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Thread: Anyone want to talk stocks and retirement?

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  1. #1
    Member JaxRed's Avatar
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    Anyone want to talk stocks and retirement?

    I'm enthused about something new I've been doing recently. I'm closing in on retirement. I'm eligible for Social Security next summer. Retirement is happening with a whimper and not a bang.

    I went from full-time, to part time with consulting, to just part time to just consulting a bit. So it's been tapering off.

    I'd been following the axiom about making your stock investments more conservative the closer you are to retirement. In the last couple years we'd gone ultra-conservative. Much was even in money markets just to ensure no loss of principal.

    The theory being to amass as much money as possible because you will need to draw on it in retirement. There's a theory about drawing 4% of your money out yearly and that leads to discussion about whether you will outlive your money.

    I had kind of an "a-ha" moment recently listening to an financial adviser discussing that the goal shouldn't be how much you have, but how much of a yearly stream of income will it produce. For example if you had a million dollars, you could earn 5% and get $50,000 yearly and NEVER touch the principal.

    That led me into the world of "Dividend Growth Investing". There's a subset of investors out there who are not trying for growth of principal, but growth on the amount of dividends an investment creates.

    Example - Facebook will be coming out as an IPO soon. The stock will pay no dividends, but tons of people will be betting that an investment in Facebook will pay off like an investment in Google. A Dividend Growth Investor would have no interest in it.

    Instead they would be more interested in McDonald's. McDonald's has increased it's dividend for 36 straight years. So if you buy McDonalds, and let the dividends re-invest automatically, over time it will really add up.

    There are lists of companies that have paid (and increased) dividends for 50, 40, 30 etc years in a row.

    more.....
    Last edited by JaxRed; 04-23-2012 at 11:57 PM.

  2. #2
    Member JaxRed's Avatar
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    Re: Anyone want to talk stocks and retirement?

    Part 2 -

    So that became my plan. To make my own Dividend Growth Portfolio out of our existing IRA's to supplement my pension and social security. I would do this in a Self-Directed IRA.

    As I started doing the research on the stocks, etc. It became evident that for someone getting ready to retire, the "McDonald's" of the world are a little too "safe". McDonalds is paying only about 2.9%. If you have a 20 or 30 year window that works, but if you want to generate current income with a little growth, you have to find stocks with a higher dividend.

    You have to be careful. Many time a high dividend rate means the company has fallen on hard time and they are about to cut the dividend. So it pays to do some DD (due diligence).

    I found a good site called Seeking Alpha where people share investment ideas. And there is a whole area about Dividend Investing. So that's what I've been doing for last 3 weeks or so. Researching and buying stocks for my Self-Directed IRA. Around May 15th the first dividends will start arriving.

    So if this area if of interest to anyone, feel free to discuss.

  3. #3
    Danger is my business! oneupper's Avatar
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    Re: Anyone want to talk stocks and retirement?

    This is an area where I have some experience, which I am glad to share here without the corresponding fees
    I know there are others in the field who are on the board.

    I work mainly with foreign investors in fixed income, so our focus is on bonds, since dividends do not have the tax advantages over interest income that they do for most US investors (the opposite is mostly true).

    However, if we are talking about IRAs, where whatever happens within the account is irrelevant for tax purposes, income from bonds and particularly high-yield bonds can be more advantageous than seeking income via dividends for a US person.

    There's a little more complexity in trading bonds than stocks, particularly online, but it could fit well into a fixed-income strategy for a self-directed IRA.
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    Member medford's Avatar
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    Re: Anyone want to talk stocks and retirement?

    I have a handful of higher yield dividend stocks in my roth IRA. There are a handful of real estate companies that have been beaten down due to the market (and perhaps they're own balance sheets during this downturn) that are now starting to bounce back. REITs by nature have to offer out a high % of their profits in dividends to remain classified as a REIT and the tax breaks that come with it. You should be able to find a package of companies here that offer solid dividends that are now poised to bounce back (if they haven't done so already) that can offer a little growth as well.

    There are also some areas outside of REITs, one of my favorite stocks has been a small company called Medallion Financial (TAXI) which specializes in medallion loans in NYC. They've regularly paid out an above 5% dividend thru all of the markets up & downs.

