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JaxRed
09-22-2012, 09:53 AM
In our stocks/retirement thread we discussed starting a small ROTH investment. One poster suggested a long term plan to get finances in order before starting to invest. I respectfully disagree. I think there in nothing wrong with making small investments in the market as you get your finances in order.

Reminder: I am a proponent of investing in only Dividend Growth Stocks.

Along these lines I wanted to get my adult daughter started in the market. So we have set up an actual Dividend Growth Roth IRA account, and I'll share it's progress with you. We are depositing $100 a month.

https://docs.google.com/spreadsheet/ccc?key=0AseuTZh70U-SdFlZWE54Rm80djREdDU5cEdDekRQR0E

We just had our first purchase in August. We bought 3 shares of a BDC (Business Development Company) called Main Street Capital. Symbol MAIN. The primary reason I chose MAIN is because it pays a monthly dividend (which is unusual) and I wanted the portfolio to show some dividend growth from compounding immediately. (although the first dividend won't show up till late November).

The spreadsheet shows 2 figures: One is total dividends per year, the other is 75% of those dividends. I suggest you withdraw only 75% upon retirement so that your income will continue to grow.

After one month the yearly income is $5.40 and the 75% withdrawal figure is $4.05 a year. So.....enough for 1 person to go to McDonald's once a year and grab a couple items off the value menu. With no compounding, the expected yearly total 30 years from now is $1,458 (at $100 a month).

I'll share the progress of this account. We'll be buying our September shares this week.

Notice I do not discuss the total $ value of the portfolio. What's important is the income stream it produces.

kaldaniels
09-22-2012, 01:31 PM
I would respectfully ask why ignoring portfolio value is ok, especially for a retirement account that I assume won't be touched for many years.

To me the goal of a retirement account is to hopefully have x dollars on y date, at which income stream can then be addressed.

JaxRed
09-22-2012, 07:10 PM
That is the traditional model. Build up as much money as possible, then close to retirement switch to conservative investments and live off the stream and or take money out to live on. However that depends on being "lucky" in your retirement income. For example people that retired in early 2008 versus 2009 when the value was 50% less. In addition, stock market folks refer to the last decade as the "lost decade" because after all the ups and downs, people ended up just treading water.

But not Dividend Growth Investors, they did great over the last decade (they do well every decade). Everyone knows the value of compounding. Essentially, Dividend Growth Investors are going for Double Compounding. Buying stocks that pay dividends and get compounding, and then the stocks are raising their dividends.

AtomicDumpling
09-22-2012, 09:10 PM
This should be an interesting case study. We will expect an update every month for the next 30 years!

Reds Nd2
09-23-2012, 04:14 PM
Did you leave the remaining $11.41 in cash? Are you concerned with the bite that monthly commissions will be taking out of the total return? It looks like the dividends won't even cover the cost of buying the stocks. Are you going to reinvest the dividends?

JaxRed
09-23-2012, 04:39 PM
Yes the remaining money is in cash. Yes, I've set up Dividend Reinvesting. Although the commissions are small ($4.50), after 3 months I'll probably let 3 months worth of cash accumulate before investing, to reduce the impact of commissions. But I wanted to "get it started".

kaldaniels
09-23-2012, 06:18 PM
That is the traditional model. Build up as much money as possible, then close to retirement switch to conservative investments and live off the stream and or take money out to live on. However that depends on being "lucky" in your retirement income. For example people that retired in early 2008 versus 2009 when the value was 50% less. In addition, stock market folks refer to the last decade as the "lost decade" because after all the ups and downs, people ended up just treading water.

But not Dividend Growth Investors, they did great over the last decade (they do well every decade). Everyone knows the value of compounding. Essentially, Dividend Growth Investors are going for Double Compounding. Buying stocks that pay dividends and get compounding, and then the stocks are raising their dividends.

I don't doubt that you have all good intentions and are trying to help all of us, so I am not trying to give you too hard of a time. But doesn't putting all of your IRA into one company (semantics aside you are investing in one company) involve hoping for some "luck". Why not go for a dividend stock based ETF?

I am a novice investor, but 2 things should be addressed by you if you ask me

1) Dividends are subject to change.

2) Dividends are "baked" into the stock price

Reading your posts you almost put off a "this can't go wrong" vibe. Perhaps I am reading into that too much?

I'm not anti-dividend, as I have a small amount in a dividend based ETF myself, but it just seems you poo-poo any other route of investing, no?

bucksfan2
09-23-2012, 08:31 PM
I don't doubt that you have all good intentions and are trying to help all of us, so I am not trying to give you too hard of a time. But doesn't putting all of your IRA into one company (semantics aside you are investing in one company) involve hoping for some "luck". Why not go for a dividend stock based ETF?

I am a novice investor, but 2 things should be addressed by you if you ask me

1) Dividends are subject to change.

2) Dividends are "baked" into the stock price

Reading your posts you almost put off a "this can't go wrong" vibe. Perhaps I am reading into that too much?

I'm not anti-dividend, as I have a small amount in a dividend based ETF myself, but it just seems you poo-poo any other route of investing, no?

1. Dividends are subject to change. Just 4 years or so ago the best dividend stocks were hammered and most of the yields cut or take away. The financial sector had been a great dividend payer for decades but after the financial crisis their dividneds were pretty much done away with. The thing is I am a proponent of staying active. Not buying or selling on a whim but having a strict set of rules and abide by them. If you are looking at dividend growers and they don't grow then it may be time to unload the stock. If the stock cuts its dividend it may be time to cut bait.

2. This is a common concern/complaint about dividends. In theory I would have to agree with you. There is a theory out there about maximizing your tax implications by buying the day after the dividend ex-date. The theory is the day after the stock has its ex-date it decreases by the amont of the dividend. It sounds good but it doesn't always work that way. Dividend stocks are impacted by the overall market as well. I have seen stocks on their exdate nose dive with the general market as well as rising when it should be falling. What I have noticed is that in a sideways or down market dividends are a very powerful tool. Over the course of a year if you own a dividend payer your going to have that yield regardless of any other market factor. My first stock I ever bought was AEP, after one year the stock was flat but I had an extra 5% as well as a dividend increase over that year.

medford
09-24-2012, 08:46 AM
JaxRed, Is there room (ie would you mind) if we took your suggestions of dividend stocks and "broke it down" a bit. Due to kids/life, my neither my Roth IRA nor my invidivual portfolio has recieved many additional funds. All of my retirement savings have gone into my 401(k) as well as my wife's STARs program. However, we're probably in line to get back to adding money into my Roth as well as starting one up for her in the next year, wouldn't mind the some practice looking into invest prior to the point where I'm adding outside of my work sponsered plans.

JaxRed
09-24-2012, 07:33 PM
I don't doubt that you have all good intentions and are trying to help all of us, so I am not trying to give you too hard of a time. But doesn't putting all of your IRA into one company (semantics aside you are investing in one company) involve hoping for some "luck". Why not go for a dividend stock based ETF?

I am a novice investor, but 2 things should be addressed by you if you ask me

1) Dividends are subject to change.

2) Dividends are "baked" into the stock price

Reading your posts you almost put off a "this can't go wrong" vibe. Perhaps I am reading into that too much?

I'm not anti-dividend, as I have a small amount in a dividend based ETF myself, but it just seems you poo-poo any other route of investing, no?

We only made our 1st $100 purchase. Of course it's only in 1 stock. Eventually I assume we'll end up at around 20 stocks in the portfolio.

1) Dividends are subject to change.: Absolutely. Which is why you should choose stocks with a long history of raising stocks every year. There are lists out there showing those stocks: Dividend Champions, Dividend Aristocrats, etc, that lists stocks like Coke and Pepsi that have raised their dividend every year for 40 years.

http://www.dividendgrowthinvestor.com/2011/12/dividend-aristocrats-list-for-2012.html

Those will be the kind of stocks we'll be concentrating on.

2) Dividends are "baked" into the stock price. If by this your saying the price is inflated by the dividend I'll just say I disagree. Most dividend growth stocks are considered "stodgy". And as far as the price of the stock being reduced by the dividend after ex-dividend... that's the circle of life. Company makes $1.00 profit in a quarter, pays .50c to the shareholder, price goes down .50c.

Next quarter they make another $1.00, in meantime price has gone back up to reflect the increase in revenue to the company and the impending dividend, and the dividend is declared, stock price is reduced. Lather, rinse, repeat....

I don't like ETF's because none are specialized as Dividend Growth, and I like to monitor and control the investment.

"Reading your posts you almost put off a "this can't go wrong" vibe. Perhaps I am reading into that too much?"

