DGI For The DIY

[EricL]

(01-29-2021, 07:07 PM)fenders53 Wrote: No matter what you do, use DEC 31 as a closeout point for the rule change and future tracking. I would definitely pool my dividends. The justification for DRP is now in the past. I stopped dripping quite some time ago. You have decent income now and it be fun to pick where to put the next share.

Don't beat yourself up for rimming your winners. You are viewing it through bull market glasses. What if you had trimmed a stock like BA just before they started crashing jets, or tech stocks before a hard tech correction?. I would stick to my general rules. Div cutters no longer fit the criteria. You could trim slow growers too but that cuts back on some growthier stocks and the CAP appreciation you've benefitted more from than income growth.

Just have fun, whatever you decide. Build something that won't get crushed in a protracted stagnant economy.

I'm thinking I will let my last two dividends for January reinvest, and then make the switch on Monday. I can then modify the spreadsheet so that going forward I will have another column after my price returns for dividends paid, which can then be used to calculate total return for each position.

From this point forward I plan to hold all the current positions in the portfolio, and then make monthly or bi-monthly adds to bring some of smaller positions up in size, and also to perhaps add some names like APD, AMT, NKE, SHW, TSCO, MED, LHX, etc. that I've watched or own in other accounts but haven't been able to add here.

While I still strongly believe the DRIP is a good way to build long-term wealth, I prefer to be more active and this allows me to do that while also leaving my existing positions alone to grow. No more trimming to rebalance, just let them grow where they may. I've sold off what's turned out to be 36 shares of AAPL and 8 shares of MSFT in the spirit of rebalancing, and that's turned out to be a mistake.

[fenders53]

(01-30-2021, 11:46 AM)EricL Wrote:

(01-29-2021, 07:07 PM)fenders53 Wrote: No matter what you do, use DEC 31 as a closeout point for the rule change and future tracking.  I would definitely pool my dividends. The justification for DRP is now in the past.  I stopped dripping quite some time ago.  You have decent income now and it be fun to pick where to put the next share.  

Don't beat yourself up for rimming your winners.  You are viewing it through bull market glasses.  What if you had trimmed a stock like BA just before they started crashing jets, or tech stocks before a hard tech correction?.  I would stick to my general rules.  Div cutters no longer fit the criteria.  You could trim slow growers too but that cuts back on some growthier stocks and the CAP appreciation you've benefitted more from than income growth.    

Just have fun, whatever you decide.  Build something that won't get crushed in a protracted stagnant economy.

I'm thinking I will let my last two dividends for January reinvest, and then make the switch on Monday. I can then modify the spreadsheet so that going forward I will have another column after my price returns for dividends paid, which can then be used to calculate total return for each position.

From this point forward I plan to hold all the current positions in the portfolio, and then make monthly or bi-monthly adds to bring some of smaller positions up in size, and also to perhaps add some names like APD, AMT, NKE, SHW, TSCO, MED, LHX, etc. that I've watched or own in other accounts but haven't been able to add here.

While I still strongly believe the DRIP is a good way to build long-term wealth, I prefer to be more active and this allows me to do that while also leaving my existing positions alone to grow. No more trimming to rebalance, just let them grow where they may. I've sold off what's turned out to be 36 shares of AAPL and 8 shares of MSFT in the spirit of rebalancing, and that's turned out to be a mistake.

In the spirit of debating things for no other reason other than our entertainment....  if the market got hit and AAPL or MSFT had pulled back 25% more than whatever you flipped into, would you then be prescient today?  Not really IMO.  We all look in the rearview mirror but don't dwell on it.  I know you are a long term guy but today you seem to be dwelling on 2020, about the craziest year ever.  You are going to DRP into something, so I see no advantage to auto dripping.  You hold a lot of positions for the size of this port.  Most every year there may be one that is heading down a wrong path.  Holding is generally good, and never selling is not good.  You are talented enough at this to direct where the new purchase lands, and you will be right often enough to make a meaningful difference in return over the next 10 years.  Auto-investing in mediocre made sense when commissions were in play.  I'd rather buy a full share of a great stock that dipped this month because the sector happens to be out of favor.  

