My "value" portfolio

[Navi]

I'm surprised that there is so much movement in a dividend portfolio. I expect dividend stocks to be purchased and held for many years unless they start to underperform (either stock price stays below the average for too long, or dividends get slashed). Also, these yields are quite high. I expect the long term dividend stocks to be around 3 or 4%. Is this a unique approach for you in regards to dividend investing?

[ken-do-nim]

(11-02-2021, 05:44 PM)Navi Wrote: I'm surprised that there is so much movement in a dividend portfolio. I expect dividend stocks to be purchased and held for many years unless they start to underperform (either stock price stays below the average for too long, or dividends get slashed). Also, these yields are quite high. I expect the long term dividend stocks to be around 3 or 4%. Is this a unique approach for you in regards to dividend investing?

Hi Navi,

I invest in 6 categories of equities:

1. Triple-leveraged Index ETFs (ex: TECL, SPXL, SOXL)
2. High growth stocks, tiny to no dividend (ex: Tesla, Nvidia)
3. High growth stocks, < 1% dividend (ex: Microsoft, Apple, Sherwin Williams)
4. Moderate growth stocks, dividend between 1 and 3% (ex: Oracle, Johnson & Johnson, Seagate)
5. Low growth high dividend stocks, with a dividend between 3 and 5% (ex: LyondellBasell)
6. Income stocks, dividend north of 6%

The funny thing is many of my income stocks are absolutely crushing growth as well.  OXLC year to date is +53.09%, with a 9.62% yield to match, which will be raising in January.  HTGC is +25.90% year-to-date with aggressive dividend increases.  ARCC is +28.35% year-to-date with a dividend raise this year.  RQI is +40.03% year-to-date, which has caused the yield to drop below 6% because they haven't raised the dividend. CIM is +56.81% year-to-date with dividend increases (might be my stock of the year if I had discovered it earlier).

Of course these funds aren't going to beat the S&P 500 index long term, but 2021 has been a fun ride.

[fenders53]

(11-02-2021, 05:44 PM)Navi Wrote: I'm surprised that there is so much movement in a dividend portfolio. I expect dividend stocks to be purchased and held for many years unless they start to underperform (either stock price stays below the average for too long, or dividends get slashed). Also, these yields are quite high. I expect the long term dividend stocks to be around 3 or 4%. Is this a unique approach for you in regards to dividend investing?

DGI investing typically involves stocks with a yield under 3% these days.  That is actually much higher than SPY average yield.  There are exceptions but the growth part is typically diminished with higher yield stocks, and the total return is usually much less after a few years.  Most dividend portfolios with normal yields are lower beta than the SPY.  If memory serves .85 beta is pretty typical.  It normally shows up in a market crash.  Higher valuation growth stocks and high yielders get smoked compared to a conservative dividend growth portfolio. It all looks good when the bull is running. Terrible stocks are up 75% the past 18 months. It's a rare time to be enjoyed. The recent stats are fairly meaningless.

[ken-do-nim]

(11-02-2021, 06:32 PM)fenders53 Wrote:

(11-02-2021, 05:44 PM)Navi Wrote: I'm surprised that there is so much movement in a dividend portfolio. I expect dividend stocks to be purchased and held for many years unless they start to underperform (either stock price stays below the average for too long, or dividends get slashed). Also, these yields are quite high. I expect the long term dividend stocks to be around 3 or 4%. Is this a unique approach for you in regards to dividend investing?

DGI investing typically involves stocks with a yield under 3% these days.  That is actually much higher than SPY average yield.  There are exceptions but the growth part is typically diminished with higher yield stocks, and the total return is usually much less after a few years.  Most dividend portfolios with normal yields are lower beta than the SPY.  If memory serves .85 beta is pretty typical.  It normally shows up in a market crash.  Higher valuation growth stocks and high yielders get smoked compared to a conservative dividend growth portfolio.  It all looks good when the bull is running.  Terrible stocks are up 75% the past 18 months.  It's a rare time to be enjoyed.  The recent stats are fairly meaningless.

What's happening is that the high yielders are taking much longer to recover from the 2020 drop, so they are still rising back to their previous levels.  Let's take a look at OXLC.  It was on a gentle slope downwards prior to the drop, and now it is coming back to that level.  It will probably peak out at 9 or so before continuing this gentle downwards trend.

[fenders53]

It had a nice ascent.  I was referring to some of the reopening plays.  Severely damaged balance sheets and not profitable until next year.  Might take two years after that to regain their 2019 financials.  Some of them rising to near ATH last fall was hard to comprehend.  When the market is bullish it's bullish.