Only a little... not my first rodeo. I've now come to believe this is absolutely the best investment plan for stocks. (not my only investments, for example I own 2 rental homes).

So.... not trying to convince the naysayers. But I'm hoping that along the way, a few people will notice that this investment technique results in an ever -increasing stream of retirement income and that they will give it a try.

JaxRed
09-24-2012, 07:36 PM
JaxRed, Is there room (ie would you mind) if we took your suggestions of dividend stocks and "broke it down" a bit. Due to kids/life, my neither my Roth IRA nor my invidivual portfolio has recieved many additional funds. All of my retirement savings have gone into my 401(k) as well as my wife's STARs program. However, we're probably in line to get back to adding money into my Roth as well as starting one up for her in the next year, wouldn't mind the some practice looking into invest prior to the point where I'm adding outside of my work sponsered plans.

The spreadsheet you see is the ACTUAL investments that my daughter has set up with my advice, but if you want me to set up a practice account and have an accompanying spreadsheet I'll be more than happy to assist.

We set up my daughters account with TradeKing (online). They were inexpensive for commissions. I'll see if they have a free sample account system.

medford
09-25-2012, 10:07 AM
No jax,

what I'm thinking, if I have the time, is to take the stocks you pick, or perhaps suggestions elsewhere in dig into them, see what their returns, dividends, growth, etc... have trended the last 5-10 years. However, what I don't want to do, should the situation arise, is insert doubt into a company that you've picked for your daughter to invest in. I don't mind being told where I'm wrong or why someone sees something a different way, that may rub you wrong on a thread that you've created.

In otherwords, I don't want to step on your toes, but think there is an opportunity to delve a little deeper to not only educate myself, but others who might be interested. I don't want to pump anything you've picked or myself or others have suggested to keep the thread friendly, I don't want to trash anything either just to prove "I'm" right. Just a look at the facts, concerns, hopes, etc...

JaxRed
09-25-2012, 11:00 AM
I see. If you want education on Dividend Growth Investing I would suggest visiting "Seeking Alpha" http://seekingalpha.com/dashboard/investing_income

Seeking Alpha is a contributor based Investing web site. Every topic is discussed there. I initially found it while investing in Real Estate.

The link I gave you takes you specifically to the area where they discuss Dividends and Dividend Growth Investing. They will do in depth analysis of individual stocks also.

If you are into investing.... it's a fascinating read.

JaxRed
10-04-2012, 08:46 AM
Our Sep $100 purchase was made. 3 more shares of MAIN. I'll probably do the same this month, and then wait till I have 3 months of money in before I next buy anything. It cost me $4.95 in commissions whether it's 3 shares or 9, so might as well reduce overall commissions. Dividends don't show up till mid November.

But yearly income after 1 month $4.05. After 2 months $8.10

bucksfan2
10-04-2012, 09:35 AM
Jax at what point do you start to diversify. I don't know enough about MAIN but at what point do you stat to add another dividend payer?

Do you look at lower yielding dividend growers or high yielding dividend growers? A company like VFC or IBM are known dividend growers but have yields right now less than 2%. Compare that with a VZ, T, SO, or AEP with yields of 4.5% or higher.

Redlegs23
10-04-2012, 12:39 PM
For example people that retired in early 2008 versus 2009 when the value was 50% less.

If people were less than a year from retirement and sitting in pure aggressive growth investments that would be pretty foolish.

JaxRed
10-04-2012, 01:25 PM
Jax at what point do you start to diversify. I don't know enough about MAIN but at what point do you stat to add another dividend payer?

Do you look at lower yielding dividend growers or high yielding dividend growers? A company like VFC or IBM are known dividend growers but have yields right now less than 2%. Compare that with a VZ, T, SO, or AEP with yields of 4.5% or higher.

I only have $200 invested !!! I'll start diversifying after I have 10 shares or so.

Seeking Alpha which I highly recommend had an article discussing the "Periodic Table of Dividends" balancing yield versus growth on dividends.

http://seekingalpha.com/article/874831-periodic-table-of-dividend-contenders


This chart is excellent also

http://www.tessellation.com/dividends/streaks.html

bucksfan2
10-04-2012, 01:45 PM
I only have $200 invested !!! I'll start diversifying after I have 10 shares or so.

Seeking Alpha which I highly recommend had an article discussing the "Periodic Table of Dividends" balancing yield versus growth on dividends.

http://seekingalpha.com/article/874831-periodic-table-of-dividend-contenders


This chart is excellent also

http://www.tessellation.com/dividends/streaks.html

I was more interested in your strategy than your $ figures. When I first started investing I bought two companies and then added more as more funds became available. Once I got to the 10-15 stocks I quite adding individual stocks and started adding to my positions when a stock was sold off in a knee jerk reaction.

I was more curious to your method of dividend growers. I read an article in one magazine a few months back about Coke and how its yield of 3% now isn't all that impressive but if you had gotten in and held and collected all the dividend increases over the past decade your current yield would be much much greater.

JaxRed
10-04-2012, 02:20 PM
The key (long run) is having stocks that increase dividends yearly so that you can get double compounding. Initially since I wanted to demonstrate monthly increases I chose a stock that paid monthly, has a nice yield, and does increase dividends.

medford
10-05-2012, 09:34 AM
bucksfan2,

Don't quote me exactly, but I read an article a couple of weeks back that talked about Coke. If you had bought 1 share of Coke in 1920(something) and re-invested all of the dividends, you'd have $5 mil today. I think that is what Jax is trying to get at, companies w/ a strong history of growing dividends every year so that your 3% yield today will turn into a 5% yield (on your initial investment) tomorrow, a 10% yield (again on your initial investment) down the road and so on and so forth.

JaxRed
11-05-2012, 09:21 AM
Well, another month has passed and we now have added our 3rd purchase of $100 worth of MAIN. Our future yearly income has gone from

Aug 2012 - $4.05
Sep 2012 - $8.10
Oct 2012 - $12.15

We have yet to receive any dividends, as our Aug purchase took place just after the ex-dividend date, so Nov 13th (and every month thereafter) we'll get some dividends.

Starting with our end of Nov deposit, we'll wait to bundle 3 months worth in order to cut down on commissions. We paid $4.95 a trade, and that occurs whether we have $100 or $300 to invest, so waiting 3 months gives us an extra $10 to invest.

bucksfan2
11-05-2012, 09:44 AM
In an attempt to simplify my portfolio I am looking to get rid of one of these and put the proceeds in the other. RAI and PM.

RAI is Reynolds American Cigarette in the US. Pays a higher dividend 5.74% but are pretty much in a mature market.

PM is Phillip Morris International. They don't pay as high of a yield 3.91% but have more room to grow in the emerging market.

I am leaning to sell in my RAI and investing in PM. I think RAI is a safer play but PM has more growth opportunities as well as paying a nice dividend. Thoughts?

kaldaniels
11-05-2012, 09:52 AM
1) Why didn't you get paid for the Sept ex-dividend day?

2) Am I correct that you have been buying 3 shares a month, if so, what is the exact amount you have invested each month, fees included.

3) It is very wise to bundle purchases (I would almost argue for bundling more than 3 months worth). You are getting killed paying 5 dollars for each 100 dollar transaction.

4) MAIN has a 6% yield right now, which is awesome. But generally when a dividend is that high, it comes with risk. Otherwise, money would be flying into the stock.

JaxRed
11-05-2012, 11:00 AM
1) Why didn't you get paid for the Sept ex-dividend day?

2) Am I correct that you have been buying 3 shares a month, if so, what is the exact amount you have invested each month, fees included.

3) It is very wise to bundle purchases (I would almost argue for bundling more than 3 months worth). You are getting killed paying 5 dollars for each 100 dollar transaction.

4) MAIN has a 6% yield right now, which is awesome. But generally when a dividend is that high, it comes with risk. Otherwise, money would be flying into the stock.


1. Although this was our "August money" we didn't get set up till Sep 18th, just missing the ex-dividend date. So this month we'll have 6 shares for the Oct 17th ex-dividend date dividend. And 9 for next months.

2. We put $100 in each month but couldn't buy $100, between the cash in the account and the shares we are down by basically the commission. But this is about building a continuously growing dividend stream, not worrying in the short term about whether we are up or down. Long term, it will be up.

Since we are just getting started and wanted to establish a increasing flow of dividends, I did a couple things differently starting out. One is paying a commission each time, which I'll stop doing this month. And in the future I may go beyond 3 months.

3. One of the other things I did starting out was pick a stock that paid monthly and had a nice return. That limited my choices, but I am VERY comfortable with the risk involved with MAIN.

