Did you have a eureka moment with dividend growth investing? If so, what was your "moment?"
My moment was my first tax season as a CPA. Several of the high net worth individuals had huge dividend income. My boss told me that a lot of the clients were receiving more than their original principle every year in dividends. Eureka! Financial life changed.
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Probably when I started playing around with compounding money calculations and realizing that $10,000 in yearly dividends compounding at 8% for 30 years means I could live off $100,000 a year in dividends during retirement if I chose to do so ... and I'd be able to pass off that massive portfolio to my kids to make their lives and their kids lives easier
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Cant remember exactly, but it was a combination of:
dividendgrowthinvestor.com started piquing my interest when it was new; I started seeing some dividend distributions trickle in from my mutual fund holdings; and then found Passive Income Earner (now renamed Dividend Earner) which I perused in and out and started my path in DGI ever since.
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Investing to me has always been about creating passive income, so dividends have always been a big part of my investing philosophy. Seeing as the ultimate goal is to have enough dividend income to survive on that alone, it was pretty much obvious that I need to be picking companies where the dividend is growing steadily so inflation doesn't get the best of me.
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06-12-2015, 02:28 PM
(This post was last modified: 06-12-2015, 02:32 PM by Kerim.)
Great topic!
I was a dedicated index fund guy until the big crisis of 2008/2009. I read a lot of news during the crisis, and was fortunate to come across an article that stated emphatically that while it seemed like the world was ending, the low prices were actually the opportunity of a lifetime. That resonated with me a lot, and I started sniffing around at individual companies.
I settled on MO. I agreed that the world was unlikely to end (and if it did, my money was going to be worthless whether it was in stocks or not). And I certainly did not think people were going to stop smoking. And the clincher for me -- the yield. I bought 500 shares of MO in November and December of 2008. The lowest starting yield of the lot was 7.6 percent, and the highest was 8.74 percent. MO had already been the best performing investment for decades, and I could buy it yielding 8 percent?
It was the first individual stock I ever bought.* And it was the value/yield that pulled me in. I didn't understand about dividend growth at the time. But as I watched my investment in MO over the next couple of years, and watched the dividend raises, that's when it clicked for me. I started reading, and started building my DG portfolio in earnest during the summer swoons of 2011 and 2012.
The 100 shares of MO that I bought on December 5, 2008 have more than tripled in value and now sport a yield on cost of 14.2 percent. I doubt I'll ever get to make such a good buy again. (But believe me, if I get the chance, I'll be backing up the truck!) But much more important was the education I got from holding and watching those shares work their magic.
(*UPDATED TO ADD: Actually, that's not quite true. I did waste about $1500 on some long-bankrupt nonsense company during the dot-com boom and bust.)
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My buddy told me about it and I broke up with my overpriced advisor. I was shopping for index funds and I noticed that a majority of the index funds had the same batch of stocks in the top holdings. I figured there was no point in paying ANY money for an expense ratio when I could just buy those stocks myself. Coincidentally those all happened to be dividend growth stocks.
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At a retirement party for one of my coworkers in his mid-40s. I asked him how he was retiring so early and he said "save most of what you make and invest it in dividend paying stocks". I did some more research on DGI after that and was convinced.
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I've been thinking about it off and on for years with a lot of people (some with finance degrees and one financial planner) telling me, "No, stay with mutual funds, you'll be better off." Well, in early 2014, after 10 to 12 years telling myself to go after divi's I said, "ENOUGH IS ENOUGH" and decided to listen to myself rather then others. I slowly started transferring my ROTH IRA mutual funds to individual divi stocks and could never be happier with my decision. I kept two funds, Vanguard Healthcare and Wellington Funds in the ROTH.
(06-14-2015, 12:45 PM)rayray Wrote: I've been thinking about it off and on for years with a lot of people (some with finance degrees and one financial planner) telling me, "No, stay with mutual funds, you'll be better off." Well, in early 2014, after 10 to 12 years telling myself to go after divi's I said, "ENOUGH IS ENOUGH" and decided to listen to myself rather then others. I slowly started transferring my ROTH IRA mutual funds to individual divi stocks and could never be happier with my decision. I kept two funds, Vanguard Healthcare and Wellington Funds in the ROTH.
When Warren Buffet was interviewing for b-school, the Dean asked for a stock recommendation in the admission interview. Warren gave the Dean the name of a company and the Dean asked why. Warren said, "Because Ben Grahm owns it." The Dean looked at him and said, "Strike 1." Warren then gives the advice, "Never invest in something because someone else is."
I've learned the hard way to only trust my own due-diligence and greatly agree with Uncle Warren's advice. Your personal story reminded me of Warren's story.
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06-20-2015, 09:55 AM
(This post was last modified: 06-20-2015, 10:00 AM by cannew.)
I've mentioned this before and can clearly remember what tuned me into DG investing. After YEARS of trying to find good growth stocks, listening to so called experts, jumping in and trying to get in on a rising tide and generally losing money I came across a little known website called The Connolly Report.
They were no longer taking subscriptions but did list some previous posts and their general strategy. One statement struck home:
"If a company does not pay a dividend, don't buy it. If it Doesn’t grow it's dividend, don't buy it either!"
After researching his statements and following is suggestions, I finally found an investment strategy which made sense and one where I felt I knew what to invest in and what to expect from my investments.
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I was riding the TSLA train a couple years ago, selling it rebuying etc. I made some good money doing that, but then my friend sent me this article.
http://theconservativeincomeinvestor.com...have-been/
And I was hooked with that idea. Then I started researching, joined this site, signed up for SA DIV app rest is history!
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