[ken-do-nim]

(11-03-2021, 07:05 AM)fenders53 Wrote: It had a nice ascent.  I was referring to some of the reopening plays.  Severely damaged balance sheets and not profitable until next year.  Might take two years after that to regain their 2019 financials.  Some of them rising to near ATH last fall was hard to comprehend.  When the market is bullish it's bullish.

Ah yes; like when I bought those cruiseline stocks.  Glad I didn't hold them long.

[fenders53]

(11-03-2021, 07:37 AM)ken-do-nim Wrote:

(11-03-2021, 07:05 AM)fenders53 Wrote: It had a nice ascent.  I was referring to some of the reopening plays.  Severely damaged balance sheets and not profitable until next year.  Might take two years after that to regain their 2019 financials.  Some of them rising to near ATH last fall was hard to comprehend.  When the market is bullish it's bullish.

Ah yes; like when I bought those cruiseline stocks.  Glad I didn't hold them long.

Exactly that.  FOMO is fun if you acknowledge you bought junk and don't over stay your welcome.

[Navi]

(11-02-2021, 06:26 PM)ken-do-nim Wrote:

(11-02-2021, 05:44 PM)Navi Wrote: I'm surprised that there is so much movement in a dividend portfolio. I expect dividend stocks to be purchased and held for many years unless they start to underperform (either stock price stays below the average for too long, or dividends get slashed). Also, these yields are quite high. I expect the long term dividend stocks to be around 3 or 4%. Is this a unique approach for you in regards to dividend investing?

Hi Navi,

I invest in 6 categories of equities:

1. Triple-leveraged Index ETFs (ex: TECL, SPXL, SOXL)
2. High growth stocks, tiny to no dividend (ex: Tesla, Nvidia)
3. High growth stocks, < 1% dividend (ex: Microsoft, Apple, Sherwin Williams)
4. Moderate growth stocks, dividend between 1 and 3% (ex: Oracle, Johnson & Johnson, Seagate)
5. Low growth high dividend stocks, with a dividend between 3 and 5% (ex: LyondellBasell)
6. Income stocks, dividend north of 6%

The funny thing is many of my income stocks are absolutely crushing growth as well.  OXLC year to date is +53.09%, with a 9.62% yield to match, which will be raising in January.  HTGC is +25.90% year-to-date with aggressive dividend increases.  ARCC is +28.35% year-to-date with a dividend raise this year.  RQI is +40.03% year-to-date, which has caused the yield to drop below 6% because they haven't raised the dividend. CIM is +56.81% year-to-date with dividend increases (might be my stock of the year if I had discovered it earlier).

Of course these funds aren't going to beat the S&P 500 index long term, but 2021 has been a fun ride.

Oh nice! Quite diverse in terms of the dividend spread. Funny you mention LyondellBasell, as they are one of my long term equities. Do you just hold on to them simply for dividends? Or are you holding the growth stocks in hopes that you get both capital gains as well as dividends someday? I would only look to growth stocks for capital gains, but it's not a "gift that keeps on giving" so to speak. Once you tap into the gains, it's gone. Curious as to the role it plays for you.

[ken-do-nim]

(11-04-2021, 05:11 PM)Navi Wrote:

(11-02-2021, 06:26 PM)ken-do-nim Wrote:

(11-02-2021, 05:44 PM)Navi Wrote: I'm surprised that there is so much movement in a dividend portfolio. I expect dividend stocks to be purchased and held for many years unless they start to underperform (either stock price stays below the average for too long, or dividends get slashed). Also, these yields are quite high. I expect the long term dividend stocks to be around 3 or 4%. Is this a unique approach for you in regards to dividend investing?

Hi Navi,

I invest in 6 categories of equities:

1. Triple-leveraged Index ETFs (ex: TECL, SPXL, SOXL)
2. High growth stocks, tiny to no dividend (ex: Tesla, Nvidia)
3. High growth stocks, < 1% dividend (ex: Microsoft, Apple, Sherwin Williams)
4. Moderate growth stocks, dividend between 1 and 3% (ex: Oracle, Johnson & Johnson, Seagate)
5. Low growth high dividend stocks, with a dividend between 3 and 5% (ex: LyondellBasell)
6. Income stocks, dividend north of 6%

The funny thing is many of my income stocks are absolutely crushing growth as well.  OXLC year to date is +53.09%, with a 9.62% yield to match, which will be raising in January.  HTGC is +25.90% year-to-date with aggressive dividend increases.  ARCC is +28.35% year-to-date with a dividend raise this year.  RQI is +40.03% year-to-date, which has caused the yield to drop below 6% because they haven't raised the dividend. CIM is +56.81% year-to-date with dividend increases (might be my stock of the year if I had discovered it earlier).

Of course these funds aren't going to beat the S&P 500 index long term, but 2021 has been a fun ride.

