06-11-2019, 10:00 AM
I had a first read through of this yesterday on SA, and it's a really great article (have it bookmarked now). Thanks for putting it all together.
I have been guilty of passing up growthy dividend stocks because the valuation was "too high." As an antidote to this, I have worked the Chowder number into my purchase decisions, which helps with assessing value of a DGI stock with low yield (due to share price running high), but high dividend growth that is matched by earnings growth. That said, I still think a valuation can be too high for a purchase, even of a solid dividend payer. BA over $400 is a good example. Sure, I probably wouldn't mind purchasing at $400 if I looked back on it 20 years down the road, but that same capital could likely have been allocated to another solid dividend payer that wasn't as richly valued (like WFC). I suspect WFC will still be around, too big to fail (just like BA), and quite successful in 20 years. No one will remember the current issues with consumer accounts in 5 years, much less 20, just like no one remembers the SEC accounting investigation opened into BA back in 2016, when it was trading for $120/share (last time I bought shares).
The universe of quality DGI stocks is broad. Today's dogs are tomorrow's darlings, and vice-versa.
I have been guilty of passing up growthy dividend stocks because the valuation was "too high." As an antidote to this, I have worked the Chowder number into my purchase decisions, which helps with assessing value of a DGI stock with low yield (due to share price running high), but high dividend growth that is matched by earnings growth. That said, I still think a valuation can be too high for a purchase, even of a solid dividend payer. BA over $400 is a good example. Sure, I probably wouldn't mind purchasing at $400 if I looked back on it 20 years down the road, but that same capital could likely have been allocated to another solid dividend payer that wasn't as richly valued (like WFC). I suspect WFC will still be around, too big to fail (just like BA), and quite successful in 20 years. No one will remember the current issues with consumer accounts in 5 years, much less 20, just like no one remembers the SEC accounting investigation opened into BA back in 2016, when it was trading for $120/share (last time I bought shares).
The universe of quality DGI stocks is broad. Today's dogs are tomorrow's darlings, and vice-versa.