DGI For The DIY

[fenders53]

The trade decisions you are contemplating or already executed seem rational to me with your goal in mind.

-CBRL dividend will be gone at least for quarters and growth rate may be lackluster for years. A special dividend won't surprise me but that will likely be years. away.

-OXY had to go. It doesn't matter that they may recover. Risk reward should be present in every retirement port, and it's just not their if you are objective. It"s not like you will miss the oil ride since you depoyed the funds to CVX and EOG.

-I think IBM is just going to keep being IBM for the long-term.

-An ABT trim may be good as long as you catch it up high. I would never tell anyone to sell ABT completely, but the Fastgraphs chart don't lie right now. BMY seems like a good destination for the proceeds from an income perspective, and perhaps even SP appreciation over the next few years. Pharma is tough to predict other than trusting the company. We never know who will have the next blockbuster,or just a few too many busts 3-5 years from now.

-I've just not been a fan of WFC for a long time. I see other banks I prefer. I'll leave you alone on that one. I know you don't want to give up that WFC Div.

I think your annual income growth goal will become more challenging going forward, but a goal is never a bad idea. Best of luck to you as always.

[EricL]

Thanks for sharing your thoughts fenders.

I can see why people wouldn't be a fan of WFC, but I think its a good value here, and being able to pick it up at a near 7% yield is a heck of a deal. It announced its next dividend payment yesterday, so if it was going to cut, that would have been the time to do it. I bought today to get it ahead of the May 7 ex-div.

Decided to hold IBM until ex-div next week, and then will likely sell and move the proceeds into AVGO and BMY.

I agree that the income growth goal could be difficult to maintain. Which is partly the reason for some of these moves. Re-balancing is part of my approach, as I can sell off overweight stocks that have run up and are trading at lofty valuations, and then use the proceeds to add to underweight stocks that are trading at fair value and offering higher yields.

Got a 10% raise from AWK this morning, and will hopefully be getting one from AMP yet this week as well. KMI announced a 5% raise, which coupled with dividend reinvestment at a 6.7% yield gives double-digit income growth as well.

Will be interesting to see what AAPL does. It is due for an increase announcement as well.

Best,

Eric

[fenders53]

(04-29-2020, 11:52 AM)EricL Wrote: Thanks for sharing your thoughts fenders.

I can see why people wouldn't be a fan of WFC, but I think its a good value here, and being able to pick it up at a near 7% yield is a heck of a deal. It announced its next dividend payment yesterday, so if it was going to cut, that would have been the time to do it. I bought today to get it ahead of the May 7 ex-div.

Decided to hold IBM until ex-div next week, and then will likely sell and move the proceeds into AVGO and BMY.

I agree that the income growth goal could be difficult to maintain. Which is partly the reason for some of these moves. Re-balancing is part of my approach, as I can sell off overweight stocks that have run up and are trading at lofty valuations, and then use the proceeds to add to underweight stocks that are trading at fair value and offering higher yields.

Got a 10% raise from AWK this morning, and will hopefully be getting one from AMP yet this week as well. KMI announced a 5% raise, which coupled with dividend reinvestment at a 6.7% yield gives double-digit income growth as well.

Will be interesting to see what AAPL does. It is due for an increase announcement as well.

Best,

Eric

I will enjoy that AWK raise as well.  One of a few stocks you put me on to.  The reality is WFC is probably shenanigan safer now.    They know they messed up, they are on the radar and consumers forget the news in a year or two.  I closed a rental property sale last week.  My attorney and I chatted it up some about stocks.  He knows my port is large and the only stock he asked my opinion of is WFC lol.  I told him you gotta love that Div and left it there.  You and I don't need to agree on every stock.  It's just an investment, not something important like disagreeing on baseball teams.    It's my belief it's beneficial if we raise concerns to each other on this forum.   

I only bring up the income goal because I don't want you to over-react to missing an arbitrary goal.  It's a lofty one long term.  SA will get over it lol.  Maybe you'll only get 8% some years, and 12% others.  I wouldn't let it drive my every decision.  That said I'll drop a Div cutter in a heartbeat.  It fails to support the strategy.  It's rare when you don't get a better chance to get back in later at a better price if you desire to.

[EricL]

Wrote up a post last night about portfolio weighting. What it means, how to calculate it, and how it can be useful for your portfolio.

I'm going to try to do a few of these types of posts for a beginner's section for investors.

Education Center: Portfolio Weighting

Please let me know if you can think of any topics that would be helpful for people or if you think something else should be added to the post.

I plan on updating and expanding on the dividend reinvestment page in the next week or two.

[fenders53]

(05-01-2020, 08:30 AM)EricL Wrote: Wrote up a post last night about portfolio weighting. What it means, how to calculate it, and how it can be useful for your portfolio.