Oh nice! Quite diverse in terms of the dividend spread. Funny you mention LyondellBasell, as they are one of my long term equities. Do you just hold on to them simply for dividends? Or are you holding the growth stocks in hopes that you get both capital gains as well as dividends someday? I would only look to growth stocks for capital gains, but it's not a "gift that keeps on giving" so to speak. Once you tap into the gains, it's gone. Curious as to the role it plays for you.

I'm not sure I understand the question, but in general I hope for both price growth and dividend growth.  The poster child of my portfolio is AVGO.  It is up 29% year-to-date, and should be raising their dividend for Q4 because they like to keep it around 3%.

> Once you tap into the gains, it's gone

Not sure what you mean by that either.  Let's say you are retired and have determined you can live on 5% of the portfolio's value annually.  That 5% can come from any combination of dividends and share sales.  As long as the portfolio is growing higher than 5% on average, it will continue to build even while you are in the drawdown phase.  I prefer dividends because they are generally dependable and selling shares stops being effective when the market is down for multiple years in a row, but many, many people sell a share here, a share there, to fund their retirement or supplement their budget.  Anyone drawing down from a 401k annually is selling shares.

[fenders53]

Ken's point is valid.  If you are drawing down more than your total return you have a smaller port value that year. It's psychological though.  Most everyone likes dividends because you can leave your share count alone.  It might eliminate the decision of which shares to sell if the market is down for an extended period and you need to draw in income.

[Navi]

(11-04-2021, 08:57 PM)ken-do-nim Wrote:

(11-04-2021, 05:11 PM)Navi Wrote:

(11-02-2021, 06:26 PM)ken-do-nim Wrote:

(11-02-2021, 05:44 PM)Navi Wrote: I'm surprised that there is so much movement in a dividend portfolio. I expect dividend stocks to be purchased and held for many years unless they start to underperform (either stock price stays below the average for too long, or dividends get slashed). Also, these yields are quite high. I expect the long term dividend stocks to be around 3 or 4%. Is this a unique approach for you in regards to dividend investing?

Hi Navi,

I invest in 6 categories of equities:

1. Triple-leveraged Index ETFs (ex: TECL, SPXL, SOXL)
2. High growth stocks, tiny to no dividend (ex: Tesla, Nvidia)
3. High growth stocks, < 1% dividend (ex: Microsoft, Apple, Sherwin Williams)
4. Moderate growth stocks, dividend between 1 and 3% (ex: Oracle, Johnson & Johnson, Seagate)
5. Low growth high dividend stocks, with a dividend between 3 and 5% (ex: LyondellBasell)
6. Income stocks, dividend north of 6%

The funny thing is many of my income stocks are absolutely crushing growth as well.  OXLC year to date is +53.09%, with a 9.62% yield to match, which will be raising in January.  HTGC is +25.90% year-to-date with aggressive dividend increases.  ARCC is +28.35% year-to-date with a dividend raise this year.  RQI is +40.03% year-to-date, which has caused the yield to drop below 6% because they haven't raised the dividend. CIM is +56.81% year-to-date with dividend increases (might be my stock of the year if I had discovered it earlier).

Of course these funds aren't going to beat the S&P 500 index long term, but 2021 has been a fun ride.

Oh nice! Quite diverse in terms of the dividend spread. Funny you mention LyondellBasell, as they are one of my long term equities. Do you just hold on to them simply for dividends? Or are you holding the growth stocks in hopes that you get both capital gains as well as dividends someday? I would only look to growth stocks for capital gains, but it's not a "gift that keeps on giving" so to speak. Once you tap into the gains, it's gone. Curious as to the role it plays for you.

I'm not sure I understand the question, but in general I hope for both price growth and dividend growth.  The poster child of my portfolio is AVGO.  It is up 29% year-to-date, and should be raising their dividend for Q4 because they like to keep it around 3%.

> Once you tap into the gains, it's gone

Not sure what you mean by that either.  Let's say you are retired and have determined you can live on 5% of the portfolio's value annually.  That 5% can come from any combination of dividends and share sales.  As long as the portfolio is growing higher than 5% on average, it will continue to build even while you are in the drawdown phase.  I prefer dividends because they are generally dependable and selling shares stops being effective when the market is down for multiple years in a row, but many, many people sell a share here, a share there, to fund their retirement or supplement their budget.  Anyone drawing down from a 401k annually is selling shares.

Ok I see what you mean. I think it's moreso that I like to hold on to my shares and never sell them unless I am transferring from one stock to another. My portfolio isn't one geared for retirement; it's a taxable account where I eventually plan on using only dividends as supplemental income, so of course the more shares I have, the more dividend income I can earn. It's probably our difference in stages and objectives why our perspectives may differ.