Critique my dividend stock strategy

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nbseer
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Location: New Jersey

Critique my dividend stock strategy

Post by nbseer »

69, retired, married. With my CD's now maturing, and interest rates virtually zero for CDs or bond funds, I've been buying stocks of companies that pay healthy dividends in the 2% to 5% range, in most cases increasing dividends year to year. They are in my Roth and tIRAs. Plan on never selling them. Isnt this better than a bond fund, which pays virtually nothing and has an ER to boot?
livesoft
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Re: Critique my dividend stock strategy

Post by livesoft »

Why are you comparing to a bond fund? This is like asking "Is Total US Stock Market Index fund better than a bond fund?"

Or asking something like: "I am retired, so I am switching from a 60/40 asset allocation to a 100/0 asset allocation. Is that a good thing to do?"
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retired@50
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Re: Critique my dividend stock strategy

Post by retired@50 »

nbseer wrote: Sat May 08, 2021 4:30 pm 69, retired, married. With my CD's now maturing, and interest rates virtually zero for CDs or bond funds, I've been buying stocks of companies that pay healthy dividends in the 2% to 5% range, in most cases increasing dividends year to year. They are in my Roth and tIRAs. Plan on never selling them. Isnt this better than a bond fund, which pays virtually nothing and has an ER to boot?
Are you okay with the additional risk of holding individual stocks?

I presume you realize that holding individual stocks is riskier than holding a stock index fund like a Total Market fund, and that either of these is riskier than holding a diversified portfolio of both stock index funds and bond index funds.

For some reason, many retirees seem to think that dividends can't fail, or be reduced, or stop altogether. This is false. The cash flow from dividend paying stocks isn't guaranteed in any way.

My advice would be to stick with a diversified mixture of stock and bond index funds like the ones mentioned in the 3-fund portfolio.
https://www.bogleheads.org/wiki/Three-fund_portfolio

Regards,
This is one person's opinion. Nothing more.
7eight9
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Re: Critique my dividend stock strategy

Post by 7eight9 »

You are in good company. Burton Malkiel likes dividend stocks too.

I believe in a surrogate bond portfolio of common stocks that are as safe as I can find and pay good dividends. AT&T (T), yielding 6.9%, would be one. Others are Verizon Communications (VZN) and Duke Energy (DUK). IBM (IBM), which at one point yielded 7.5%, has new management that might get the cloud right but also has a strong balance sheet. They’ll pay their dividend.
https://www.barrons.com/articles/buy-st ... 1586961967
I guess it all could be much worse. | They could be warming up my hearse.
Mike Scott
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Re: Critique my dividend stock strategy

Post by Mike Scott »

No. Stocks are not bonds. It may seem OK until it doesn't.
illumination
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Re: Critique my dividend stock strategy

Post by illumination »

Even if you want to assume the dividend payout is safe and won't be cut (a big assumption) the underlying price of the stock can definitely go down. All sorts of "invincible" blue chip stocks have gone through this, from Exxon Mobil, General Electric, IBM, etc. Clinging to the dividend when the asset has been cut in half is cold comfort.

But I'm not totally against a dividend investment strategy for part of a portfolio, even though it's not really a pure "Boglehead" approach. But the biggest mistake you can make is picking these companies out individually yourself. Own a fund that's diversified (SCHD, VIG) otherwise you're going to pick 7-8 companies and 1-2 of them is going to be General Electric and PG&E.
tibbitts
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Re: Critique my dividend stock strategy

Post by tibbitts »

nbseer wrote: Sat May 08, 2021 4:30 pm 69, retired, married. With my CD's now maturing, and interest rates virtually zero for CDs or bond funds, I've been buying stocks of companies that pay healthy dividends in the 2% to 5% range, in most cases increasing dividends year to year. They are in my Roth and tIRAs. Plan on never selling them. Isnt this better than a bond fund, which pays virtually nothing and has an ER to boot?
I assume you know that if this was an obviously effective strategy, everybody would be using it. Everybody isn't using it.

Why do you believe you'll be more effective with stock picking than you could be by merely purchasing a fund based on the Aristocrats, or relying on an active manager with a staff that spends all day researching stocks globally with the same objectives you have? Have you looked at the history of stocks that were once renowned for paying consistent and rising dividends for years and years... until they didn't?
olyveoil
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Re: Critique my dividend stock strategy

Post by olyveoil »

OP,
I am doing the same thing. for whatever reason, there is a lot of animosity to dividend paying stocks on this forum that repeat the downside of dividend stocks and use the same examples over and over.
There are a lot of stocks that fit your criteria. Lots.
There is also a downside to mutual funds that focus on dividend stocks in that they are very unpredictable in distributions.
There are also plenty of ETF's that pay consistent dividends. Plenty.

