10 companies that control everything.

[rnsmth]

(04-15-2014, 09:24 PM)NilesMike Wrote:

(04-15-2014, 08:18 AM)rnsmth Wrote:

(04-14-2014, 07:56 PM)NilesMike Wrote: Unfortunately a portfolio of those 10 underperform the S&P.

http://low-risk-investing.com/

No, they do no underperform if your metric is current dividend yield. They outperform by a lot.

I was referring to total return in the last bull run. IMO, measuring anything else doesn't make a lot of sense.

In my opinion, using that as a primary measure does not make much sense.

[hendi_alex]

IMO it doesn't make much sense to own more than 2-3 tickers from this list. Too much overlap, similar exposure. Owning six just complicates things further, and gains no real advantage.

[rnsmth]

(04-16-2014, 07:20 AM)hendi_alex Wrote: IMO it doesn't make much sense to own more than 2-3 tickers from this list. Too much overlap, similar exposure. Owning six just complicates things further, and gains no real advantage.

That is one view. Here is my view - the six I own are core holdings.

KO yields 3.2%. 3 and 5 year dividend growth rates - 8.6 and 8.1%
GIS yields 3.2%. 3 and 5 year dividend growth rates - 11.5 and 12.5%
UL yields 3.3%. 3 and 5 year dividend growth rates - 8.55 and 8.57%
JNJ yields 2.7%. 3 and 5 year dividend growth rates - 6.9 and 7.5%
PG yields 3.2%. 3 and 5 year dividend growth rates - 7.7 and 8.5%
KRFT yields 3.8%. Not even time since the spin-off from KFT to have established those dividend growth rates.

I think you overstate the degree of overlap, but that is a call each of us gets to make. In a sub-2% inflation environment, I am more than delighted with the yield, the dividend growth rates and the dividend growth history of these companies.

This does not feel at all complicated to me.

Yields from yahoo finance, growth rates from dividend investor.com

[hendi_alex]

I don't own any of them, but would consider any of the 3%+ yielding issues as potential covered call plays, if the calls are rich enough. Right now GE, AAPL, and INTC are the only somewhat similar covered calls in place.

As strictly dividend investments, the DG stocks just don't have high enough yields to attract my interest. After all, $1M invested in your selection kicks out a paltry $30,000. Who can live on that? Someone says [yeah, but in 10 years they will be kicking out $60K.] My main question of that is, [ how much will that $60k buy compared to what $30K buys today?] Secondly, how safe are those projected growth rates for the next ten years?

For me, I'll continue to take a bird in the hand, skimming the market for more solid cash flow returns. When and if the big cap DG stocks move back to historically attractive p/e's, they will once again get my attention.

[rnsmth]

(04-16-2014, 09:53 AM)hendi_alex Wrote: I don't own any of them, but would consider any of the 3%+ yielding issues as potential covered call plays, if the calls are rich enough. Right now GE, AAPL, and INTC are the only somewhat similar covered calls in place.

As strictly dividend investments, the DG stocks just don't have high enough yields to attract my interest. After all, $1M invested in your selection kicks out a paltry $30,000. Who can live on that? Someone says [yeah, but in 10 years they will be kicking out $60K.] My main question of that is, [ how much will that $60k buy compared to what $30K buys today?] Secondly, how safe are those projected growth rates for the next ten years?

For me, I'll continue to take a bird in the hand, skimming the market for more solid cash flow returns. When and if the big cap DG stocks move back to historically attractive p/e's, they will once again get my attention.

Here is how I view it:

I have a base of income that is more than adequate to meet our needs. That includes pensions, social security and dividend income. I am not looking to maximize dividend income, but rather am looking to increase income from dividends at a rate significantly higher than inflation from financially strong companies that have a habit of increasing their dividends on an annual basis. When combined with smaller annual increases in pensions and SS, I should be able to stay ahead of inflation for the foreseeable future. In my view, deflation remains a more immediate threat than inflation.

I own a mix of companies whose yields range from 2.1% to 11%. All of them are dividend growth stocks! The average dividend increase in 2013 was around 10%. The current yield of the mix was right at 3.9% the last time I looked, in late March.

I am meeting my goals with a fairly low risk way of going about it. Other folks have different goals and use different tactics to help them meet their goals. That adds to the variety and richness of the discussion.

[hendi_alex]

"Other folks have different goals and use different tactics to help them meet their goals. That adds to the variety and richness of the discussion. "

I agree 100%. The demands for income, the risk tolerance, various sources of income outside of the portfolio, temperament, total return objectives, investing horizon .......... All are so variable that one person's strategy will almost never be a very close match to that of another. Sometimes I play a bit of devils advocate here, mostly because stock boards of a specific theme often get a bit too sanitized, always giving the peachy view of the particular stock or strategy. DG strategies are sound and at least some exposure to such would be appropriate for most investors. On the other hand, IMO, the benefits of DG investing perhaps get over stated many times, and the costs associated with the strategy are likely understated much of the time. Because of that, it is probably a healthy thing to have discussion and debate dealing with weaknesses in the strategy or the benefits of alternative strategies. That way the content of the forum takes on a much more balanced tone where, especially younger investors, may be encouraged to explore more alternatives which give rise to a more diversified set of investing strategies.

[EricL]

(04-16-2014, 10:32 AM)hendi_alex Wrote: "Other folks have different goals and use different tactics to help them meet their goals. That adds to the variety and richness of the discussion. "

I agree 100%. The demands for income, the risk tolerance, various sources of income outside of the portfolio, temperament, total return objectives, investing horizon .......... All are so variable that one person's strategy will almost never be a very close match to that of another. Sometimes I play a bit of devils advocate here, mostly because stock boards of a specific theme often get a bit to sanitized, always giving the peachy view of the particular stock or strategy. DG strategies are sound and at least some exposure to such would be appropriate for most investors. On the other hand, IMO, the benefits of DG investing perhaps get over stated many times, and the costs associated with the strategy are likely understated much of the time. Because of that, it is probably a healthy thing to have discussion and debate dealing with weaknesses in the strategy or the benefits of alternative strategies. That way the content of the forum takes on a much more balanced tone where, especially younger investors, may be encouraged explore more alternatives which give rise to a more diversified set of investing strategies.

Excellent response Alex. While I don't always agree with you, I do appreciate hearing things from your perspective.

I haven't ventured into using options much, and the few times I have didn't work out for me, but I like learning from other people's experiences and you've always been willing to share those with the board.