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I Love This Dividend Investing Thingie
#21
(03-06-2014, 08:23 AM)hendi_alex Wrote: Performance over a small slice of time can be quite misleading, though I would expect the increasing dividend stream of a portfolio of DG stocks to continue over time.

Yeah, forgot to mention that in my haste to get to all the other information. A bull market covers a lot of sins in portfolio value. Screw the portfolio value. Look at the dividend stream. My portfolio is doing something similar but I just haven't sat down and compiled all that info like I did with the wife's portfolio.

Just as an experiment, I went to Yahoo and created a comparison chart of the S&P500 and a few of the stocks I mentioned when talking about the Vanguard fund. They all yield around or a little above the S&P right now yet they are all on the CCC list. I did it over about 10 years because that's what fiveoh thought he had left before he wanted to retire. Looks like FDO was the clinker in the bunch.

   

(03-06-2014, 09:11 AM)fiveoh Wrote: If my DGI portfolio doesn't match or exceed that, I will have lost money AND potential income.

Good point. I'm not sure the best way to argue that or even if there is a way. For me, I just need to look at the graph above and see there are several ways to beat the S&P and also include growing dividends. The chart doesn't even show anything about the income stream of any of them. To those I listed earlier I'll add TJX, ROST, GWW, maybe FAST and LECO off the top of my head. Would not investing the majority of your portfolio in lower yielding and higher growth and DGR stocks be the thoroughbreds you need to win the race?

I see your point. You have to do what makes sense to you. For me, I know myself. I don't think I can time myself into or out of the market at the appropriate times, I don't like depending on someone else to determine whether I can make the car payment, and I don't have the skill or knowledge to trade around those high yielders like Alex can. He seems to have found a strategy that works for him.

So, after all my hot air, all I can add is I hope you find something that works for you, meets your goals (especially retiring early) and eases your mind.
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How do they get the deer to cross at that yellow road sign?

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#22
I am walloping the S&P on the metric that make the most sense to my style, namely dividend yield. Yield without dividend growth can lead one into the error of yield chasing. I do not know what the dividend growth is among the over 400 S&P 500 companies that are currently paying a dividend, but I am sure I am competitive with it - the estimate from

http://www.factset.com/websitefiles/PDFs...d_12.16.13

is for an 8.5% dividend growth rate in 2014. I think I will be around or a little above, with a portfolio current yield of 3.9%

I am satisfied with that performance. I am pleased to be getting close to half of my annual total return goal from dividends
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#23
(03-05-2014, 05:42 PM)hendi_alex Wrote: I don't trust any single investing philosophy, so only would trust DGI strategies for a max of perhaps 25% of the portfolio value. And as a current retiree, would not buy a single DGI stock for long term hold unless it was yielding north of 4%. If younger would probably consider up the the 25% figure, but would only be buying/accumulating when shares were selling at a steep discount to current values.

Alex,
Excellent points. I am interpreting this as having a portfolio of many "types" of assets. I do have to disagree with the buy and hold 4% or greater comment. Here is a decade look at the S&P vs PG, JNJ, KO, and T. All but T are below 4%:

[Image: big.chart?nosettings=1&symb=sp500&uf=0&t...mocktick=1]

Trying To Beat The Market Is A Fool's Errand

This is a wonderful perspective for those concerned with returns.

http://seekingalpha.com/article/1752582-...ols-errand

Chuck is a Rock Star! OK, can't see him on stage with Bruce Springsteen...but he deserves to be on the Rushmore of Investors next to Graham, Buffett, etc.

The best advice I heard recently was to turn off the Talking Heads on TV, turn off your computer, put the newspaper down and go play with the Grandkids. If you have chosen reliable companies with a good track record they will go up and down with Mr. Market but in the end they will most assuredly be UP.

Contemplate this on your Saturday jog:...if you only purchased stocks that were Dividend Champions (25+ years of dividend increases) or Contenders (10 to 24 years of dividend increases) how would you have faired during the Great Recession of 2007-2009? Hint: Many of those companies ARE STILL Champions or Contenders.

http://dripinvesting.org/tools/tools.asp
There are people who use up their entire lives making money so they can enjoy the lives they have entirely used up
Frederick Buechner
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#24
5o, how have you been the last couple months? I've been having the same concerns myself, and trying to find a balance between dividend and index investing while "getting my feet wet".
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#25
It's been mentioned before, but the concerns I'm hearing are from Short Term results. DG is a Long Term strategy, provided you stick with a select group of companies who have a history of paying and increasing dividends. You have to select the stocks you feel comfortable with and meet your investment goals.