I am migrating 25% of my portfolio to dividend paying stocks/ETF's over time.

Yield on cost is a great metric. Wealth capitalist has a great google sheet template for tracking dividends, yields and monthly income streams and growth of income stream.
TropikThunder
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Re: Critique my dividend stock strategy

Post by TropikThunder »

7eight9 wrote: Sat May 08, 2021 4:40 pm You are in good company. Burton Malkiel likes dividend stocks too.

I believe in a surrogate bond portfolio of common stocks that are as safe as I can find and pay good dividends. AT&T (T), yielding 6.9%, would be one. Others are Verizon Communications (VZN) and Duke Energy (DUK). IBM (IBM), which at one point yielded 7.5%, has new management that might get the cloud right but also has a strong balance sheet. They’ll pay their dividend.
https://www.barrons.com/articles/buy-st ... 1586961967
IMO it's shockingly irresponsible for someone of Malkiel's status to recommend this.
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WarAdmiral
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Re: Critique my dividend stock strategy

Post by WarAdmiral »

illumination wrote: Sat May 08, 2021 5:06 pm Even if you want to assume the dividend payout is safe and won't be cut (a big assumption) the underlying price of the stock can definitely go down. All sorts of "invincible" blue chip stocks have gone through this, from Exxon Mobil, General Electric, IBM, etc. Clinging to the dividend when the asset has been cut in half is cold comfort.

But I'm not totally against a dividend investment strategy for part of a portfolio, even though it's not really a pure "Boglehead" approach. But the biggest mistake you can make is picking these companies out individually yourself. Own a fund that's diversified (SCHD, VIG) otherwise you're going to pick 7-8 companies and 1-2 of them is going to be General Electric and PG&E.
I have been looking at this strategy as well and on lookout for high-dividend yield fund. However, these funds have yields of < 2%. So, they do not offer any significant dividend advantage over say, S&P500.

e.g. SCHD yield is 1.52%
VIG is 1.32%


Individual Stocks on the other hand have significant dividend yields.
VZ - 4.53%
AT&T - > 6%
IBM - 4.51%
dbr
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Re: Critique my dividend stock strategy

Post by dbr »

What you are proposing is so different from holding bonds it is not clear that "better" even means anything.

The point is that when you do that you change so many important properties of your portfolio that it is a complete re-do to decide of it is better or not, depending on what fraction of your assets is involved. What you will have done is increase both the expected return and the expected volatility of return of your portfolio. You would have to think through whether or not that is needed or a good idea.

Note this does not mean holding dividend stocks is a bad thing. The bad thing is not being clear what one is doing when one does that. The issue lies at two levels. The first is how holding stocks is different from holding bonds. The second is whether or not there is a special advantage to selecting specifically dividend paying or high dividend paying individual stocks rather than a total stock index fund as a comparison point. It all comes down to whether or not you get more return and/or less risk in some combination. The paying of dividends by dividend paying individual stocks in a tax deferred account probably increases risk without increasing expected return. To follow this strategy you have to have some basis to give confidence that on the contrary your stock selection can return more and/or with less risk than your alternative. If you have that analysis and are confident in it, then I would not stand in your way. Note that in stocks dividends are part of, not all of, the return. For bonds the yield, at least the SEC yield, is a starting predictor for return, which is not true of stocks.
tibbitts
Posts: 13950
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Re: Critique my dividend stock strategy

Post by tibbitts »

WarAdmiral wrote: Sat May 08, 2021 5:49 pm
illumination wrote: Sat May 08, 2021 5:06 pm Even if you want to assume the dividend payout is safe and won't be cut (a big assumption) the underlying price of the stock can definitely go down. All sorts of "invincible" blue chip stocks have gone through this, from Exxon Mobil, General Electric, IBM, etc. Clinging to the dividend when the asset has been cut in half is cold comfort.