JaxRed
11-05-2012, 11:07 AM
In an attempt to simplify my portfolio I am looking to get rid of one of these and put the proceeds in the other. RAI and PM.

RAI is Reynolds American Cigarette in the US. Pays a higher dividend 5.74% but are pretty much in a mature market.

PM is Phillip Morris International. They don't pay as high of a yield 3.91% but have more room to grow in the emerging market.

I am leaning to sell in my RAI and investing in PM. I think RAI is a safer play but PM has more growth opportunities as well as paying a nice dividend. Thoughts?

Most of the people that discuss this over at Seeking Alpha prefer PM. In my wife's portfolio we were in MO for a while and most seemed to prefer PM to MO.

Here's an article today from Seeking Alpha about them

http://seekingalpha.com/article/977541-smoking-dividends-in-cigarettes?source=yahoo

medford
11-05-2012, 12:05 PM
If you're looking for monthly dividends, may be worth looking at GOOD (Gladstone), they've been paying out monthly dividends since I bought them in 2006 (and who knows how long before that) and managed to keep it thru the downturn in real estate stock. Paying out over 8% currently.

JaxRed
11-05-2012, 12:10 PM
I will definitely explore them. I own a couple REITS in my wife's portfolio, and was considering Realty Corp (O) as next purchase for my daughter (this portfolio).

medford
11-05-2012, 12:31 PM
IIRC, you were looking for companies that regularly increased their dividend. GOOD has kepth theirs pretty steady since 2006 when I bought it (.12 a month for a long period, .125 a month for the last 2-3 years) so it doesn't fall into that class. That could be a part of the large hit real estate took the last 4-6 years, perhaps its a statement along that they kept their dividend in place.

As a REIT, as I'm sure you know but others may not, it is required to return a certain % of all earnings back to its investors to hold onto the REIT classification.

Another place to look, though I'm not sure if any pay out monthly are Timber companies. Not only do they have a renewable resource (trees) that grow in value every year they remain in the ground, but they have the property that the trees stand on that generally increase in value every year (though that has been challenged the last 4-6 years)

again, thanks for posting this, its certainly interesting to watch.

Boston Red
11-06-2012, 12:28 AM
The key (long run) is having stocks that increase dividends yearly so that you can get double compounding. Initially since I wanted to demonstrate monthly increases I chose a stock that paid monthly, has a nice yield, and does increase dividends.

Love this strategy. It's (at least partially) why I own ADP, INTC, WMT, MCD, PG, and MCD. In 20 years (I'm 36), ideally dividends would account for a significant chunk of my financial needs.

bucksfan2
11-06-2012, 10:52 AM
IIRC, you were looking for companies that regularly increased their dividend. GOOD has kepth theirs pretty steady since 2006 when I bought it (.12 a month for a long period, .125 a month for the last 2-3 years) so it doesn't fall into that class. That could be a part of the large hit real estate took the last 4-6 years, perhaps its a statement along that they kept their dividend in place.

As a REIT, as I'm sure you know but others may not, it is required to return a certain % of all earnings back to its investors to hold onto the REIT classification.

Another place to look, though I'm not sure if any pay out monthly are Timber companies. Not only do they have a renewable resource (trees) that grow in value every year they remain in the ground, but they have the property that the trees stand on that generally increase in value every year (though that has been challenged the last 4-6 years)

again, thanks for posting this, its certainly interesting to watch.

I own NLY, a "REIT" that pays a heck of a dividend but is pretty volatile. I have wavered on replacing it with IRC but have yet to do so. The problem is NLY deals CMO and CDO's and its dividend is all over the place.

Plum Creek Timber is a a Timber company that I have looked at in the past but haven't bought. I am heavy utilities and IMO this is along the lines of a utility. You would think that at timber company would benefit from housing picking up but you never know.

I am hoping to create a portfolio of solid dividend companies going forward. I like INTC but for some reason have never been able to pull the trigger on it.

medford
11-06-2012, 11:15 AM
I've had Plum Creek Timber on my 'watch' list for as long as I can remember, however I've never purchased any. either didn't have money to add, or it was a little higher than i would have liked.

bucksfan2
11-06-2012, 11:47 AM
I've had Plum Creek Timber on my 'watch' list for as long as I can remember, however I've never purchased any. either didn't have money to add, or it was a little higher than i would have liked.

I don't really worry about something being a "little higher" than I would have liked. As long as everything seems reasonable I don't fret over a couple of percent. Too many times I have had my eyes on something that was a little too expensive only to see it continue to climb.

Just looked at PCL again and saw that 37 P/E and know how you feel. Thats a high P/E for a dividend paying stock. The thing is if I went strictly by that I would have never gotten into VZ (which is one of my favorite stocks around) because it carries a 40+ P/E. I guess the way I look at thing with cheap trades you can get in and out of stocks much easier. I am young and if I make an impulse buy at a high price I can get out quickly, have time on my side, and can tax loss harvest the losses if need be.

JaxRed
11-17-2012, 10:09 AM
Well, since I am going to wait 3 months to complete our next purchase of stocks in order to reduce commission cost, and we got our first dividend, November's "in the books".

8/31/2012 $4.05
9/28/2012 $8.10
10/31/2012 $12.15
11/16/2012 $12.20

So without any purchases, and with a very bad market, our income stream increased. In addition, we got a pleasant surprise. MAIN declared their regular (unchanged) dividend for the Jan-Mar quarter of .15 a share. But they also announced a special (one-time) dividend of .35 a share in January.

JaxRed
12-18-2012, 07:23 PM
OK, change of plans. I decided to make our next purchase of stock in December rather than January for 3 reasons

1. If I'm going to purchase quarterly it just seems more 'normal' to have the quarter coincide with the calendar quarter. So we'll do 3 months next time and have the quarter end in March. And with this purchase of 2 months worth of stock ($100 per month) we'll end in December.

2. MAIN is having a special dividend in January. Just makes sense to buy now to take advantage of that. Ex-Dividend is 1/2/2013 and market is closed on 1/1/2013 so you need to buy in December.

3. MAIN just had a secondary offering which lowered the price a bit, so bought now to take (a little) advantage of that.

On Dec 15th we had another dividend/reinvestment and this time it resulted in an increase in monthly dividends of .06. Last month it was .05. The compounding is starting !!

And then today we were able to buy 7 more shares, bringing us to a total of 16.08 shares of MAIN.

And our income per year without touching principle has gone to $21.71 !

Date Yearly Withdrawal
8/31/2012 $4.05
9/28/2012 $8.10
10/31/2012 $12.15
11/16/2012 $12.20
12/15/2012 $12.26
12/18/2012 $21.71

When we purchase again in March, I'll be buying something else besides MAIN as we start to diversify.

Bob Sheed
12-31-2012, 09:55 AM
I have been following this thread and wanted to say thanks for posting!

I am curious though... If I am understanding, taxes on Dividends are about to go from 19% to 47%. Is this true? And if so, does that affect your strategy at all?

JaxRed
01-04-2013, 12:30 PM
My daughter's account is a Roth, so it's all tax-free. (I expect that to change in the future as tax-hungry politicians realize how much they could grab)

medford
01-04-2013, 02:00 PM
My daughter's account is a Roth, so it's all tax-free. (I expect that to change in the future as tax-hungry politicians realize how much they could grab)

Sadly, I think you're correct.

Bob Sheed
01-07-2013, 03:41 PM
I have been following this thread and wanted to say thanks for posting!

I am curious though... If I am understanding, taxes on Dividends are about to go from 19% to 47%. Is this true? And if so, does that affect your strategy at all?

UPDATE: Turns out taxes of dividends remains the same, unless you are making over 400k single 450k jointly.

:thumbup:

Bob Sheed
01-07-2013, 03:45 PM
My daughter's account is a Roth, so it's all tax-free. (I expect that to change in the future as tax-hungry politicians realize how much they could grab)

So you can setup a Roth IRA that allows you to pick and choose which stocks you want to be included in it?

medford
01-07-2013, 04:19 PM
So you can setup a Roth IRA that allows you to pick and choose which stocks you want to be included in it?

yes,

the roth is similar to any regular investment account in terms of what options you have to invest (bonds, stocks, mutual funds, etc..) All money is taxed upfront (where a 401(k) is all pre-tax investments) then your money is free to grow tax-free until retirement.

JaxRed
01-08-2013, 12:35 AM
Generally you have to ask to set up a Brokerage Roth Account. I did my daughter's at Tradeking all online and it was pretty painless.

