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DGI For The DIY
(05-01-2020, 10:07 AM)EricL Wrote:
(05-01-2020, 09:49 AM)fenders53 Wrote:
(05-01-2020, 08:30 AM)EricL Wrote: Wrote up a post last night about portfolio weighting. What it means, how to calculate it, and how it can be useful for your portfolio.

I'm going to try to do a few of these types of posts for a beginner's section for investors.

Education Center: Portfolio Weighting

Please let me know if you can think of any topics that would be helpful for people or if you think something else should be added to the post.

I plan on updating and expanding on the dividend reinvestment page in the next week or two.
I have a few suggestions I know you would do very well with.  I'd be happy to give it some feedback before you publish.  Not that you need to answer to me, but we have slightly different tolerances for risk, and your balance sheet abilities are above average.  Anyway, I know these would help new investors.....

1.  Yield traps.  All but the complete novice knows that 15-20% Div from a commodity or financial is nothing but trouble at some point.  The opposite extreme is a fake income investment like Apple or Visa with their token divs.  Dividend investors want some yield NOW.  Explain how the 3% yielder might be better than the 6% after risk and Div growth is factored in.  The early signs your Div is too high.  Should a dividend investor immediately sell when a company cuts or suspends the Div?  That is going to hit most everyone with a lot of stocks in their port.   

2.  Credit ratings 101.  A new Div investor does not want to be confined to AA and better companies.  Few of us do actually.  Where's the line?  What does it mean to be junk or on the verge of junk when the economy goes south.  Things change fast and recent examples are  plentiful.               

Those are the two most important topics that come to mind.

Some good ideas there. Yield traps are a big one. I don't know how many times in the last two years I warned people not to buy airlines and car companies because the yields aren't guaranteed in a cyclical business.

Credit ratings are interesting, but I'm not sure how sophisticated a post I could give on that one. I just look at S&P ratings and debt, and stay away from the ones with lower than BBB credit ratings.
I know you can knock yields traps out of the park.  It might be the most valuable sticky here, and I know the more seasoned investors here would participate in a thread.  It would be a great service to the less experienced.  How many times have you and I tried to help a new investor on this low traffic forum?  Actually, I see members chasing sketchy yields here almost every day.  I do it as well but what I do with 3% of my port and some kid building an entire port full of junk is not the same thing at all.  

Credit rating article doesn't have to be a PHD quality thesis paper to be very valuable.  Everything doesn't have to be "worthy" of S.A. publication immediately.  You could work through the details here with some feedback then put it on your site.  BTW I got a lot of B's in high school and college.  That earned me a fine degree and an early retirement.  So why would I have any idea a BB stock is probably dangerous the next time the economy dips?  Did that sound ridiculous?  I suspect you overestimate the credit rating knowledge of the average new investor.  Being forced to pay loan shark financing rates will destroy an otherwise decent business, even with a well known brand.  That's less obvious to the novice investor than you may realize.                

I know you enjoy writing and have a desire to help new investors.  I have a lot of respect for your motives.
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And while I'm thinking of work for others to do lol ...............

Top 10 financial ratios one should check so they have some idea what they are buying. I know the following info is scattered around the internet. The basic info one should quickly master if they wish to have any long-term success with individual stocks, and more specifically dividend stocks.

Off the top of my head, PE, FWD PE, DIV Yield, DIV % Growth historical, FCF, DIV Pay-out ratio, REV growth historical and projected, Total debt to equity or market cap, credit rating. A person with your knowledge could add 30 more metrics but that wouldn't be appropriate for a 101 level article. I realize the commenters on SA might wreck such an article by over-complicating it, but it would be great on your website, and for the hundreds that monitor but never post this site. I hate that I see so many kids with a new Div port that is 75%+ train-wreck looking for a crash site. They simply have no idea what they were doing other than seeing a large Div payout and hitting the buy button.

Anyway, your past writings give me the impression you are trying to help others rather than impress them. I have definitely learned from you.
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Here's May's post, highlighting my 24% income growth, a summary of recent dividend increase announcements, and my predictions on two upcoming dividend boosts.

I also included links to a few articles from other authors that I enjoyed during the month.

Dividend Growth Digest: May 2020

Enjoy!
My website: DGI For The DIY
Also on: Facebook - Twitter - Seeking Alpha
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Enjoyed the update. This may turn out to be one of your most active years. Disciplined execution of your long-term plan is good, and so is patience, but it can easily become denial. One thing I struggle with is "just how long do I wait for a company to perform". That is usually not an easy decision.

And I see you also practice the art of dancing with ex-div dates to maximize income. I try to do the same when changing or adding to a position. If you have to make a move you might as well grab an extra dividend. Smile
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(05-06-2020, 09:25 AM)fenders53 Wrote: Enjoyed the update. This may turn out to be one of your most active years. Disciplined execution of your long-term plan is good, and so is patience, but it can easily become denial. One thing I struggle with is "just how long do I wait for a company to perform". That is usually not an easy decision.

