01-28-2014, 08:20 AM
The tone of a board often steers individuals in extreme ways. Obviously there is a love of dividends on a dividend investing board. IMO it is healthy to have some discussion of growth allocation, growth candidates, other investment vehicles outside of the typical DG exposure. It would seem prudent to me, that for diversification sake, a person should view DG exposure as an investment class whose portfolio weighting should be determined based upon the individual's circumstances.
For our portfolio there is an emphasis on dividend stocks. The stocks are usually chosen based upon yield and distribution coverage rather than DG considerations. I visually scan the dividend history, but don't attempt to quantify growth rates. For me, current yield is more important than dividend growth. Stocks with 3% and lower yield simply hold no interest, as my target is to average near 6%. It has now become very difficult to do that without taking on too much risk. Any lower yielding positions are generally used as covered call plays in order to boost the cash flow yield above 6%. Because of our focus, very few DG stocks are under consideration, and even if they are, just as covered call plays. I will eventually buy some DG stocks, but only when the yields generally move into the 4%-5% range or higher. IMO we will see single digit p/e's again, and that will be the time to make a significant adjustment to our portfolio structure.
For our portfolio there is an emphasis on dividend stocks. The stocks are usually chosen based upon yield and distribution coverage rather than DG considerations. I visually scan the dividend history, but don't attempt to quantify growth rates. For me, current yield is more important than dividend growth. Stocks with 3% and lower yield simply hold no interest, as my target is to average near 6%. It has now become very difficult to do that without taking on too much risk. Any lower yielding positions are generally used as covered call plays in order to boost the cash flow yield above 6%. Because of our focus, very few DG stocks are under consideration, and even if they are, just as covered call plays. I will eventually buy some DG stocks, but only when the yields generally move into the 4%-5% range or higher. IMO we will see single digit p/e's again, and that will be the time to make a significant adjustment to our portfolio structure.
Alex