JaxRed
01-28-2013, 08:10 AM
January's transactions are complete. No purchases. We are waiting till March. But we received our regular monthly dividend and a special dividend in January. Bumped our future yearly withdrawal (without touching principle) to an even $22.00

8/31/2012 $4.05
9/28/2012 $8.10
10/31/2012 $12.15
11/16/2012 $12.20
12/15/2012 $12.26
12/18/2012 $21.71
1/16/2012 $21.77
1/23/2013 $22.00

JaxRed
02-17-2013, 12:24 PM
Well, February's transactions are complete. Again no purchases till end of March.

8/31/2012 $4.05
9/28/2012 $8.10
10/31/2012 $12.15
11/16/2012 $12.20
12/15/2012 $12.26
12/18/2012 $21.71
1/16/2012 $21.77
1/23/2013 $22.00
2/15/2013 $22.10

The monthly increase has now jumped to .10c In the beginning it was .05, then in December it hit .06, but thanks to the special dividend in January, it's jumped to .10 a month.

This also marks the 6 month point in the Portfolio. It's jumped from $0 to $22.10. So yearly it should be $44.20. Extrapolate that out 20 years and now you are talking about an extra $884 a year in income. But it will go higher. Because of the compounding.

All at $100 a month.

lidspinner
02-17-2013, 03:50 PM
Jaxred......maybe you do this for a living but have you thought about doing this for members of reds zone? If I am going to pay someone I would just assume pay someone from this site who is a fellow fan of the Reds......I know there is a lot of crap that gets involved when people invest money via your opinions but I say it's worth a shot......I know I would consider it......

The hardest part about going through an investor is you just never know if you can trust them or not....not saying we are automatically supposed to trust you but your no different than someone from a firm that I don't know,...,ay be you just give the advice and we do the investing on our own and just pay you to tell us what to do....there are hundreds of people just like you that understand this game and know how to invest.......then there are millions of people just like me that have 100% no idea of how to do it....I don't even understand half of the words in your posts, let alone trying to read this thread and the other investment thread on RZ so me trying to invest my money would be like me trying to ace a Chinese algebra class.

JaxRed
02-17-2013, 05:03 PM
No, I'm a database guy (and part time at that as I'm retiring). And there are many many hoops to jump thru to be a financial planner.

But the best way to do this is to just try it on a small scale. My first introduction to stocks was when I turned 21 my parents bought me like 5 shares of a Dayton company called Dayco. (I'm from Dayton) I remember seeing stock listings in the paper. So looked up Dayco and I saw it said 16.

I literally didn't even know they meant 16 dollars.

Medford gave you some solid financial advice, but if you followed his plan to the letter, you'd NEVER get started investing (or it would be so far away it would seem like forever).

So you said you could invest $100 a month. Just try it one time. It's a learning experience. You really don't need to pay anyone to do this.

There's an online brokerage company we used called TradeKing. It was very easy (and $0 cost) to sign up for an Roth IRA brokerage account. If I remember correctly we did everything online. You had to scan your driver's license I think and upload it. They have online chat during normal business hours to talk you thru things.

https://www.tradeking.com

There are probably plenty of others that are great but I am familiar with them. Once the account is set up you can just mail them a check. (there are other ways also)

I would recommend buying a stock called Realty Income Incorporated. Their symbol is O. They are an incredibly conservative investment. And they pay dividends monthly, so you get some immediate feedback every month. It sells for $44.46 a share so with a $4.95 commission you could (just) buy 2 shares.

Feel free to send me an IM and I'll give you my email address and I'll answer any questions you may have.

JaxRed
03-23-2013, 12:01 PM
March dividends are in. MAIN also raised their dividend again another 3%



Date Yearly Withdrawal
8/31/2012 $4.05
9/28/2012 $8.10
10/31/2012 $12.15
11/16/2012 $12.20
12/15/2012 $12.26
12/18/2012 $21.71
1/16/2012 $21.77
1/23/2013 $22.00
2/15/2013 $22.10
3/16/1013 $22.94


So we are up to $22.94 a share yearly income without touching principle. We've been waiting for the end of March to make our next purchase, and that will happen next week.

JaxRed
04-02-2013, 07:41 PM
Well we did make our March purchase of 3 months worth of stock in a new (second) company. The logical side of me said to pick Realty Income Incorporated. (O). A safe secure monthly 4.8% payer that raises their dividend just a little bit every quarter.

But the wild child in me wanted to buy another BDC in PSEC which also pays monthly, but pays 12%. Obviously the odds a dividend cut are much greater in PSEC, and I'm trying to show you that you can choose an ever-growing portfolio. So, I'm "gambling" a bit here that PSEC stays good for a while. (I own some in my own accounts).

So wild child won and we bought 25 shares of PSEC. The three months accumulation of capital and the high dividend now jumps double what is was to $47.69



Date Yearly Withdrawal
8/31/2012 $4.05 Purchased 3 shares of MAIN
9/28/2012 $8.10 Purchased 3 shares of MAIN
10/31/2012 $12.15 Purchased 3 shares of MAIN
11/16/2012 $12.20 MAIN Dividend
12/15/2012 $12.26 MAIN Dividend
12/18/2012 $21.71 Purchased 7 shares of MAIN
1/16/2012 $21.77 MAIN Dividend
1/23/2013 $22.00 Main Special Dividend
2/15/2013 $22.10 MAIN Dividend
3/16/1013 $22.94 MAIN Dividend
3/27/2013 $47.69 Bought 25 shares PSEC


Next purchase (end of June) I promise to buy Realty Income :)

bucksfan2
04-03-2013, 09:05 AM
@JaxRed since you seem well abreast in the REIT I would like your opinion. I have owned NLY for a couple of years now. I am in the red but the dividend is pretty nice. Its one that I have owned and really refused to do anything with because it fluctuates all over the place. I have had my eyes on IRC which is more of a property play instead of a mortgage play. It doesn't bounce all over the place and pays a smaller but more stable dividend.

Any thoughts on these two?

JaxRed
05-03-2013, 08:32 AM
Our April is over. No purchases till June. Our PSEC dividend won't show up till May so, just a slight increase in yearly income for April



8/31/2012 $4.05 Purchased 3 shares of MAIN
9/28/2012 $8.10 Purchased 3 shares of MAIN
10/31/2012 $12.15 Purchased 3 shares of MAIN
11/16/2012 $12.20 MAIN Dividend
12/15/2012 $12.26 MAIN Dividend
12/18/2012 $21.71 Purchased 7 shares of MAIN
1/16/2012 $21.77 MAIN Dividend
1/23/2013 $22.00 Main Special Dividend
2/15/2013 $22.10 MAIN Dividend
3/16/1013 $22.94 MAIN Dividend
3/27/2013 $47.69 Bought 25 shares PSEC
4/16/2013 $47.81 MAIN Dividend

JaxRed
06-09-2013, 11:14 PM
@JaxRed since you seem well abreast in the REIT I would like your opinion. I have owned NLY for a couple of years now. I am in the red but the dividend is pretty nice. Its one that I have owned and really refused to do anything with because it fluctuates all over the place. I have had my eyes on IRC which is more of a property play instead of a mortgage play. It doesn't bounce all over the place and pays a smaller but more stable dividend.

Any thoughts on these two?

Hey, Bucks.... I don;t know how I missed your question. Tunnel vision I guess. But if I only could choose one of those I would choose IRC. I know I sound like a broken record, but over on Seeking Alpha is a Property REIT expert I "follow".

He had a nice article on IRC about 7 months agao

http://seekingalpha.com/article/1054451-inland-real-estate-corporation-a-wide-moat-reit-forming-in-the-windy-city

JaxRed
06-09-2013, 11:16 PM
A little late but here's our May results. We got our first dividend from PSEC, and income keeps going up. We buy our June stocks here in next couple weeks.



8/31/2012 $5.40 $4.05 Purchased 3 shares of MAIN
9/28/2012 $10.80 $8.10 Purchased 3 shares of MAIN
10/31/2012 $16.20 $12.15 Purchased 3 shares of MAIN
11/16/2012 $16.26 $12.20 MAIN Dividend
12/15/2012 $16.34 $12.26 MAIN Dividend
12/18/2012 $28.94 $21.71 Purchased 7 shares of MAIN
1/16/2012 $29.02 $21.77 MAIN Dividend
1/23/2013 $29.33 $22.00 Main Special Dividend
2/15/2013 $29.47 $22.10 MAIN Dividend
3/16/1013 $30.59 $22.94 MAIN Dividend
3/27/2013 $63.59 $47.69 Bought 25 shares PSEC
4/16/2013 $63.74 $47.81 MAIN Dividend
5/16/2013 $63.89 $47.92 MAIN Dividend
5/24/2013 $64.23 $48.17 PSEC Dividend

forfreelin04
06-22-2013, 02:03 AM
yes,

the roth is similar to any regular investment account in terms of what options you have to invest (bonds, stocks, mutual funds, etc..) All money is taxed upfront (where a 401(k) is all pre-tax investments) then your money is free to grow tax-free until retirement.

