Great topic!
I was a dedicated index fund guy until the big crisis of 2008/2009. I read a lot of news during the crisis, and was fortunate to come across an article that stated emphatically that while it seemed like the world was ending, the low prices were actually the opportunity of a lifetime. That resonated with me a lot, and I started sniffing around at individual companies.
I settled on MO. I agreed that the world was unlikely to end (and if it did, my money was going to be worthless whether it was in stocks or not). And I certainly did not think people were going to stop smoking. And the clincher for me -- the yield. I bought 500 shares of MO in November and December of 2008. The lowest starting yield of the lot was 7.6 percent, and the highest was 8.74 percent. MO had already been the best performing investment for decades, and I could buy it yielding 8 percent?
It was the first individual stock I ever bought.* And it was the value/yield that pulled me in. I didn't understand about dividend growth at the time. But as I watched my investment in MO over the next couple of years, and watched the dividend raises, that's when it clicked for me. I started reading, and started building my DG portfolio in earnest during the summer swoons of 2011 and 2012.
The 100 shares of MO that I bought on December 5, 2008 have more than tripled in value and now sport a yield on cost of 14.2 percent. I doubt I'll ever get to make such a good buy again. (But believe me, if I get the chance, I'll be backing up the truck!) But much more important was the education I got from holding and watching those shares work their magic.
(*UPDATED TO ADD: Actually, that's not quite true. I did waste about $1500 on some long-bankrupt nonsense company during the dot-com boom and bust.)
I was a dedicated index fund guy until the big crisis of 2008/2009. I read a lot of news during the crisis, and was fortunate to come across an article that stated emphatically that while it seemed like the world was ending, the low prices were actually the opportunity of a lifetime. That resonated with me a lot, and I started sniffing around at individual companies.
I settled on MO. I agreed that the world was unlikely to end (and if it did, my money was going to be worthless whether it was in stocks or not). And I certainly did not think people were going to stop smoking. And the clincher for me -- the yield. I bought 500 shares of MO in November and December of 2008. The lowest starting yield of the lot was 7.6 percent, and the highest was 8.74 percent. MO had already been the best performing investment for decades, and I could buy it yielding 8 percent?
It was the first individual stock I ever bought.* And it was the value/yield that pulled me in. I didn't understand about dividend growth at the time. But as I watched my investment in MO over the next couple of years, and watched the dividend raises, that's when it clicked for me. I started reading, and started building my DG portfolio in earnest during the summer swoons of 2011 and 2012.
The 100 shares of MO that I bought on December 5, 2008 have more than tripled in value and now sport a yield on cost of 14.2 percent. I doubt I'll ever get to make such a good buy again. (But believe me, if I get the chance, I'll be backing up the truck!) But much more important was the education I got from holding and watching those shares work their magic.
(*UPDATED TO ADD: Actually, that's not quite true. I did waste about $1500 on some long-bankrupt nonsense company during the dot-com boom and bust.)