I'm going to try to do a few of these types of posts for a beginner's section for investors.

Education Center: Portfolio Weighting

Please let me know if you can think of any topics that would be helpful for people or if you think something else should be added to the post.

I plan on updating and expanding on the dividend reinvestment page in the next week or two.

I have a few suggestions I know you would do very well with.  I'd be happy to give it some feedback before you publish.  Not that you need to answer to me, but we have slightly different tolerances for risk, and your balance sheet abilities are above average.  Anyway, I know these would help new investors.....

1.  Yield traps.  All but the complete novice knows that 15-20% Div from a commodity or financial is nothing but trouble at some point.  The opposite extreme is a fake income investment like Apple or Visa with their token divs.  Dividend investors want some yield NOW.  Explain how the 3% yielder might be better than the 6% after risk and Div growth is factored in.  The early signs your Div is too high.  Should a dividend investor immediately sell when a company cuts or suspends the Div?  That is going to hit most everyone with a lot of stocks in their port.   

2.  Credit ratings 101.  A new Div investor does not want to be confined to AA and better companies.  Few of us do actually.  Where's the line?  What does it mean to be junk or on the verge of junk when the economy goes south.  Things change fast and recent examples are  plentiful.               

Those are the two most important topics that come to mind.

[EricL]

(05-01-2020, 09:49 AM)fenders53 Wrote:

(05-01-2020, 08:30 AM)EricL Wrote: Wrote up a post last night about portfolio weighting. What it means, how to calculate it, and how it can be useful for your portfolio.

I'm going to try to do a few of these types of posts for a beginner's section for investors.

Education Center: Portfolio Weighting

Please let me know if you can think of any topics that would be helpful for people or if you think something else should be added to the post.

I plan on updating and expanding on the dividend reinvestment page in the next week or two.

I have a few suggestions I know you would do very well with.  I'd be happy to give it some feedback before you publish.  Not that you need to answer to me, but we have slightly different tolerances for risk, and your balance sheet abilities are above average.  Anyway, I know these would help new investors.....

1.  Yield traps.  All but the complete novice knows that 15-20% Div from a commodity or financial is nothing but trouble at some point.  The opposite extreme is a fake income investment like Apple or Visa with their token divs.  Dividend investors want some yield NOW.  Explain how the 3% yielder might be better than the 6% after risk and Div growth is factored in.  The early signs your Div is too high.  Should a dividend investor immediately sell when a company cuts or suspends the Div?  That is going to hit most everyone with a lot of stocks in their port.   

2.  Credit ratings 101.  A new Div investor does not want to be confined to AA and better companies.  Few of us do actually.  Where's the line?  What does it mean to be junk or on the verge of junk when the economy goes south.  Things change fast and recent examples are  plentiful.               

Those are the two most important topics that come to mind.

Some good ideas there. Yield traps are a big one. I don't know how many times in the last two years I warned people not to buy airlines and car companies because the yields aren't guaranteed in a cyclical business.

Credit ratings are interesting, but I'm not sure how sophisticated a post I could give on that one. I just look at S&P ratings and debt, and stay away from the ones with lower than BBB credit ratings.

[fenders53]

(05-01-2020, 10:07 AM)EricL Wrote:

(05-01-2020, 09:49 AM)fenders53 Wrote:

(05-01-2020, 08:30 AM)EricL Wrote: Wrote up a post last night about portfolio weighting. What it means, how to calculate it, and how it can be useful for your portfolio.

I'm going to try to do a few of these types of posts for a beginner's section for investors.

Education Center: Portfolio Weighting

Please let me know if you can think of any topics that would be helpful for people or if you think something else should be added to the post.

I plan on updating and expanding on the dividend reinvestment page in the next week or two.

I have a few suggestions I know you would do very well with.  I'd be happy to give it some feedback before you publish.  Not that you need to answer to me, but we have slightly different tolerances for risk, and your balance sheet abilities are above average.  Anyway, I know these would help new investors.....

1.  Yield traps.  All but the complete novice knows that 15-20% Div from a commodity or financial is nothing but trouble at some point.  The opposite extreme is a fake income investment like Apple or Visa with their token divs.  Dividend investors want some yield NOW.  Explain how the 3% yielder might be better than the 6% after risk and Div growth is factored in.  The early signs your Div is too high.  Should a dividend investor immediately sell when a company cuts or suspends the Div?  That is going to hit most everyone with a lot of stocks in their port.   

2.  Credit ratings 101.  A new Div investor does not want to be confined to AA and better companies.  Few of us do actually.  Where's the line?  What does it mean to be junk or on the verge of junk when the economy goes south.  Things change fast and recent examples are  plentiful.               

Those are the two most important topics that come to mind.

