Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
New to DGF
#1
Hello everyone!

A new member of the forum. Glad to be here.

I'm a 40 yr. (little late to the game), but do want to do the best I can.

Little bit about my financial background: No loans/mortgages/credits, just a rent. I am almost maxing out pension plans and a Roth IRA. I do want to start getting into Dividend Growth stocks; I am planning to open a brokerage in the next few days and start with a seed of 3K, and I am able to allocate at least $1,000/month to start with.

I am a newbie here, but have been educating myself in the last month. I looked into the dividend champions list and other valuation criteria and came up with the following list to choose from:

Johnson & Johnson (JNJ)
Wal-Mart (WMT)
Altria Group Inc (MO)
Aflac Incorporated (AFL)
ConocoPhillips (COP)
Chevron Corporation (CVX)
Procter & Gamble (PG),
Philip Morris International Inc. (PM)
Realty Income Corp. (O)
Kinder Morgan Inc. (KMI)
Royal Dutch Shell plc (ADR)

I would like your input and suggestions if this is appears to be a good start list to pick from. Or if there is a something I am totally missing.

Thanks a lot.

Paul
Reply
#2
Welcome, Paul.
That is a great set of stock you've picked to begin with. All strong names that have a proven record. One thing you would want to keep in mind is diversification - youve picked some names from For the most part, if you have all stocks mentioned there - you are pretty good, but companies are missing from Indsustrials, Utilities for e.g.

Be sure to check out the CCC list put together and updated (every month) by Dave Fish. Its one of the best resource to narrow things down and then provides you a starting point for your research.
http://www.dripinvesting.org/tools/tools.asp

cheers
R2R
Reply
#3
Welcome Paul!

Better late than never -- and 40 isn't all that late. And $1000 per month is nothing to sneeze at. You've still got 20 or 25 years to let compounding do its thing. It will feel excruciatingly slow at first, but this strategy requires patience.

Your starting list looks great. I'd say don't worry too much in the first few years on staying balanced. Put your money in whichever of those great companies is presenting the best value at the moment. For example, in my opinion, this is a poor time to be starting a position in PG. But JNJ seems fairly valued at today's prices. Unfortunately, not many bargains these days.

Anyway, glad you found us and thanks for joining up. Hope we can help you along the way!
Reply
#4
Good list Paul, tho a bit heavy on Energy.

I'd personally swap in XOM for COP and for Royal I think you're looking at RDS.B rather than ADR as ADR just stands for American Depositary Receipt.

Are you going to accumulate cash or do a DRIP? Keep in mind transaction costs depending on your brokerage.

KO, RTN, CL, CLX, GPS, GIS, WEC, HRS, DEO, PEP, MMM, ROK, PH, MSFT, BEN, TROW are some other names I'd offer to put on your radar if you haven't already taken a look

Reply
#5
(04-28-2015, 12:07 PM)stewardinlife Wrote: Johnson & Johnson (JNJ)
Wal-Mart (WMT)
Altria Group Inc (MO)
Aflac Incorporated (AFL)
ConocoPhillips (COP)
Chevron Corporation (CVX)
Procter & Gamble (PG),
Philip Morris International Inc. (PM)
Realty Income Corp. (O)
Kinder Morgan Inc. (KMI)

Royal Dutch Shell plc (ADR)

Welcome to the forum. That is a nice list of stocks to start with. I highlighted my favorites from your list. Also consider KO, PEP or DPS for consumer staples and ROST or TJX if you are looking for a higher growth retail option.

I noticed you don't have any utilities on the list either. Is that personal preference or just that they are overvalued right now? Some ideas there are XEL, D, WEC, VVC.

Overall I think you are off to a great start, and with having $1000 per month to add to your portfolio you should be able to build a diversified portfolio pretty quickly.

Good luck!
My Blog: DGIfortheDIY.com
Seeking Alpha Author Page 
Reply
#6
(04-28-2015, 12:47 PM)EricL Wrote:
(04-28-2015, 12:07 PM)stewardinlife Wrote: Johnson & Johnson (JNJ)
Wal-Mart (WMT)
Altria Group Inc (MO)
Aflac Incorporated (AFL)
ConocoPhillips (COP)
Chevron Corporation (CVX)
Procter & Gamble (PG),
Philip Morris International Inc. (PM)
Realty Income Corp. (O)
Kinder Morgan Inc. (KMI)

Royal Dutch Shell plc (ADR)

Welcome to the forum. That is a nice list of stocks to start with. I highlighted my favorites from your list. Also consider KO, PEP or DPS for consumer staples and ROST or TJX if you are looking for a higher growth retail option.