    I'm hardly a professional, most of my retirements is funded thru my 401(k), actually my IRA recieves mostly just maintance work for the time being, but I've used my dividend stocks to help fund further purchases of stock when the market tumbled to cost average down.

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    Member medford's Avatar
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    Re: Anyone want to talk stocks and retirement?

    Quote Originally Posted by medford View Post
    I have a handful of higher yield dividend stocks in my roth IRA. There are a handful of real estate companies that have been beaten down due to the market (and perhaps they're own balance sheets during this downturn) that are now starting to bounce back. REITs by nature have to offer out a high % of their profits in dividends to remain classified as a REIT and the tax breaks that come with it. You should be able to find a package of companies here that offer solid dividends that are now poised to bounce back (if they haven't done so already) that can offer a little growth as well.

    There are also some areas outside of REITs, one of my favorite stocks has been a small company called Medallion Financial (TAXI) which specializes in medallion loans in NYC. They've regularly paid out an above 5% dividend thru all of the markets up & downs.
    I'm hardly a professional, most of my retirements is funded thru my 401(k), actually my IRA recieves mostly just maintance work for the time being, but I've used my dividend stocks to help fund further purchases of stock when the market tumbled to cost average down.
    While we're talking stocks and dividends, just want to share my glee to have just found out (they reported 1st quareter results this morning) that TAXI has increased dividends 24% to $0.21 a share for the 1st quarter. yeah me

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    Member JaxRed's Avatar
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    Re: Anyone want to talk stocks and retirement?

    Quote Originally Posted by medford View Post
    While we're talking stocks and dividends, just want to share my glee to have just found out (they reported 1st quareter results this morning) that TAXI has increased dividends 24% to $0.21 a share for the 1st quarter. yeah me
    Way to go...

  7. #7
    Member medford's Avatar
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    Re: Anyone want to talk stocks and retirement?

    Quote Originally Posted by medford View Post
    While we're talking stocks and dividends, just want to share my glee to have just found out (they reported 1st quareter results this morning) that TAXI has increased dividends 24% to $0.21 a share for the 1st quarter. yeah me
    Another year (actually I guess it was 3/4 of a year since their last div increase), another quartley dividend increase, this time up to $0.22 a share (4.5% increase)

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    Score Early, Score Often gonelong's Avatar
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    Re: Anyone want to talk stocks and retirement?

    I'm 42 ... about 5 years ago I began purchasing dividend paying stocks in my Roth IRA. At 37 or so I thought I had about 25-30 years to retirement and it was time to begin thinking about dividends and the income they might provide. At this point my portfolio has mostly larger companies that have paid regular dividends (and increased them) over time. I currently have MCD, BIP, BGS, VZ, MMM, & RIG. I am hoping to hold some of these stocks for life so all dividends on these stocks are reinvested. I also have VZ and RAI, but I suspect I will sell them at some point in the future.

    I maintain more of a growth stratedgy with my 401K investing in individual stocks, sometimes swing trading, a little gold/silver, etc. At some point I will probably begin purchasing more and more dividend paying stocks, likely soon. One of the things I'd like to start looking at in this account is small caps that initiate dividends or are already paying dividends.

    GL

  9. #9
    Waitin til next year bucksfan2's Avatar
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    Re: Anyone want to talk stocks and retirement?

    I am quite a bit younger than you are but I look towards dividends in all my investments. If you like the dividend increasers check out VIG or SDY. Both are ETF's, VIG is a dividend appreciating ETF and SDY is the dividend aristocrats.

    For yield I like utilities, telecom, and consumer staples. I know there isn't huge upside growth but I also like the "monopoly" aspects of Utilities. Looking close to home PG, CINF, DUK, and AEP all have attractive yeilds, have paid dividends for a long long time, and increase them regurarly.

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    Member JaxRed's Avatar
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    Re: Anyone want to talk stocks and retirement?

    Mentioning REITS.... one of my favorite's right now is OHI - Omega Healthcare Investors Inc. Going Ex-Dividend in the next couple days. Paying 7.9% right now. Been increasing dividends yearly since 2003

  11. #11
    Member JaxRed's Avatar
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    Re: Anyone want to talk stocks and retirement?

