R2R
Posts: 1,530
Threads: 172
Joined: Mar 2013
Reputation:
24
Welcome Paul!
Better late than never -- and 40 isn't all that late. And $1000 per month is nothing to sneeze at. You've still got 20 or 25 years to let compounding do its thing. It will feel excruciatingly slow at first, but this strategy requires patience.
Your starting list looks great. I'd say don't worry too much in the first few years on staying balanced. Put your money in whichever of those great companies is presenting the best value at the moment. For example, in my opinion, this is a poor time to be starting a position in PG. But JNJ seems fairly valued at today's prices. Unfortunately, not many bargains these days.
Anyway, glad you found us and thanks for joining up. Hope we can help you along the way!
Posts: 576
Threads: 21
Joined: May 2014
Reputation:
11
Good list Paul, tho a bit heavy on Energy.
I'd personally swap in XOM for COP and for Royal I think you're looking at RDS.B rather than ADR as ADR just stands for American Depositary Receipt.
Are you going to accumulate cash or do a DRIP? Keep in mind transaction costs depending on your brokerage.
KO, RTN, CL, CLX, GPS, GIS, WEC, HRS, DEO, PEP, MMM, ROK, PH, MSFT, BEN, TROW are some other names I'd offer to put on your radar if you haven't already taken a look
Posts: 2,411
Threads: 54
Joined: Jul 2013
Reputation:
34
(04-28-2015, 12:07 PM)stewardinlife Wrote: Johnson & Johnson (JNJ)
Wal-Mart (WMT)
Altria Group Inc (MO)
Aflac Incorporated (AFL)
ConocoPhillips (COP)
Chevron Corporation (CVX)
Procter & Gamble (PG),
Philip Morris International Inc. (PM)
Realty Income Corp. (O)
Kinder Morgan Inc. (KMI)
Royal Dutch Shell plc (ADR)
Welcome to the forum. That is a nice list of stocks to start with. I highlighted my favorites from your list. Also consider KO, PEP or DPS for consumer staples and ROST or TJX if you are looking for a higher growth retail option.
I noticed you don't have any utilities on the list either. Is that personal preference or just that they are overvalued right now? Some ideas there are XEL, D, WEC, VVC.
Overall I think you are off to a great start, and with having $1000 per month to add to your portfolio you should be able to build a diversified portfolio pretty quickly.
Good luck!
Posts: 72
Threads: 14
Joined: Apr 2015
Reputation:
0
04-28-2015, 01:00 PM
(This post was last modified: 04-28-2015, 01:03 PM by stewardinlife.)
(04-28-2015, 12:47 PM)EricL Wrote: (04-28-2015, 12:07 PM)stewardinlife Wrote: Johnson & Johnson (JNJ)
Wal-Mart (WMT)
Altria Group Inc (MO)
Aflac Incorporated (AFL)
ConocoPhillips (COP)
Chevron Corporation (CVX)
Procter & Gamble (PG),
Philip Morris International Inc. (PM)
Realty Income Corp. (O)
Kinder Morgan Inc. (KMI)
Royal Dutch Shell plc (ADR)
Welcome to the forum. That is a nice list of stocks to start with. I highlighted my favorites from your list. Also consider KO, PEP or DPS for consumer staples and ROST or TJX if you are looking for a higher growth retail option.
I noticed you don't have any utilities on the list either. Is that personal preference or just that they are overvalued right now? Some ideas there are XEL, D, WEC, VVC.
Overall I think you are off to a great start, and with having $1000 per month to add to your portfolio you should be able to build a diversified portfolio pretty quickly.
Good luck!
Thanks Eric. Thanks for pointing out the utilities sector ( I missed it totally).
I am still trying to learn, but if you could explain how to evaluate if a stock currently is overvalued or fair/undervalued (for purchase decision).
Thanks again.
Paul
Thank you all for your feedback. Looking forward with excitement.
Paul
Posts: 1,002
Threads: 89
Joined: Dec 2013
Reputation:
32
I'm just going to say "Welcome" for now. I've got to get back to work for now but you've got a nice list started.
Feel free to ask away.
=====
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
Posts: 2,411
Threads: 54
Joined: Jul 2013
Reputation:
34
(04-28-2015, 01:00 PM)stewardinlife Wrote: I am still trying to learn, but if you could explain how to evaluate if a stock currently is overvalued or fair/undervalued (for purchase decision).
Thanks again.
Paul
That is a much longer topic than what I have time to completely respond to right now. I use FAST Graphs as my primary valuation tool. If you are serious about putting $1000 a month into investments and plan on making regular purchases, the $10 a month for a subscription would be money well spent in my opinion.
In a nutshell, I generally look at PE and dividend yield in historical terms for a company and compare them with expected growth rates. Try to buy when it is trading at or below historical valuations and at or above historical dividend yields and generally you will do well over the long run.
Posts: 72
Threads: 14
Joined: Apr 2015
Reputation:
0
04-28-2015, 04:17 PM
(This post was last modified: 04-28-2015, 04:37 PM by stewardinlife.)
(04-28-2015, 01:36 PM)EricL Wrote: (04-28-2015, 01:00 PM)stewardinlife Wrote: I am still trying to learn, but if you could explain how to evaluate if a stock currently is overvalued or fair/undervalued (for purchase decision).
Thanks again.
Paul
That is a much longer topic than what I have time to completely respond to right now. I use FAST Graphs as my primary valuation tool. If you are serious about putting $1000 a month into investments and plan on making regular purchases, the $10 a month for a subscription would be money well spent in my opinion.
