07-06-2014, 04:37 PM
(07-06-2014, 11:36 AM)Robert_NL Wrote: I currently have 17 positions to monitor and I know some have over 30 positions to check, but where do these people get the time from to monitor them AND do research on new companies? How do you monitor your positions?
Here's a quote from my Mentor.
"When they are at least fairly priced (we use a stocks long term dividend average as a guide), I purchase certain common stocks with a long record of dividend growth and hold them for years, waiting for the dividend and the yield to grow. In the long run, yield provides most of the return. I also use yield, mainly, to determine value.
Some general ideas on the essence of dividend growth investing: You must believe it produces superior returns. You must stay on track. You can't waiver. You must buy only common stocks and only common stocks that pay a dividends. And further, only common stocks with a good dividend growth record. Load up on them when they are fairly priced…certainly not all at once. Valuation of the stock at the time you buy is most important. How do you know if they are fairly priced? I use a couple of value measures: yield, Graham's price and the cyclically adjusted (ten-year) price to earnings ratio. It's the growing income you are after (not high yield) so you do not have to eat into capital when you retire. Mutual funds do not produce much income: they eat into your capital to pay you. It's the long term income your assets produce that is important. You do not want a fixed income, do you? Motivation: Once you've owned a dividend growth stock for a decade or so, you will most likely be beating the market with you income alone. You must be brave to take the first step. Once your portfolio is set up, it pretty well runs itself…benign neglect.
Look at dividend growth investing this way. You will end up receiving much more than the original yield (dividend/price). As the dollar amount of your dividend increases over the years, you can say you are earning an increasing dividend yield on your original invested capital (higher dividend/ original price)".
I've followed his advice for years and I'm very satisfied with the returns and income growth over the years. Currently I only hold 21 stocks and will cut at least two at some point. I monitor the companies dividend, dividend growth and payout ratio, that's it. Over the past three years I've only made 5 trades and three were to buy. I'm waiting and hoping for a correction to buy more of what I already own.