And active is fun.  It does fit your personality and desire to research new opportunities..

[ken-do-nim]

I too am just realizing the freedom of $0 commission.  I like your idea of turning off the dividend reinvestment and deciding for yourself where to allocate the funds.  What I've been doing is buying 1 share of any stock I'm interested in.  I think it's better than a Watch list to have an actual connection to the stock at hand.  Then when I'm in a position to add more income to the portfolio, I can choose to bring one of those 1 share assets up to a real investment or not.

[fenders53]

I do that as well. It does cause me to pay close attention. It's difficult for me to add to a stock that launches after initial purchase but owning a few shares of a company that runs 20% in a few months surely isn't the worst problem an investor will experience. I recently started a new growth port and that happened immediately. If you own enough stocks like Eric does, there will almost always be a few flailing and he has the skills to identify one worthy of another share. With mechanical DRP you knowingly buying high. It looks ok enough during a protracted bull run. It's a game of inches and adding that share with a better entry yield matters if you do it often.

[EricL]

Here's my end of year update for the portfolio on Seeking Alpha.

DGI For The DIY: 2020 Dividend Portfolio Review

Enjoy!

[ken-do-nim]

I just skimmed it and I'll give it a close read later, but looks really interesting so far. I especially like how you've plotted out the plan through 2044, when dividend income reaches $26k (which would be amazing!). Gotta figure $26k dividends + say $24k social security + say $25k drawn from retirement accounts = $75k which is hopefully enough to retire with depending on lifestyle. Congrats on reaching your goal amount in each of the first 4 years!

Also it's great that you have the entire portfolio posted so I can study it.

[EricL]

Yeah the $26k would be a nice boost to retirement income if I can make it. I will have a 401k and ESOP program at work, and my wife is four years away from her twenty in the Air Guard, so she will have a pension at retirement as well.

Here's a link to my portfolio page on my website, it has an embedded spreadsheet that gives more information if you are interested.

[fenders53]

Always a good read. It will be more fun with DRP shut off. I would even be on board with your no trim policy if it was done with some upper limit of sanity. You use Fast Graphs and know what that means. If you have forgotten the market will remind you eventually.

[ken-do-nim]

Yeah that embedded spreadsheet was also in your annual report but that link's one is a bit easier to read. There's definitely names in there I'm not familiar with so I have a lot of research to do

[EricL]

(03-01-2021, 11:41 AM)fenders53 Wrote: Always a good read.  It will be more fun with DRP shut off.  I would even be on board with your no trim policy if it was done with some upper limit of sanity.  You use Fast Graphs and know what that means.  If you have forgotten the market will remind you eventually.  

I'll do my best to keep sanity in check, but I've learned over the last fifteen years that I've made many more mistakes selling good companies than buying them.

It's one thing to have a giant nest egg you need to protect at retirement, but in accumulation stage like me, I'm learning that cutting winners back isn't the best way to maximize returns.

You only need to find a couple MNST, NFLX, AAPL, CMG, AMZN, etc. over the years to do well. But constantly trimming them off is counterproductive.

I've trimmed what's turned out be 36 shares of AAPL and nearly half my MSFT position over the last several years in this portfolio A few replacements have fared okay, but not nearly as well as those two. I think this new approach will help keep me from making that mistake again, while still allowing me to scratch the itch to tinker with my quarterly purchases.

[fenders53]

(03-01-2021, 12:07 PM)EricL Wrote:

(03-01-2021, 11:41 AM)fenders53 Wrote: Always a good read.  It will be more fun with DRP shut off.  I would even be on board with your no trim policy if it was done with some upper limit of sanity.  You use Fast Graphs and know what that means.  If you have forgotten the market will remind you eventually.  