In a nutshell, I generally look at PE and dividend yield in historical terms for a company and compare them with expected growth rates. Try to buy when it is trading at or below historical valuations and at or above historical dividend yields and generally you will do well over the long run.
Thanks for the advice!
rapidacid -- Thanks for the feedback ! I am going with Tradeking. As to accumulate cash or DRIP, would DRIP be beneficial, as I understand it is auto-reinvesting the dividends right? Based on the understanding that I may not need cash right away for at least 15 yrs. or so.
Posts: 576
Threads: 21
Joined: May 2014
Reputation:
11
(04-28-2015, 04:17 PM)stewardinlife Wrote: rapidacid -- Thanks for the feedback ! I am going with Tradeking. As to accumulate cash or DRIP, would DRIP be beneficial, as I understand it is auto-reinvesting the dividends right?
Yea, DRIP means Dividend Reinvesting Plan. Looks like Tradeking is $4.95 a trade which is pretty great, but I'd still go with DRIP which just tells your brokerage "any dividends that are to be paid to me I want the cash to go towards the purchase of new shares, even if they're incremental". There's no $4.95 a trade with DRIP so you're "saving" money on new purchases
If you were to allot your initial $3K to a portfolio that yielded 3.5% you'd "only" get $105 a year in dividend payments and if you waited and accumulated that cash and then made one purchase at the end of the year you'd end up paying $4.95 / $105 = 4.7% in transaction fees ... which is a lot like going to the ATM and it costing you $63 to withdraw $60 of your own money
A good rule of thumb is to try to only pay 0.5 - 1.0% in transaction fees per trade so you get more bang for your hard earned buck ... At $1,000 a month in new money you plan on allocating ( which is really great ) you're looking right at a 0.495% transaction fee ...
If you were to stay disciplined and deposit $1,000 into your brokerage account every month and only make 1 purchase / month for the whole $1,000 I think you'd have a very strong protocol in place
(04-28-2015, 04:17 PM)stewardinlife Wrote: Based on the understanding that I may not need cash right away for at least 15 yrs. or so.
The main talking point of DRIP vs No DRIP is that if you DRIP you may not always be buying at valuations you normally would, like KO at a P/E of 50X. If you don't DRIP and you just accumulate the cash you can always allocate the accumulation in your best idea at the time of allocation.
The downside of No DRIP is that it may take you ~12 months to accumulate enough dividend cash to make a sensible purchase in the 0.5% - 1% transaction fee range, and during that 12 months your accumulating cash is sitting around not being put to use and losing value to inflation ... until you're accumulating $500 or so a month in dividends I think it makes the most sense to DRIP
Posts: 72
Threads: 14
Joined: Apr 2015
Reputation:
0
(04-28-2015, 06:39 PM)rapidacid Wrote: (04-28-2015, 04:17 PM)stewardinlife Wrote: rapidacid -- Thanks for the feedback ! I am going with Tradeking. As to accumulate cash or DRIP, would DRIP be beneficial, as I understand it is auto-reinvesting the dividends right?
Yea, DRIP means Dividend Reinvesting Plan. Looks like Tradeking is $4.95 a trade which is pretty great, but I'd still go with DRIP which just tells your brokerage "any dividends that are to be paid to me I want the cash to go towards the purchase of new shares, even if they're incremental". There's no $4.95 a trade with DRIP so you're "saving" money on new purchases
If you were to allot your initial $3K to a portfolio that yielded 3.5% you'd "only" get $105 a year in dividend payments and if you waited and accumulated that cash and then made one purchase at the end of the year you'd end up paying $4.95 / $105 = 4.7% in transaction fees ... which is a lot like going to the ATM and it costing you $63 to withdraw $60 of your own money
A good rule of thumb is to try to only pay 0.5 - 1.0% in transaction fees per trade so you get more bang for your hard earned buck ... At $1,000 a month in new money you plan on allocating ( which is really great ) you're looking right at a 0.495% transaction fee ...
If you were to stay disciplined and deposit $1,000 into your brokerage account every month and only make 1 purchase / month for the whole $1,000 I think you'd have a very strong protocol in place
(04-28-2015, 04:17 PM)stewardinlife Wrote: Based on the understanding that I may not need cash right away for at least 15 yrs. or so.
The main talking point of DRIP vs No DRIP is that if you DRIP you may not always be buying at valuations you normally would, like KO at a P/E of 50X. If you don't DRIP and you just accumulate the cash you can always allocate the accumulation in your best idea at the time of allocation.
The downside of No DRIP is that it may take you ~12 months to accumulate enough dividend cash to make a sensible purchase in the 0.5% - 1% transaction fee range, and during that 12 months your accumulating cash is sitting around not being put to use and losing value to inflation ... until you're accumulating $500 or so a month in dividends I think it makes the most sense to DRIP
Very nicely explained. Going to go with DRIP. Thanks so much rapidacid. --Paul
Posts: 187
Threads: 14
Joined: Mar 2014
Reputation:
1
(04-28-2015, 01:17 PM)Dividend Watcher Wrote: I'm just going to say "Welcome" for now. I've got to get back to work for now but you've got a nice list started.
Feel free to ask away.
WOW, DW without time to talk. I ALWAYS enjoy the insights of DW.
My gut feeling is when he has the time he will expand on the previous comments.
No DW, that is not a dig on you, you articulate well and I like reading all the good stuff from everyone.
Jim
|