Some good ideas there. Yield traps are a big one. I don't know how many times in the last two years I warned people not to buy airlines and car companies because the yields aren't guaranteed in a cyclical business.

Credit ratings are interesting, but I'm not sure how sophisticated a post I could give on that one. I just look at S&P ratings and debt, and stay away from the ones with lower than BBB credit ratings.

I know you can knock yields traps out of the park.  It might be the most valuable sticky here, and I know the more seasoned investors here would participate in a thread.  It would be a great service to the less experienced.  How many times have you and I tried to help a new investor on this low traffic forum?  Actually, I see members chasing sketchy yields here almost every day.  I do it as well but what I do with 3% of my port and some kid building an entire port full of junk is not the same thing at all.  

Credit rating article doesn't have to be a PHD quality thesis paper to be very valuable.  Everything doesn't have to be "worthy" of S.A. publication immediately.  You could work through the details here with some feedback then put it on your site.  BTW I got a lot of B's in high school and college.  That earned me a fine degree and an early retirement.  So why would I have any idea a BB stock is probably dangerous the next time the economy dips?  Did that sound ridiculous?  I suspect you overestimate the credit rating knowledge of the average new investor.  Being forced to pay loan shark financing rates will destroy an otherwise decent business, even with a well known brand.  That's less obvious to the novice investor than you may realize.                

I know you enjoy writing and have a desire to help new investors.  I have a lot of respect for your motives.

[fenders53]

And while I'm thinking of work for others to do lol ...............

Top 10 financial ratios one should check so they have some idea what they are buying. I know the following info is scattered around the internet. The basic info one should quickly master if they wish to have any long-term success with individual stocks, and more specifically dividend stocks.

Off the top of my head, PE, FWD PE, DIV Yield, DIV % Growth historical, FCF, DIV Pay-out ratio, REV growth historical and projected, Total debt to equity or market cap, credit rating. A person with your knowledge could add 30 more metrics but that wouldn't be appropriate for a 101 level article. I realize the commenters on SA might wreck such an article by over-complicating it, but it would be great on your website, and for the hundreds that monitor but never post this site. I hate that I see so many kids with a new Div port that is 75%+ train-wreck looking for a crash site. They simply have no idea what they were doing other than seeing a large Div payout and hitting the buy button.

Anyway, your past writings give me the impression you are trying to help others rather than impress them. I have definitely learned from you.

[EricL]

Here's May's post, highlighting my 24% income growth, a summary of recent dividend increase announcements, and my predictions on two upcoming dividend boosts.

I also included links to a few articles from other authors that I enjoyed during the month.

Dividend Growth Digest: May 2020

Enjoy!

[fenders53]

Enjoyed the update. This may turn out to be one of your most active years. Disciplined execution of your long-term plan is good, and so is patience, but it can easily become denial. One thing I struggle with is "just how long do I wait for a company to perform". That is usually not an easy decision.

And I see you also practice the art of dancing with ex-div dates to maximize income. I try to do the same when changing or adding to a position. If you have to make a move you might as well grab an extra dividend.

[EricL]

(05-06-2020, 09:25 AM)fenders53 Wrote: Enjoyed the update. This may turn out to be one of your most active years. Disciplined execution of your long-term plan is good, and so is patience, but it can easily become denial. One thing I struggle with is "just how long do I wait for a company to perform". That is usually not an easy decision.

And I see you also practice the art of dancing with ex-div dates to maximize income. I try to do the same when changing or adding to a position. If you have to make a move you might as well grab an extra dividend.

Free trades from Schwab have definitely made trimming positions easier and more sensible to do. Whether that turns out to be a positive or not is up for debate, but it's nice having the flexibility to move a few shares around without it costing anything.

[fenders53]

(05-06-2020, 09:38 AM)EricL Wrote:

(05-06-2020, 09:25 AM)fenders53 Wrote: Enjoyed the update.  This may turn out to be one of your most active years.  Disciplined execution of your long-term plan is good, and so is patience, but it can easily become denial.  One thing I struggle with is "just how long do I wait for a company to perform".  That is usually not an easy decision.

And I see you also practice the art of dancing with ex-div dates to maximize income.  I try to do the same when changing or adding to a position.  If you have to make a move you might as well grab an extra dividend.

Free trades from Schwab have definitely made trimming positions easier and more sensible to do. Whether that turns out to be a positive or not is up for debate, but it's nice having the flexibility to move a few shares around without it costing anything.

It can definitely encourage over-handling of a port.  I add shares to my port every month, and you can bet some of them will be a week before ex-div when current SP makes any sense at all. I know you have no interest in it but same with my conservative option income strategy when I sell puts.  I pick the expiration date.  If I'm going to potentially be forced to buy 100 new shares, I will qualify for the dividend that is coming in a few days or weeks.