03-27-2014, 05:25 AM
(03-26-2014, 08:46 PM)EricL Wrote: ARG may not be attractive now with its 1.8% yield and its 22 PE, but don't disparage the low yielders, they can produce some great capital gains. Also some outstanding YOC down the road.
Here is the FAST Graph for Airgas (ARG) had you bought it at the end of 2000 and reinvested dividends along the way. Notice the initial yield of just 2.4%.
It has an average annual return of 24% and a YOC at the end of the period of 26.3%. In 13 years, $10K invested would have turned into nearly $179K.
Now I'm not saying all of your investment money should be tied up in these types of companies, but if you're a younger investor or have more than a decade until you need to start drawing from your investments, you could be missing out on some great capital gains.
I'm 35 and have a 50 position dividend growth portfolio. Right now exactly half of those stocks are yielding under 2.5% with an overall portfolio yield of 2.85% and a YOC after one year of 3.38%.
I think Blue Chip cash cows are great, but there is plenty of room for the high growth stocks in my portfolio as well.
Yeah, at 26, I want to buy a bit of everything. I have no limit on total number of stocks owned.
The way that I look at it is this; I only invest with money that I have left over from my job, whatever I buy is my money going out to work for me. At this point, that is not a lot of money, but over time it will grow as my income rises.
Why wouldn't I want it invested in a great multitude of companies that are spread across a wide avenue of streets within the stock market nation.