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Hi all
#11
(01-13-2016, 09:17 AM)Roadmap2Retire Wrote: Hi CD,
To answer your other question on how much will you bring in at the start and how long will it take to reach $10K or $20K...it depends (as is the answer usually).

To start off, your dividend will be very low - so the first year or two can be a bit discouraging and it might seem like its not worth it. But as you build your portfolio - your income will grow and gets compounded over time. Addition of new money coupled with the increase in dividends will keep that income growing.

When I started off, I used a rule of thumb for projections (just for the sake of managing my expectations) as an average starting dividend yield of 3% and growing at 7-8% per year. So, for e.g., if you invest $10K now, with those assumptions you can expect to make $300 in dividends the first year, $324 next year etc. Hope that gives you an idea.

I also made sure that I had a wide spectrum of dividend payers in my portfolio. Some companies with low starting yield but high growth of dividend rate (look at companies like SBUX, V, DIS etc), and some companies with a high starting yield and low dividend growth rate (companies like T, VZ, SO etc) and then some companies which fit right in the middle with decent starting yield and decent dividend growth rate (companies like JNJ, WFC etc).

Read as much as you can. Pay close attention to diversification and never put eggs in one basket no matter how lucrative an investment might seem and may appear to be a once-in-a-lifetime opportunity.
Hope that helps.

Thanks for the tips. So when you look at the dividend growth rate, is that something that the company reports or do you calculate it using historical data? I tried to run some projections of portfolio growth with those average growth rates (so, "If I invest xx/year, 3% div, these divs grow at 7-8%/yr) but I'm not sure what that equation needs to look like. Will do some digging.

(01-13-2016, 11:28 AM)crimsonghost747 Wrote: Welcome. Glad to see yet another young person joining us, it's best to start early!

One thing I would like to correct you on though. You said that everything seems to be on sale... well yeah it looks like that when looking at the past few months or a year but when you take a look over a longer timeframe you will see that a lot of the numbers don't seem that cheap afterall. Sure there are some good ones but in general the P/E doesn't seem to be that cheap compared with historical P/E numbers. Most of us tend to buy a little all the time but of course be careful not to spend too much right now because it looks cheap.

I started when I was 23 and been doing this a few years now. I didn't have as much as $2k per month to invest so you can expect your dividends to grow a little faster than mine did. Here is how it went for me.
2012: 111.60 euros
2013: 993.47 euros
2014: 1557.78 euros
2015: 1783.10 euros
2016: estimate is around 2100 euros.

All of that is before taxes. So as you can see it goes up, you will probably manage it faster than I did as you have more capital to invest but that should give you some example of what it can look like.
Good luck with it and keep us updated! Smile

Crimson, thanks for the snapshot of your growth! I love seeing these kinds of summaries as they give a concrete picture of how these investments grow over time.
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#12
Quote:Thanks for the tips. So when you look at the dividend growth rate, is that something that the company reports or do you calculate it using historical data? I tried to run some projections of portfolio growth with those average growth rates (so, "If I invest xx/year, 3% div, these divs grow at 7-8%/yr) but I'm not sure what that equation needs to look like. Will do some digging.

Its based on historical data. One of the best resources available is Dave Fish's CCC list, where he maintains and updates (monthly) data on dividend growers.
The document called US Dividend Champions is available here: http://www.dripinvesting.org/tools/tools.asp

There are also documents maintained by a couple other folks for Canada and UK dividends (see same page).

There are four dividend growth rate numbers available: 1-yr, 3-yr, 5-yr and 10-yr (columns AL to AO in the doc). Of course you can calculate it yourself with the raw data. So, if for some reason you choose to look at 7-yr dividend growth rate, you will have to calculate yourself (but the raw data is also present there).
1-yr and 3-yr are a bit too small of a window, so use atleast 5-yr dividend growth rate window for your calculations.
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