Comparing to an index or market should not be a concern. Those returns are based on short term and don't reflect real dollars to the investor. Only dividends received are real, unless you wish to try the Buy Low, Sell High strategy or some other active trading strategy.

The question should not be matching market or index performance but: "Is the income from my investments growing at a reasonable rate" If the income grows so will the value of your investment, eventually.
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#26
Thanks cannew. I've been reading the SA articles mentioned previously in this thread, and the "Fool's Errand" article was especially helpful. The F.A.S.T. graphs are great visual aids. Would you recommend paying for the basic membership?
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#27
(05-13-2014, 01:32 PM)WRXodus Wrote: 5o, how have you been the last couple months? I've been having the same concerns myself, and trying to find a balance between dividend and index investing while "getting my feet wet".

(05-13-2014, 04:45 PM)cannew Wrote: It's been mentioned before, but the concerns I'm hearing are from Short Term results. DG is a Long Term strategy, provided you stick with a select group of companies who have a history of paying and increasing dividends. You have to select the stocks you feel comfortable with and meet your investment goals.

Comparing to an index or market should not be a concern. Those returns are based on short term and don't reflect real dollars to the investor. Only dividends received are real, unless you wish to try the Buy Low, Sell High strategy or some other active trading strategy.

The question should not be matching market or index performance but: "Is the income from my investments growing at a reasonable rate" If the income grows so will the value of your investment, eventually.

I do not agree with most DG investors that "Comparing to an index or market should not be a concern." As I've stated numerous times it is way easier to buy the index and if total return is greater from the index, you are losing INCOME and appreciation from going with a DG strategy. This is only relevant to someone in the accumulation phase like me. Once retired, I will agree that DG is a superior strategy and you shouldn't be comparing to the index.

WRXodus: My investment dollars are split between DG and index ETFs. Mainly because in my 401k I can only hold index and mutual funds. I like this because it doesn't put all my eggs in one investing strategy. If my DG portfolio underperforms for 5 years I will switch it to index funds as well.

As far as this year goes... the S&P is around a a 3.3% return and my DG portfolio is around 6.3%. Most of the gains came in the last few months when the S&P was down or flat for the month. Some will argue that is when the DG portfolio is supposed to shine and I hope that's the case. However, it may just be a few lucky months.
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#28
I agree with you 5o. Since I'm (early) in the accumulation phase, I feel more comfortable having at least some funds invested for total return. I have about 10% of my portfolio invested in DG stocks for now, but I'd like to work up to 25% or even 50%. With all the talk of a pending correction, or worse, it doesn't hurt to have some DG investments to help at least smooth out an otherwise rougher downturn that a total return portfolio would feel.

What's your ratio of equities to fixed income for the index funds? Since I'm in my late 20s, I think I'm at about 10-12% bonds (45% 5-year duration, 45% new markets income, 10% corporate high-yield)
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#29
(05-14-2014, 09:10 AM)WRXodus Wrote: I agree with you 5o. Since I'm (early) in the accumulation phase, I feel more comfortable having at least some funds invested for total return. I have about 10% of my portfolio invested in DG stocks for now, but I'd like to work up to 25% or even 50%. With all the talk of a pending correction, or worse, it doesn't hurt to have some DG investments to help at least smooth out an otherwise rougher downturn that a total return portfolio would feel.

What's your ratio of equities to fixed income for the index funds? Since I'm in my late 20s, I think I'm at about 10-12% bonds (45% 5-year duration, 45% new markets income, 10% corporate high-yield)



I'm 100% in equities. No bonds at all. I may rotate into some in the future(probably about 10% like you) but at this point they are not attractive to me. In fact I'm 80% in one fund.(VFINX)
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#30
I've been thinking about getting out of bonds, especially the corporate grade and total bond but I like having something to balance out of. I guess time will tell with the tapering of QE! The new market income is pretty enticing, especially with the turn around it's made the last couple years.

Have you been to the Bogleheads' forum at all? It's tough being on both their forum and this one because since they are so gung-ho on indexing, they pretty much mute and poo-poo DG'ers..which can lead to some over-thinking.
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