And I see you also practice the art of dancing with ex-div dates to maximize income. I try to do the same when changing or adding to a position. If you have to make a move you might as well grab an extra dividend. Smile

Free trades from Schwab have definitely made trimming positions easier and more sensible to do. Whether that turns out to be a positive or not is up for debate, but it's nice having the flexibility to move a few shares around without it costing anything.
My website: DGI For The DIY
Also on: Facebook - Twitter - Seeking Alpha
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(05-06-2020, 09:38 AM)EricL Wrote:
(05-06-2020, 09:25 AM)fenders53 Wrote: Enjoyed the update.  This may turn out to be one of your most active years.  Disciplined execution of your long-term plan is good, and so is patience, but it can easily become denial.  One thing I struggle with is "just how long do I wait for a company to perform".  That is usually not an easy decision.

And I see you also practice the art of dancing with ex-div dates to maximize income.  I try to do the same when changing or adding to a position.  If you have to make a move you might as well grab an extra dividend. Smile

Free trades from Schwab have definitely made trimming positions easier and more sensible to do. Whether that turns out to be a positive or not is up for debate, but it's nice having the flexibility to move a few shares around without it costing anything.
It can definitely encourage over-handling of a port.  I add shares to my port every month, and you can bet some of them will be a week before ex-div when current SP makes any sense at all. I know you have no interest in it but same with my conservative option income strategy when I sell puts.  I pick the expiration date.  If I'm going to potentially be forced to buy 100 new shares, I will qualify for the dividend that is coming in a few days or weeks.
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Haven't pulled the trigger yet, but I'm leaning towards selling ROST after the dividend suspension and adding to my positions in AMP, AWK, NEE, and HRL with the proceeds.

They are all underweight positions that I feel pretty confident about maintaining dividends during the pandemic.
My website: DGI For The DIY
Also on: Facebook - Twitter - Seeking Alpha
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(05-22-2020, 02:36 PM)EricL Wrote: Haven't pulled the trigger yet, but I'm leaning towards selling ROST after the dividend suspension and adding to my positions in AMP, AWK, NEE, and HRL with the proceeds.

They are all underweight positions that I feel pretty confident about maintaining dividends during the pandemic.
All of those should at least maintain the dividend.  Retail is likely to be a bumpy ride.  You might wait a year for your dividend to return in ROST.
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(05-23-2020, 06:27 AM)fenders53 Wrote:
(05-22-2020, 02:36 PM)EricL Wrote: Haven't pulled the trigger yet, but I'm leaning towards selling ROST after the dividend suspension and adding to my positions in AMP, AWK, NEE, and HRL with the proceeds.

They are all underweight positions that I feel pretty confident about maintaining dividends during the pandemic.
All of those should at least maintain the dividend.  Retail is likely to be a bumpy ride.  You might wait a year for your dividend to return in ROST.

I read ROST's conference call transcript and it didn't do much to encourage me on its near-term expectations. I think earnings estimates are still too high, and with shares trading at over 20X next year's rosy estimates, I don't see much upside. Management didn't elaborate on the dividend at all, and with a yield of just 1.25% to begin with, I don't expect it to be a priority.

My replacement stocks aren't values either, but I have more faith in their earnings prospects than ROST at this point, and I get paid to hold them in the meantime, which is the goal behind a DGI portfolio to begin with.
My website: DGI For The DIY
Also on: Facebook - Twitter - Seeking Alpha
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(05-23-2020, 08:11 AM)EricL Wrote:
(05-23-2020, 06:27 AM)fenders53 Wrote:
(05-22-2020, 02:36 PM)EricL Wrote: Haven't pulled the trigger yet, but I'm leaning towards selling ROST after the dividend suspension and adding to my positions in AMP, AWK, NEE, and HRL with the proceeds.

They are all underweight positions that I feel pretty confident about maintaining dividends during the pandemic.
All of those should at least maintain the dividend.  Retail is likely to be a bumpy ride.  You might wait a year for your dividend to return in ROST.

I read ROST's conference call transcript and it didn't do much to encourage me on its near-term expectations. I think earnings estimates are still too high, and with shares trading at over 20X next year's rosy estimates, I don't see much upside. Management didn't elaborate on the dividend at all, and with a yield of just 1.25% to begin with, I don't expect it to be a priority.

My replacement stocks aren't values either, but I have more faith in their earnings prospects than ROST at this point, and I get paid to hold them in the meantime, which is the goal behind a DGI portfolio to begin with.
No the replacements are exactly undervalued, but they won't cut IMO, and several of them are well off their highs.  It hasn't worked perfectly but I shoot my Div cutters and ask questions later.  I've never had more div cuts, and my incomes is up for the quarter.  ROST would be gone for now if I owned it.  I'm confident you'll get another chance to buy it back cheaper if you wish but I doubt you do.
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