(12-22-2021, 07:50 AM)rnsmth Wrote: I do not do sector and phase of the economic cycle investing. I do dividend safety investing. I own most sectors, but am light in some. That is okay with me.
When Simply Safe Dividends determines a company's safety score, they are not looking at the next year or two, they are looking across an economic cycle. They are not perfect, but if you limit yourself to Very Safe rated companies, there is about a 3% chance that any of those companies will have a dividend cut, based on historical data. Does not get much better than that, in my view. Those with a Safe range rating also do pretty darn good. Plenty of mid-yield dividend growers in those ranks, that are easily found using their screening tool.
For me, "Augmenting" (deployment of new capital to increase share count, Overweight / underweight of specific securities) my DG portfolio by taking into account The full business cycle ensures I do not increase share in an investment security when sector valuations are too high. Example; I would much rather concentrate increasing share count in my consumer staple securities when they are out of favor and on the cheap during the business cycle, Then slowly begin to overweight the staples as the business economic cycle transitions into the late phase (Capture of increased dividends plus Total Return).
"One of those most important things is knowing where we stand in the cycle. I don’t believe in forecasts. We always say, We never know where we’re going, but we sure as hell ought to know where we are. I can’t tell you what’s going to happen tomorrow, but I should be able to assess the current environment, and that’s the kind of thinking that helped us prepare for the crisis. I think that the two most important things are where we stand in the cycle, and the broad subject of risk, and in fact, where we stand in the cycle is the primary determinant of risk". - Howard Marks (Mastering the Market Cycle - Getting The Odds On Your Side)
All I can say is this approach has worked enormously well for me for decades.
Peace and Penguins
- Scoot