I've hesitated posting in this thread for a year now. I work in the industry.

I'll clarify here since it's not that simple, but generally speaking you are correct.

First, a 401 (K) can include post-tax investments. Many companies have instituted the option for a ROTH designated account inside of their 401 K chassis. Thus your contributions can be much larger than outside of that chassis. If your under 50 like myself, you can put up to 17,500 in your 401 (K) in the ROTH designated account. Personally, I utilize this account because I feel tax rates will be higher when I'm able to withdraw after 59 1/2 without a 10% penalty. The downside is I do not get to defer that 17,500 from my income taxes.

At retirement or upon job loss, I'll be able to roll the ROTH portion of my account out into a ROTH IRA just like the traditional rollovers. By doing this, I maximize the features of the ROTH because I can put a heck of a lot more money away than ROTH's outside of the 401 K chassis. (5,500 for under 50 years old and 6,500 for those over 50)

Secondly, the money from a ROTH is tax free in retirement, but you still must be over 59 1/2 to avoid the 10% penalty. Also, you must hold "A ROTH" for at least 5 years and be over 59 1/2 to get tax free withdraws. Your cost basis (money contributed) will never again be taxable, but your investment gains will be. You can also always peel out your cost basis before 59 1/2 so long as its coded that way. Finally, the 5 year rule is subject to ROTH IRA's in general. Thus, if you have multiple ROTH accounts with various companies each does not have to serve the 5 year rule. The first day you open a ROTH account the clock starts ticking and you don't have to subsequently serve the 5 year's if you were to open a new ROTH account with another company.

forfreelin04
06-22-2013, 02:21 AM
@JaxRed since you seem well abreast in the REIT I would like your opinion. I have owned NLY for a couple of years now. I am in the red but the dividend is pretty nice. Its one that I have owned and really refused to do anything with because it fluctuates all over the place. I have had my eyes on IRC which is more of a property play instead of a mortgage play. It doesn't bounce all over the place and pays a smaller but more stable dividend.

Any thoughts on these two?

I don't want to steal JaxRed's thunder at all since he sounds highly educated in dividend paying investments, but dividends are never guaranteed.

If you have a stock that's in the red, and the only reason you have it is for the dividend yield I would caution you against holding it much longer. If NLY chooses to stop paying dividends, your not going to get your yield and subsequently you'll fade even deeper into the red since they'll be a mass exodus at that point.

There's nothing wrong with dividend stock investments. In fact, I would encourage it to the right investor. However, 95% of the country doesn't truly understand the risk involved. Many times retirees get their investment tips from the golf course instead of someone trained and licensed in the field. Certainly, dividend paying stocks are a nice diversification strategy to a balanced portfolio. The problem is many folks get in way too deep with money their actually planning on using in retirement.

It seems like JAXRED here is using the ROTH for his daughter. I don't know how old she is and if he's planning on using the funds for college for her, but in most scenario's people haven't saved enough for retirement to warrant the holding of individual stock's that pay beyond the norm in dividends.

JaxRed
06-30-2013, 10:18 AM
Let me post my results for June before I respond to forfreel. June was the month that we were planing on purchasing with our $100 monthly investment. We purchased a new stock for our portfolio. O - Realty Income Incorporated. They carved out a niche starting in 1970 as "The Monthly Dividend Company". They have increased their dividend 71 times since then, including 62 consecutive quarterly increases. They have never missed a dividend, they have never decreased a dividend.


http://www.realtyincome.com/landing/realty-income.shtml?gclid=CMGQ8PP4i7gCFazm7AodQhEAmA


June was a brutal month for stocks and in particular for BDC's and REITS, which is all that I have in this portfolio at this time. Yet even in a severe down market, the yearly income stream and the 75% withdraw figure just keeps increasing.

Date Yearly Dividend Income Yearly Withdrawal
08/31/2012 $5.40 $4.05 Purchased 3 shares of MAIN
09/28/2012 $10.80 $8.10 Purchased 3 shares of MAIN
10/31/2012 $16.20 $12.15 Purchased 3 shares of MAIN
11/16/2012 $16.26 $12.20 MAIN Dividend
12/15/2012 $16.34 $12.26 MAIN Dividend
12/18/2012 $28.94 $21.71 Purchased 7 shares of MAIN
01/16/2012 $29.02 $21.77 MAIN Dividend
01/23/2013 $29.33 $22.00 Main Special Dividend
02/15/2013 $29.47 $22.10 MAIN Dividend
03/16/1013 $30.59 $22.94 MAIN Dividend
03/27/2013 $63.59 $47.69 Bought 25 shares PSEC
04/16/2013 $63.74 $47.81 MAIN Dividend
05/16/2013 $63.89 $47.92 MAIN Dividend
05/24/2013 $64.23 $48.17 PSEC Dividend
06/10/2013 $79.42 $59.57 Bought 7 shares O
06/14/2013 $79.59 $59.69 MAIN Dividend
06/20/2013 $79.94 $59.96 PSEC Dividend

JaxRed
06-30-2013, 10:42 AM
Posted a reply to forfreel over in my original thread where we discussed investing philosphy

http://www.redszone.com/forums/showthread.php?t=95034&page=1

JaxRed
07-27-2013, 08:46 AM
July's activity is done. We got another special dividend from MAIN. And the yearly income keeps climbing. No investments this month. Got our first dividend from our June purchase of Realty Corporation.



Date Yearly Dividend Income Yearly Withdrawal
8/31/2012 $5.40 $4.05 Purchased 3 shares of MAIN
9/28/2012 $10.80 $8.10 Purchased 3 shares of MAIN
10/31/2012 $16.20 $12.15 Purchased 3 shares of MAIN
11/16/2012 $16.26 $12.20 MAIN Dividend
12/15/2012 $16.34 $12.26 MAIN Dividend
12/18/2012 $28.94 $21.71 Purchased 7 shares of MAIN
1/16/2012 $29.02 $21.77 MAIN Dividend
1/23/2013 $29.33 $22.00 Main Special Dividend
2/15/2013 $29.47 $22.10 MAIN Dividend
3/16/1013 $30.59 $22.94 MAIN Dividend
3/27/2013 $63.59 $47.69 Bought 25 shares PSEC
4/16/2013 $63.74 $47.81 MAIN Dividend
5/16/2013 $63.89 $47.92 MAIN Dividend
5/24/2013 $64.23 $48.17 PSEC Dividend
6/10/2013 $79.42 $59.57 Bought 7 shares O
6/14/2013 $79.59 $59.69 MAIN Dividend
6/20/2013 $79.94 $59.96 PSEC Dividend
7/15/2013 $80.10 $60.08 MAIN Dividend
7/15/2013 $80.16 $60.12 O Dividend
7/18/2013 $80.50 $60.38 PSEC Dividend
7/26/2013 $80.70 $60.53 MAIN Special Dividend

JaxRed
09-04-2013, 10:04 AM
Well, 1 year is up. Started with a purchase for Aug 2012 and we have just finished Aug 2013



8/31/2012 $5.40 $4.05 Purchased 3 shares of MAIN
9/28/2012 $10.80 $8.10 Purchased 3 shares of MAIN
10/31/2012 $16.20 $12.15 Purchased 3 shares of MAIN
11/16/2012 $16.26 $12.20 MAIN Dividend
12/15/2012 $16.34 $12.26 MAIN Dividend
12/18/2012 $28.94 $21.71 Purchased 7 shares of MAIN
1/16/2012 $29.02 $21.77 MAIN Dividend
1/23/2013 $29.33 $22.00 Main Special Dividend
2/15/2013 $29.47 $22.10 MAIN Dividend
3/16/1013 $30.59 $22.94 MAIN Dividend
3/27/2013 $63.59 $47.69 Bought 25 shares PSEC
4/16/2013 $63.74 $47.81 MAIN Dividend
5/16/2013 $63.89 $47.92 MAIN Dividend
5/24/2013 $64.23 $48.17 PSEC Dividend
6/10/2013 $79.42 $59.57 Bought 7 shares O
6/14/2013 $79.59 $59.69 MAIN Dividend
6/20/2013 $79.94 $59.96 PSEC Dividend
7/15/2013 $80.10 $60.08 MAIN Dividend
7/15/2013 $80.16 $60.12 O Dividend
7/18/2013 $80.50 $60.38 PSEC Dividend
7/26/2013 $80.70 $60.53 MAIN Special Dividend
8/14/2013 $81.72 $61.29 Main Increases Dividend
8/15/2013 $81.89 $61.42 Main Dividend
8/15/2013 $81.95 $61.46 O Dividend
8/22/2013 $82.29 $61.72 PSEC Dividend