I noticed you don't have any utilities on the list either. Is that personal preference or just that they are overvalued right now? Some ideas there are XEL, D, WEC, VVC.

Overall I think you are off to a great start, and with having $1000 per month to add to your portfolio you should be able to build a diversified portfolio pretty quickly.

Good luck!


Thanks Eric. Thanks for pointing out the utilities sector ( I missed it totally).

I am still trying to learn, but if you could explain how to evaluate if a stock currently is overvalued or fair/undervalued (for purchase decision).

Thanks again.
Paul

Thank you all for your feedback. Looking forward with excitement.

Paul
Reply
#7
I'm just going to say "Welcome" for now. I've got to get back to work for now but you've got a nice list started.

Feel free to ask away.
=====
How do they get the deer to cross at that yellow road sign?

Reply
#8
(04-28-2015, 01:00 PM)stewardinlife Wrote: I am still trying to learn, but if you could explain how to evaluate if a stock currently is overvalued or fair/undervalued (for purchase decision).

Thanks again.
Paul

That is a much longer topic than what I have time to completely respond to right now. I use FAST Graphs as my primary valuation tool. If you are serious about putting $1000 a month into investments and plan on making regular purchases, the $10 a month for a subscription would be money well spent in my opinion.

In a nutshell, I generally look at PE and dividend yield in historical terms for a company and compare them with expected growth rates. Try to buy when it is trading at or below historical valuations and at or above historical dividend yields and generally you will do well over the long run.
My Blog: DGIfortheDIY.com
Seeking Alpha Author Page 
Reply
#9
(04-28-2015, 01:36 PM)EricL Wrote:
(04-28-2015, 01:00 PM)stewardinlife Wrote: I am still trying to learn, but if you could explain how to evaluate if a stock currently is overvalued or fair/undervalued (for purchase decision).

Thanks again.
Paul

That is a much longer topic than what I have time to completely respond to right now. I use FAST Graphs as my primary valuation tool. If you are serious about putting $1000 a month into investments and plan on making regular purchases, the $10 a month for a subscription would be money well spent in my opinion.

In a nutshell, I generally look at PE and dividend yield in historical terms for a company and compare them with expected growth rates. Try to buy when it is trading at or below historical valuations and at or above historical dividend yields and generally you will do well over the long run.

Thanks for the advice!

rapidacid -- Thanks for the feedback ! I am going with Tradeking. As to accumulate cash or DRIP, would DRIP be beneficial, as I understand it is auto-reinvesting the dividends right? Based on the understanding that I may not need cash right away for at least 15 yrs. or so.
Reply
#10
(04-28-2015, 04:17 PM)stewardinlife Wrote: rapidacid -- Thanks for the feedback ! I am going with Tradeking. As to accumulate cash or DRIP, would DRIP be beneficial, as I understand it is auto-reinvesting the dividends right?

Yea, DRIP means Dividend Reinvesting Plan. Looks like Tradeking is $4.95 a trade which is pretty great, but I'd still go with DRIP which just tells your brokerage "any dividends that are to be paid to me I want the cash to go towards the purchase of new shares, even if they're incremental". There's no $4.95 a trade with DRIP so you're "saving" money on new purchases

If you were to allot your initial $3K to a portfolio that yielded 3.5% you'd "only" get $105 a year in dividend payments and if you waited and accumulated that cash and then made one purchase at the end of the year you'd end up paying $4.95 / $105 = 4.7% in transaction fees ... which is a lot like going to the ATM and it costing you $63 to withdraw $60 of your own money

A good rule of thumb is to try to only pay 0.5 - 1.0% in transaction fees per trade so you get more bang for your hard earned buck ... At $1,000 a month in new money you plan on allocating ( which is really great ) you're looking right at a 0.495% transaction fee ...

If you were to stay disciplined and deposit $1,000 into your brokerage account every month and only make 1 purchase / month for the whole $1,000 I think you'd have a very strong protocol in place

(04-28-2015, 04:17 PM)stewardinlife Wrote: Based on the understanding that I may not need cash right away for at least 15 yrs. or so.

The main talking point of DRIP vs No DRIP is that if you DRIP you may not always be buying at valuations you normally would, like KO at a P/E of 50X. If you don't DRIP and you just accumulate the cash you can always allocate the accumulation in your best idea at the time of allocation.

The downside of No DRIP is that it may take you ~12 months to accumulate enough dividend cash to make a sensible purchase in the 0.5% - 1% transaction fee range, and during that 12 months your accumulating cash is sitting around not being put to use and losing value to inflation ... until you're accumulating $500 or so a month in dividends I think it makes the most sense to DRIP

Reply




Users browsing this thread: 1 Guest(s)