I'll do my best to keep sanity in check, but I've learned over the last fifteen years that I've made many more mistakes selling good companies than buying them.

It's one thing to have a giant nest egg you need to protect at retirement, but in accumulation stage like me, I'm learning that cutting winners back isn't the best way to maximize returns.

You only need to find a couple MNST, NFLX, AAPL, CMG, AMZN, etc. over the years to do well. But constantly trimming them off is counterproductive.

I've trimmed what's turned out be 36 shares of AAPL and nearly half my MSFT position over the last several years in this portfolio A few replacements have fared okay, but not nearly as well as those two. I think this new approach will help keep me from making that mistake again, while still allowing me to scratch the itch to tinker with my quarterly purchases.

I hear what you are saying.  We all have a few sells we regret if we've been in this game for long.  I try to trim gradually if it's a winner, and I am learning to get out of denial and trim losers much faster.  That acceptance can be even harder for some of us.  That's been my biggest mistake.  

But as I have stated before our opinions are jaded by about the longest bull market in history, or whatever happens to occur next.  I ran with MSFT during it's true growth period and trimmed nothing, then I eventually wished I had trimmed it 15yrs earlier than I did and put it in just about any Aristocrat.  I had 15 years to get back into MSFT after they showed signs of finally turning it around.  My real lesson was valuation matters eventually.  All that said, hindsight is 20/20, and I am just stirring conversation because you take the time to share your portfolio with us.  I could just give you an obligatory "Congrats" but I actually track what you are doing.  I'll enjoy watching you add to your port.  It doesn't matter if it's just a few shares.  The decision process has the same value IMO because it matters to you.

[EricL]

(03-02-2021, 08:41 AM)fenders53 Wrote:

(03-01-2021, 12:07 PM)EricL Wrote:

(03-01-2021, 11:41 AM)fenders53 Wrote: Always a good read.  It will be more fun with DRP shut off.  I would even be on board with your no trim policy if it was done with some upper limit of sanity.  You use Fast Graphs and know what that means.  If you have forgotten the market will remind you eventually.  

I'll do my best to keep sanity in check, but I've learned over the last fifteen years that I've made many more mistakes selling good companies than buying them.

It's one thing to have a giant nest egg you need to protect at retirement, but in accumulation stage like me, I'm learning that cutting winners back isn't the best way to maximize returns.

You only need to find a couple MNST, NFLX, AAPL, CMG, AMZN, etc. over the years to do well. But constantly trimming them off is counterproductive.

I've trimmed what's turned out be 36 shares of AAPL and nearly half my MSFT position over the last several years in this portfolio A few replacements have fared okay, but not nearly as well as those two. I think this new approach will help keep me from making that mistake again, while still allowing me to scratch the itch to tinker with my quarterly purchases.

I hear what you are saying.  We all have a few sells we regret if we've been in this game for long.  I try to trim gradually if it's a winner, and I am learning to get out of denial and trim losers much faster.  That acceptance can be even harder for some of us.  That's been my biggest mistake.  

But as I have stated before our opinions are jaded by about the longest bull market in history, or whatever happens to occur next.  I ran with MSFT during it's true growth period and trimmed nothing, then I eventually wished I had trimmed it 15yrs earlier than I did and put it in just about any Aristocrat.  I had 15 years to get back into MSFT after they showed signs of finally turning it around.  My real lesson was valuation matters eventually.  All that said, hindsight is 20/20, and I am just stirring conversation because you take the time to share your portfolio with us.  I could just give you an obligatory "Congrats" but I actually track what you are doing.  I'll enjoy watching you add to your port.  It doesn't matter if it's just a few shares.  The decision process has the same value IMO because it matters to you.

Thanks, I always appreciate the feedback and discussion from you. That's why I started writing about my journey, as a way to help others following along, but also to learn more myself through discussion with people who've been doing it a lot longer than I have.