Income climbing consistently every month. For those of you hung up on "gains vs losses", technically we are down a bit. But it demonstrates the principle. "Don't worry about the ups and downs, focus on the income stream". Now.... long term it will be up.

kaldaniels
09-04-2013, 10:57 AM
Well, 1 year is up. Started with a purchase for Aug 2012 and we have just finished Aug 2013



8/31/2012 $5.40 $4.05 Purchased 3 shares of MAIN
9/28/2012 $10.80 $8.10 Purchased 3 shares of MAIN
10/31/2012 $16.20 $12.15 Purchased 3 shares of MAIN
11/16/2012 $16.26 $12.20 MAIN Dividend
12/15/2012 $16.34 $12.26 MAIN Dividend
12/18/2012 $28.94 $21.71 Purchased 7 shares of MAIN
1/16/2012 $29.02 $21.77 MAIN Dividend
1/23/2013 $29.33 $22.00 Main Special Dividend
2/15/2013 $29.47 $22.10 MAIN Dividend
3/16/1013 $30.59 $22.94 MAIN Dividend
3/27/2013 $63.59 $47.69 Bought 25 shares PSEC
4/16/2013 $63.74 $47.81 MAIN Dividend
5/16/2013 $63.89 $47.92 MAIN Dividend
5/24/2013 $64.23 $48.17 PSEC Dividend
6/10/2013 $79.42 $59.57 Bought 7 shares O
6/14/2013 $79.59 $59.69 MAIN Dividend
6/20/2013 $79.94 $59.96 PSEC Dividend
7/15/2013 $80.10 $60.08 MAIN Dividend
7/15/2013 $80.16 $60.12 O Dividend
7/18/2013 $80.50 $60.38 PSEC Dividend
7/26/2013 $80.70 $60.53 MAIN Special Dividend
8/14/2013 $81.72 $61.29 Main Increases Dividend
8/15/2013 $81.89 $61.42 Main Dividend
8/15/2013 $81.95 $61.46 O Dividend
8/22/2013 $82.29 $61.72 PSEC Dividend


Income climbing consistently every month. For those of you hung up on "gains vs losses", technically we are down a bit. But it demonstrates the principle. "Don't worry about the ups and downs, focus on the income stream". Now.... long term it will be up.

How much have you invested total, and what is your expected yearly income stream expected as of today?

As with a baseball stat that needs supplemented, saying you expect 82.29 of income stream doesn't tell much unless you know what you paid to get that.

If you don't want to divulge anything, certainly I don't expect you to.

Boston Red
09-04-2013, 11:18 AM
How much have you invested total, and what is your expected yearly income stream expected as of today?

As with a baseball stat that needs supplemented, saying you expect 82.29 of income stream doesn't tell much unless you know what you paid to get that.

If you don't want to divulge anything, certainly I don't expect you to.

Based on the initial post to this thread, I'd say he's invested either $1200 or $1300 to this point.

kaldaniels
09-04-2013, 11:32 AM
Based on the initial post to this thread, I'd say he's invested either $1200 or $1300 to this point.

An actual number would be good. One percentage point is huge in the investing game. With all the details given on the expected dividend, it would be good for each of those posts simply stating amount invested to date, not counting reinvestments.

JaxRed
09-05-2013, 08:31 AM
At this point, we have invested $1100. Our expected income stream as of today is the last figure. Earning $82.29 and (if we were in withdrawal phase, which we are not) we would withdraw 75% of earnings, or $61.72.

I am specifically trying to get away from the notion of "what is dollar value of portfolio" and focus on what the stream of income it produces.

This is my daughters portfolio. MY actual portfolio (and I am in withdrawal mode) is heavily weighted with REITS. And they have been getting slammed for a couple months. They've lost a lot of $$ value. Yet, my dividend income is still going up because these temporary price changes do not affect the stocks ability to pay their dividends.

I calculate Yield on Original Cost which over time should get better and better. I may include that from now on.

JaxRed
10-12-2013, 11:02 AM
I'm a little behind on posting Septembers results. September was our quarterly purchase month and we purchased 7 more shares of O (Realty Income Inc).\\



Date Yearly Dividend Income Yearly Withdrawal
8/31/2012 $5.40 $4.05 Purchased 3 shares of MAIN
9/28/2012 $10.80 $8.10 Purchased 3 shares of MAIN
10/31/2012 $16.20 $12.15 Purchased 3 shares of MAIN
11/16/2012 $16.26 $12.20 MAIN Dividend
12/15/2012 $16.34 $12.26 MAIN Dividend
12/18/2012 $28.94 $21.71 Purchased 7 shares of MAIN
1/16/2012 $29.02 $21.77 MAIN Dividend
1/23/2013 $29.33 $22.00 Main Special Dividend
2/15/2013 $29.47 $22.10 MAIN Dividend
3/16/1013 $30.59 $22.94 MAIN Dividend
3/27/2013 $63.59 $47.69 Bought 25 shares PSEC
4/16/2013 $63.74 $47.81 MAIN Dividend
5/16/2013 $63.89 $47.92 MAIN Dividend
5/24/2013 $64.23 $48.17 PSEC Dividend
6/10/2013 $79.42 $59.57 Bought 7 shares O
6/14/2013 $79.59 $59.69 MAIN Dividend
6/20/2013 $79.94 $59.96 PSEC Dividend
7/15/2013 $80.10 $60.08 MAIN Dividend
7/15/2013 $80.16 $60.12 O Dividend
7/18/2013 $80.50 $60.38 PSEC Dividend
7/26/2013 $80.70 $60.53 MAIN Special Dividend
8/14/2013 $81.72 $61.29 Main Increases Dividend
8/15/2013 $81.89 $61.42 Main Dividend
8/15/2013 $81.95 $61.46 O Dividend
8/22/2013 $82.29 $61.72 PSEC Dividend
9/16/2013 $82.46 $61.85 MAIN Dividend
9/16/2013 $82.53 $61.90 O Dividend
9/19/2013 $82.86 $62.15 PSEC Dividend
9/27/2013 $98.05 $73.54 Bought 7 Shares of O


So with out purchase our yearly income is now closing in on $100 at $98.06 which at 75% withdrawal at retirement would be $73.54 a year.

Here's a look at the portfolio as of today.




TickerPrice Div Shares Income Cost Value Yield YOC Net PPS
MAIN $30.88 1.92 17.074 $32.78 $490.83 $527.25 6.22% 6.68% $28.75
PSEC $11.17 1.32 26.278 $34.69 $277.20 $293.53 11.82% 12.51% $10.55
O $40.65 2.17 14.091 $30.58 $610.15 $572.80 5.34% 5.01% $43.30


$98.05 $1,378.18 $1,393.57



Even with code symbols couldn't get it to line up. But as of today we are slightly ahead. Gains on first 2 makes up for deficit on third. But as I say, I don't sweat those. They'll take care of themselves. In the long run they'll all be ahead. The important thing is the ever growing income stream.

kaldaniels
10-12-2013, 08:53 PM
At this point, we have invested $1100. Our expected income stream as of today is the last figure. Earning $82.29 and (if we were in withdrawal phase, which we are not) we would withdraw 75% of earnings, or $61.72.

I am specifically trying to get away from the notion of "what is dollar value of portfolio" and focus on what the stream of income it produces.

This is my daughters portfolio. MY actual portfolio (and I am in withdrawal mode) is heavily weighted with REITS. And they have been getting slammed for a couple months. They've lost a lot of $$ value. Yet, my dividend income is still going up because these temporary price changes do not affect the stocks ability to pay their dividends.

I calculate Yield on Original Cost which over time should get better and better. I may include that from now on.

I understand getting away from the dollar amount and focusing on your estimated future income stream, that's fair.

But the amount invested to get your income stream is a relevant figure if you ask me.

I'm not wanting to be critical - I enjoy your updates.

Boston Red
10-24-2013, 05:09 PM
I was looking back today at the dividend history of some ADP stock I bought in 2004 and saw that the dividend has increased 245% since I bought the stock. Believe me, I didn't buy/don't own enough for that to mean anything, but it just reinforced for me the fact that I really like this strategy.