    Have had 2 increased dividends since April 13th when I started. Linn Energy (Yield 7%) increased today.

  12. #12
    Score Early, Score Often gonelong's Avatar
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    Re: Anyone want to talk stocks and retirement?

    Quote Originally Posted by JaxRed
    Mentioning REITS.... one of my favorite's right now is OHI - Omega Healthcare Investors Inc. Going Ex-Dividend in the next couple days. Paying 7.9% right now. Been increasing dividends yearly since 2003
    Researched, then purchased this a few days after you posted it. Sold today for ~14.5% gain (~77.5% annualized). ($20.94/$23.97)

    I use a few charts to assist me on the timing of buy/sells (not what to buy/sell, just the timing) and I believe they are due for a 10%+ pullback and will be hoping to see them around 22.00 to evaluate for re-entry. I suspect this means I will miss the next dividend payment in August which is not really what I want. Time will tell.

    GL

    /thanks for the idea

  13. #13
    Member JaxRed's Avatar
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    Re: Anyone want to talk stocks and retirement?

    Quote Originally Posted by gonelong View Post
    Researched, then purchased this a few days after you posted it. Sold today for ~14.5% gain (~77.5% annualized). ($20.94/$23.97)

    I use a few charts to assist me on the timing of buy/sells (not what to buy/sell, just the timing) and I believe they are due for a 10%+ pullback and will be hoping to see them around 22.00 to evaluate for re-entry. I suspect this means I will miss the next dividend payment in August which is not really what I want. Time will tell.

    GL

    /thanks for the idea
    Glad it worked !!

  14. #14
    Little Reds BandWagon Reds Nd2's Avatar
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    Re: Anyone want to talk stocks and retirement?

    Quote Originally Posted by gonelong View Post
    Researched, then purchased this a few days after you posted it. Sold today for ~14.5% gain (~77.5% annualized). ($20.94/$23.97)

    I use a few charts to assist me on the timing of buy/sells (not what to buy/sell, just the timing) and I believe they are due for a 10%+ pullback and will be hoping to see them around 22.00 to evaluate for re-entry. I suspect this means I will miss the next dividend payment in August which is not really what I want. Time will tell.

    GL

    /thanks for the idea
    I think using technical analysis could be useful in finding entry/exit points, even if the overall strategy is buy and hold. My problem is that I'm not very educated on this. What charts do you use specifically and do you have any websites that you recommend for further study? Do you chart individual stocks or just the indexes?
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  15. #15
    Score Early, Score Often gonelong's Avatar
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    Re: Anyone want to talk stocks and retirement?

    Quote Originally Posted by Reds Nd2 View Post
    I think using technical analysis could be useful in finding entry/exit points, even if the overall strategy is buy and hold. My problem is that I'm not very educated on this. What charts do you use specifically and do you have any websites that you recommend for further study? Do you chart individual stocks or just the indexes?
    The first thing to know is that technical analysis is only as good as the guy interpreting it. (Similar to a baseball scout, some are just better than others)

    The second thing you need to understand, is what are you hoping to get from the charts. Are you looking to find a tech stock that is primed for a run? A long time dividend payer at a low? The charts you may use to track entries/exits for those kinds of opportunities are very different.

    Once you understand what you are looking for, look for the indicators you think will give you this info. I like to look at stocks that pay a dividend and are beat down. I am looking for a turnaround so I can buy in early.

    Here is a good place to start understanding some basic charting/indicators. I would suggest starting with SMA and plot (3,13,50 for shorter term, and 20,40,200 for longer term) and check out some stocks you follow to see what it may/may not have told you.

    I like to browse through these and see how other people implement them.

    The last thing to be aware of is time. Some people chart in minutes, others in days, others in weeks, months, years, or decades. If you use other peoples charts to make decisions, you will often be very wrong. If you use a chart and don't do due dilligence, you will very often be wrong.

    I use them purely to decide when to buy sell, not what to buy sell.

    GL

    /That's my opinion, and probably exactly worth what I am charging for it.


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