05-21-2015, 04:59 PM
(05-21-2015, 01:45 PM)EricL Wrote:(05-21-2015, 01:16 PM)stewardinlife Wrote: Also, what are your thoughts on not owning JNJ? It appears to have almost close to double-digit DGR for the last decade for its close to 3% yield. It's being touted as the "one" that every portfolio should have or something like thatThanks.
JNJ was overvalued when I put my portfolio together and hasn't been cheap enough yet to convince me to add it. I recently added GILD and ABBV over it due to their higher growth rates and in ABBV's case, higher dividend yield.
If I was relying on my dividends for income, JNJ would be at the top of the list. It has a decent near 3% yield and at AAA rated is as safe as they come. But its payout ratio has steadily climbed from the mid 30's to near 50% and the dividend growth rate has slowly fallen from the mid teens in the early 2000's to a 6-8% range in recent years. With earnings projected to grow at a 5% rate going forward, I don't expect dividend growth to be much higher than 5-7% unless something fundamentally changes to increase the earnings growth rate.
So basically, 3% yield plus 5-7% growth just doesn't quite meet my criteria at this time, but if it drops some more and gets that yield up a bit more I may have to take a closer look.
Great. Discussing with you has been very helpful.
I am going to be tuning my portfolio as I progress in understanding(hopefully) the various philosophies.
One of the criteria that I am looking in terms of the overall portfolio is to aim for at least 10-12% ( x% div yield + y% div growth) on quality companies. Is this something that is okay to incorporate, considering I will have around 20 more yrs. to actively contribute to my portfolio? Thanks!