JaxRed
10-25-2013, 08:08 AM
A few people have brought up that dividends are not guaranteed. Which they are not. Nothing in the stock market is. But it's as close to a sure thing as you can get (when taken in aggregate).

Take a look at this chart that shows dividend growth of the S&P 500 over last 60 years.

http://pages.stern.nyu.edu/~%20adamodar/New_Home_Page/datafile/spearn.htm

And the S&P isn't even a Dividend weighted average.

AT&T doesn't raise their dividend much these days, but they pay 5%. If you hold it 10 years, you've already gotten 1/2 your money back.

bucksfan2
10-25-2013, 09:27 AM
I was looking back today at the dividend history of some ADP stock I bought in 2004 and saw that the dividend has increased 245% since I bought the stock. Believe me, I didn't buy/don't own enough for that to mean anything, but it just reinforced for me the fact that I really like this strategy.

UPS was the first stock I ever bought. I had graduated from college with a Transportation and Logistics degree and thought that they were a good company. I did a little research of my own, called up a broker my family uses and bought it. My first dividend was roughly $.28 back in 2004. I held the stock through the big increase in gas prices, the downturn, the challenging economic times, and was looking at it the other day and the stock now pays a $.62 dividend. It shocked me when I looked back and realized how much they had increased their payout.

It is one of those things where in the present you don't see much of a payoff but when you look back 10 years its pretty shocking.

BuckeyeRed27
10-25-2013, 03:46 PM
Have you ever considered using an ETF like DVY?

JaxRed
10-27-2013, 09:56 AM
Have you ever considered using an ETF like DVY?

If you are talking to me, I don't have much interest in an ETF or mutual Fund. I know you posted in an earlier thread that regular folks can't pick well so leave it to the pros. I don't subscribe to that.

Besides being "fun", I don't want to pay expense ratios of .5% or similar. If you have a $200,000 account that's $1,000 in fees you are paying a year.

BuckeyeRed27
10-28-2013, 11:03 AM
If you are talking to me, I don't have much interest in an ETF or mutual Fund. I know you posted in an earlier thread that regular folks can't pick well so leave it to the pros. I don't subscribe to that.

Besides being "fun", I don't want to pay expense ratios of .5% or similar. If you have a $200,000 account that's $1,000 in fees you are paying a year.

Sure, but DYV has 100 holdings of diversification. You have 3. If you bought 100 holdings at $10 a trade, you just paid $1,000. This fund actually has an expense ration of .4% so it would be less than that. You also have to rebalance now and then and make new purchases if you are buying each month like you are, so by my math you probably come out ahead.

I like to "subscribe" to what I call a core and explore philosphy. No matter what you think the market isn't set up for the average guy to win, but I do agree that researching and buying some stocks is fun and can help portfolio performance if done properly. I like to take about 20-25% of my funds (my explore) and do something like what you are doing and then I put the rest (my core) into longer term professionally managed investments like ETFs or funds. I feel it allows for greater portfolio diversification, better long term performance and doesn't punish me as badly if my picks were wrong.

bucksfan2
10-28-2013, 03:58 PM
Sure, but DYV has 100 holdings of diversification. You have 3. If you bought 100 holdings at $10 a trade, you just paid $1,000. This fund actually has an expense ration of .4% so it would be less than that. You also have to rebalance now and then and make new purchases if you are buying each month like you are, so by my math you probably come out ahead.

I like to "subscribe" to what I call a core and explore philosphy. No matter what you think the market isn't set up for the average guy to win, but I do agree that researching and buying some stocks is fun and can help portfolio performance if done properly. I like to take about 20-25% of my funds (my explore) and do something like what you are doing and then I put the rest (my core) into longer term professionally managed investments like ETFs or funds. I feel it allows for greater portfolio diversification, better long term performance and doesn't punish me as badly if my picks were wrong.

When it comes to yield I wonder if an all encompassing ETF is the way to go. I own VIG mostly because it fits my investment style. But I noticed that of its top 10 holdings VIG's payout is lower than all 10's dividends. Granted two are very small differences, but differences none the less. Now granted that is ~40% of the funds holdings, but if you are looking for yield, you may be able to pick 10-15 stocks you like better. With online brokerage fees pretty low nowadays, you can rebalance fairly cheaply.

I am not suggesting doing this nor do I think it is the best method, just something I have noticed.

JaxRed
10-28-2013, 10:39 PM
Sure, but DYV has 100 holdings of diversification. You have 3. If you bought 100 holdings at $10 a trade, you just paid $1,000. This fund actually has an expense ration of .4% so it would be less than that. You also have to rebalance now and then and make new purchases if you are buying each month like you are, so by my math you probably come out ahead.

I like to "subscribe" to what I call a core and explore philosphy. No matter what you think the market isn't set up for the average guy to win, but I do agree that researching and buying some stocks is fun and can help portfolio performance if done properly. I like to take about 20-25% of my funds (my explore) and do something like what you are doing and then I put the rest (my core) into longer term professionally managed investments like ETFs or funds. I feel it allows for greater portfolio diversification, better long term performance and doesn't punish me as badly if my picks were wrong.

. First of all my commissions are $5.00 not $10, so it's half of what you estimated and the 4% is every year on all of your assets, and my $5 is only on new transactions. So even if bought every month it would be $60.

I believe with a Dividend Growth Philosophy the market IS built for an average guy to win.

So, we'll agree to disagree....respectfully....

kaldaniels
10-28-2013, 11:43 PM
My stomach couldn't take my retirement being tied up in just a handful of companies.

I'd gladly pay the .4% expenses. Each investor is different though so I respect the other side.

BuckeyeRed27
10-29-2013, 01:34 AM
. First of all my commissions are $5.00 not $10, so it's half of what you estimated and the 4% is every year on all of your assets, and my $5 is only on new transactions. So even if bought every month it would be $60.

I believe with a Dividend Growth Philosophy the market IS built for an average guy to win.

So, we'll agree to disagree....respectfully....

Right $60 per stock. I just generally believe that your strategy doesn't lend itself to enough long term diversification. I think it's a perfectly reasonable strategy to use for a portion of your assets, but for a large portfolio would be a little reckless. I don't mean to come off as disrespectful and that wasn't my intention if I did. I do this for a living and the biggest mistake clients make is being under diversified.

Redsfaithful
10-29-2013, 05:49 AM
My expense ratio on my biggest retirement holding (Vanguard's 500 index fund) is .05%.

I wouldn't pay .4% if I could avoid it. That really adds up over time.

Bob Sheed
10-29-2013, 10:05 AM
"The "average manager" of an investment trust cannot consistently beat the average return of the market because in effect that would mean that the stock market experts as a whole could beat themselves- a logical contradiction." -Benjamin Graham

There is a VERY small percentage of people out there who can beat the market average over time. As for the rest? They have a good racket going, I'll leave it at that.

medford
10-29-2013, 10:18 AM
My stomach couldn't take my retirement being tied up in just a handful of companies.

I'd gladly pay the .4% expenses. Each investor is different though so I respect the other side.

If I recall correctly, early in this thread, or perhaps another thread, Jax talked about the long term strategy was to have 20 or so stocks in his portfolio. I've seen enough studies in the past to convince me that you can be very well diversified at 20 stocks. Plus, as an individual, 20 stocks is a reasonable number of companies that you can follow, read annual reports, follow earnings, etc... with out getting overwhelmed. Stocks will rise and fall with the market, but its highly unlikely 10 of his companies are going to go "belly up" over night. He may have 1 or 2, but that's 5-10% of his portfolio. If he's paying attention, he can get out before things go from bad to worse, most companies don't go bell up over night.

Another note, is that he's targetting companies that have a strong history of not only paying dividends, but increasing their dividend annually. Its generally a safe assumption that if a company has a history of paying dividends regularly and increases their dividend every year, they are going to be on stable ground. I've seen companies decrease their dividend, or suspend it. They generally take a pretty big hit when that news is announced, but they don't get driven into the ground. I'll assume that is a pretty big red flag in this type of investment, which perhaps means you sell that stock and find another to replace it. The goal is capital accumulation and to turn that capital accumulation into a steady stream of dividends that can support, if not completely fund your retirement.

I'll use Coke (KO) as an example of a company that has a strong history of providing dividends and I believe (correct me if I'm wrong) a company that has regularly raised their dividends) Lets say you retired in the late 90s w/ 5% of your 1,000,000 portfolio invested in Coke. Coke hit 40ish in the late 90s, which would mean you had roughly 1,250 shares. B/w the tech bubble, housing bubble, poor economy, etc.. Coke is just now (adjusted for a 2-1 split a few years ago) at the same level it was in the late 90s (40ish a share). In 1995, Coke was paying $.22 a share for coke per quarter in cash dividend. Today, they are paying $0.56 (split adjusted) per share of Coke.

