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Thread: Actual Dividend Growth Portfolio

  1. #76
    Member medford's Avatar
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    Re: Actual Dividend Growth Portfolio

    Quote Originally Posted by kaldaniels View Post
    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.

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  3. #77
    Waitin til next year bucksfan2's Avatar
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    Re: Actual Dividend Growth Portfolio

    Quote Originally Posted by medford View Post
    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.

  4. #78
    Viva la Rolen kaldaniels's Avatar
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    Re: Actual Dividend Growth Portfolio

    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?

  5. #79
    Member JaxRed's Avatar
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    Re: Actual Dividend Growth Portfolio

    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.

  6. #80
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    Re: Actual Dividend Growth Portfolio

    This seems like a strategy that Kalvoski is somewhat hostile to.

  7. #81
    Viva la Rolen kaldaniels's Avatar
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    Re: Actual Dividend Growth Portfolio

    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.

  8. #82
    Viva la Rolen kaldaniels's Avatar
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    Re: Actual Dividend Growth Portfolio

    Jax is doing well to date, I can appreciate that I might add.

  9. #83
    Member JaxRed's Avatar
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    Re: Actual Dividend Growth Portfolio

    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.

  10. #84
    Waitin til next year bucksfan2's Avatar
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    Re: Actual Dividend Growth Portfolio

    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?

  11. #85
    Member JaxRed's Avatar
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    Re: Actual Dividend Growth Portfolio

    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.

  12. #86
    Member JaxRed's Avatar
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    Re: Actual Dividend Growth Portfolio

    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.

  13. #87
    Member JaxRed's Avatar
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    Re: Actual Dividend Growth Portfolio

    Quote Originally Posted by Bob Sheed View Post
    "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.
    Last edited by JaxRed; 11-13-2013 at 08:27 PM.

  14. #88
    Member JaxRed's Avatar
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    Re: Actual Dividend Growth Portfolio

    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

  15. #89
    Member JaxRed's Avatar
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    Re: Actual Dividend Growth Portfolio

    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

  16. #90
    Waitin til next year bucksfan2's Avatar
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    Re: Actual Dividend Growth Portfolio

    Quote Originally Posted by JaxRed View Post
    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?


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