Originally Posted by kaldaniels
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.
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.