In 1997, you're 1250 shares of coke were netting you $700 a year in dividends. Today, your 2500 shares of coke (assuming you haven't made any additional purchaes in coke the share total is to adjust for the 2-1 split) you're making $2,800 a year. So while the per share price of Coke hasn't been anything stellar in the last 2 decades from start to finish, you've seen a 300% increase in your cash dividend on a year basis.

When you have a dividend history like Coke, which is just an example of the kind of consistancy that Jax is trying to find, may not be the yield he is hoping to generate, the company can take a decade or two wading thru the mud, going nowwhere in particular, even taking a big drop in price from its high, while you sit back and accumulate an increasing dividend on a yearly basis. If all you are concerned about is the quartley, monthly or yearly dividend, you worry more about the consistancy that is devliered and less about the short term prospects of the company.

bucksfan2
10-29-2013, 11:36 AM
When you have a dividend history like Coke, which is just an example of the kind of consistancy that Jax is trying to find, may not be the yield he is hoping to generate, the company can take a decade or two wading thru the mud, going nowwhere in particular, even taking a big drop in price from its high, while you sit back and accumulate an increasing dividend on a yearly basis. If all you are concerned about is the quartley, monthly or yearly dividend, you worry more about the consistancy that is devliered and less about the short term prospects of the company.

Dividend history is important when talking about this. Companies who have paid a consistent dividend and have prided themselves on increasing that dividend make a point of doing it each and every year. A company like KO who has increased their dividend 50 years in a row is going to make sure they do that 51, 52, 53, etc. They may fall into tough times and could go belly up, heck any company can go bust, but the odds are in their favor.

One thing that often gets overlooked in these discussions about "beating the market" or funds vs individual stocks, is what happens in down years. What happens when the market is flat or down. What happens when the market is substantially down. Using KO, when the market took a nose dive in 2008-2009 KO still increased their dividend to a split adjusted $.205 from $.19. Not much but still an increase. To further the discussion if you reinvest the dividends, something suggested to anyone and everyone who isn't in retirement, then you are buying shares when they are low and watching that reinvested capital grow.

The one caveat with this strategy is its a long term plan. It is a plan that when put in place really pays off, but it doesn't pay off immediately. If you look back after 5 years you can see it paying off, and then the further you go the more it pays off. Using KO one more time, if you invested in it 20 years ago, held it, you would no be reaping a 10% yield, based upon the price 20 years ago of $10.69 and a payout of $1.12 today.

kaldaniels
10-29-2013, 11:38 AM
If expenses are so important - they are....

How much has been invested and how much has been paid in fees so far? I understand it is only paid on the front and back end, but if we are propping up this strategy, how much in fees have been paid out of the 1500 or so invested?

JaxRed
10-29-2013, 04:04 PM
I'm heading out of town (going to Az Fall League). So I'll figure it out when I get back. Of course, it might look worse now.

I only pay the $5.00 fee once on the front end. I have no fee on the back end because I don't intend to sell. Just collect dividends. In a mutual fund you pay the expense every year. And the more you have the more the total dollars are.

When the fund is small the $5 will have a bigger impact but the impact lessens over time.

I'll tell you we are already ahead overall.

Boston Red
10-31-2013, 12:30 PM
This seems like a strategy that Kalvoski is somewhat hostile to.

kaldaniels
10-31-2013, 02:21 PM
Dividend stocks are great, but I'd rather have a large bucket of them rather than a handful...I know you have to start somewhere but If it were me, I'd go the ETF route until a solid balance was accumulated.

Now, like I said, if Jax is going to post his expected income stream to be evaluated or learned from, I do think the cost needs to be shown. I'm not asking for many numbers

- cost basis (how much has been paid)
- fees paid to date (commissions)
- account balance or #shares (shares x price...Jax says he doesn't worry much but it is pertinent if you ask me)
- expected annual income stream (really not needed as I can calculate...but that's the point of this thread pretty much)

That's it. If less is provided you really can't evaluate things.

kaldaniels
10-31-2013, 02:22 PM
Jax is doing well to date, I can appreciate that I might add.

JaxRed
11-01-2013, 03:02 PM
I'm still out here in Arizona but in the very first post I have a link to the portfolio so you can see much of it yourself.

bucksfan2
11-11-2013, 11:51 AM
I have a question for financial advisers or accountants. I own Southern Company (SO) and currently have about a 7% loss. I have been debating selling SO, harvesting my taxable losses, and buying another utility in my portfolio. It is a little more complicated because I am due a dividend within an month and I reinvest all my dividends which would trigger a wash sale.

Can I sell SO and buy ETR? The rules say it can't be substantially identical. Would that be substantially identical? Furthermore would any utility be substantially identical?

JaxRed
11-13-2013, 11:49 AM
My educated guess is that they are not considered substantially identical. Usually the dividend comes in as cash if you have sold the stock and can't do reinvestment.

JaxRed
11-13-2013, 08:16 PM
I got back from Arizona and then was buried in a combination of work/sickness that I'm still not recovered from.

In order to take up a little less space from now on here's where we stand:
Take home income (75% of income):

As of Oct 31 - $73.97 annually.
6 months ago - $47.81
12 months ago - $12.15


Remember you can actually see the portfolio here.....

https://docs.google.com/spreadsheet/...DU5cEdDekRQR0E

I've had $34.65 in fees so far. I should only pay $19.80 a year from now on in comissions. No matter how big the account gets.

JaxRed
11-13-2013, 08:23 PM
"The "average manager" of an investment trust cannot consistently beat the average return of the market because in effect that would mean that the stock market experts as a whole could beat themselves- a logical contradiction." -Benjamin Graham

There is a VERY small percentage of people out there who can beat the market average over time. As for the rest? They have a good racket going, I'll leave it at that.

Bob, I'm not sure if this was meant as a slam and that I have a gimmick to beat the market. This is about 100% the opposite. This is Benjamin Graham at his finest. I am not trying to beat the market. I'm simply trying to accumulate the best income producing stocks.

The Dividend Growth crowd quotes Graham's belief in Dividends constantly.

JaxRed
12-06-2013, 10:47 PM
End of November
Take home income (75% of income):

As of Nov 30 - $74.75 annually.
6 months ago - $47.92
12 months ago - $12.20

JaxRed
01-04-2014, 10:55 AM
December was our purchase month ($300) and we finally bought a traditional Dividend Growth Stock. Altria - (MO). Our other purchases had been Business Development Companies and REITS.

They have done well, though.

Our Annual Take Home income (75% of income) is now:

As of Dec 30 - $86.65
6 Months ago - $59.96
12 Months ago - $21.71

bucksfan2
01-06-2014, 12:11 PM
December was our purchase month ($300) and we finally bought a traditional Dividend Growth Stock. Altria - (MO). Our other purchases had been Business Development Companies and REITS.

They have done well, though.

Our Annual Take Home income (75% of income) is now:

As of Dec 30 - $86.65
6 Months ago - $59.96
12 Months ago - $21.71

So all you are worried about is income stream? You don't care about capital appreciation/depreciation.

Wouldn't reinvesting your dividends be a more cost effective way of managing the portfolio?

JaxRed
01-08-2014, 12:50 AM
So all you are worried about is income stream? You don't care about capital appreciation/depreciation.

Wouldn't reinvesting your dividends be a more cost effective way of managing the portfolio?

That's right. Just the income stream. The total amount takes care of itself in the end. Do I like it if it goes up? Sure. But what matters is the ever-increasing dividend stream.

All of these are being reinvested automatically.

JaxRed
02-10-2014, 07:51 PM
Man.... January was a bad month in the stock market. The S&P 500 was down 3.7% and the DOW was down more than 5% !!

So....... the income stream of the Dividend Growth just keeps increasing!!!

As of Jan 31 it stood at $87.93

Jan 31 $87.93
1 month ago - $86.65
6 months ago- $60.53
12 months ago - $21.71

JaxRed
03-01-2014, 09:57 AM
As of Feb 28th we are at $88.42 (up again of course)

1 month ago - $87.93
6 moths ago - $61.72
12 months ago - $22.10

JaxRed
04-13-2014, 10:22 AM
As of March 31st we are at $100.44. March was our quarterly purchase month and we bought 8 more shares of Altria.

1 month ago - $88.42
6 moths ago - $73.54
12 months ago - $47.69

As you can see, our income keeps climbing and climbing.