But I'm not totally against a dividend investment strategy for part of a portfolio, even though it's not really a pure "Boglehead" approach. But the biggest mistake you can make is picking these companies out individually yourself. Own a fund that's diversified (SCHD, VIG) otherwise you're going to pick 7-8 companies and 1-2 of them is going to be General Electric and PG&E.
I have been looking at this strategy as well and on lookout for high-dividend yield fund. However, these funds have yields of < 2%. So, they do not offer any significant dividend advantage over say, S&P500.

e.g. SCHD yield is 1.52%
VIG is 1.32%


Individual Stocks on the other hand have significant dividend yields.
VZ - 4.53%
AT&T - > 6%
IBM - 4.51%
What about a stock that paid 4% a couple of years ago - and today yields 0% and the share price has been cut in half? Of course whatever stock it was, in retrospect you can explain how that was totally foreseeable and claim you would never have invested in it. The problem is if you throw enough screens in the mix to minimize (but not eliminate) the chances of that happening, you're going to wind up with either a very, very small number of individual stocks (thus greatly magnifying your risk should your screens not pan out), or a 2%-ish yield.
z3r0c00l
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Location: NYC

Re: Critique my dividend stock strategy

Post by z3r0c00l »

In hindsight this strategy worked out for many of these stocks, Verizon is one of my favorite stocks for just this reason. It is a mature company focused on making steady profits and returning those profits to the shareholders, rather than hoard and squander it on harebrained new ventures, overpriced headquarters, or overpaid programmers. I can't imagine how much MSFT, Google, and Facebook have wasted on these kinds of activities and sincerely wish they would have just given me my share of the profits as they made them. The Verizon share price goes up over time but nothing crazy, just a steady slow upward climb. If all stocks were like Verizon, it would be a safer, more relaxing business of investing. But they are not, and in fact you never know when any company will go bust. By the way, Verizon is at a PE ratio of under 13, what gives?
Last edited by z3r0c00l on Sat May 08, 2021 6:24 pm, edited 2 times in total.
100% Global Stocks / Ibond Emergency Fund
olyveoil
Posts: 77
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Re: Critique my dividend stock strategy

Post by olyveoil »

OP,

My holdings
PSX 4.3%
MPC 3.9%
DHT 2.75%
ABBV 4.5%
BGS 6.4%
BMY 3.05%
C 2.73%
NUSI 8.44%
GAIN 6.15%
QYLD 11.7%
MRK 3.34%
NEWT 7.17%

Watchlist
AM 9.86%
BMO 3.58%
BNS 4.5%
CAH 3.47%
CPB 2.97%
CRT 7.4%
EPD 7.74%
FLO 3.24%
GPC 2.46%
IRM 5.94%
K 3.44%
KO 3.08%
LYB 3.68%
MET 2.87%
MFC 4.23%
NAVI 3.77%
NWL 3.16%
OKE 7%
PPL 5.76%
PRU 4.36%
REYN 3%
SO 4%
TFC 2.95%
WBA 3.43%

Watchlist REIT
ACC 4.14%
CHCT 4.33%
DOC 5.07%
GMRE 5.93%
LTC 5.6%
STAG 4.05%
UMH 3.49%
VICI 4.28%

Watchlist ETF
FDL 3.65%
HDEF 4.69%
JEPI 6.61%
KBWD 6.8%
PFFA 7.53%
PFFD 5.11%
PGX 4.95%
RYLD 11.2%
HYLB 4.92%
SRET 6.6%
YYY 9%
XYLD 9.55%
SDOG 3.81%
olyveoil
Posts: 77
Joined: Thu Feb 04, 2021 8:47 am

Re: Critique my dividend stock strategy

Post by olyveoil »

tibbitts wrote: Sat May 08, 2021 6:13 pm
WarAdmiral wrote: Sat May 08, 2021 5:49 pm
illumination wrote: Sat May 08, 2021 5:06 pm Even if you want to assume the dividend payout is safe and won't be cut (a big assumption) the underlying price of the stock can definitely go down. All sorts of "invincible" blue chip stocks have gone through this, from Exxon Mobil, General Electric, IBM, etc. Clinging to the dividend when the asset has been cut in half is cold comfort.

But I'm not totally against a dividend investment strategy for part of a portfolio, even though it's not really a pure "Boglehead" approach. But the biggest mistake you can make is picking these companies out individually yourself. Own a fund that's diversified (SCHD, VIG) otherwise you're going to pick 7-8 companies and 1-2 of them is going to be General Electric and PG&E.
I have been looking at this strategy as well and on lookout for high-dividend yield fund. However, these funds have yields of < 2%. So, they do not offer any significant dividend advantage over say, S&P500.

e.g. SCHD yield is 1.52%
VIG is 1.32%


Individual Stocks on the other hand have significant dividend yields.
VZ - 4.53%
AT&T - > 6%
IBM - 4.51%
What about a stock that paid 4% a couple of years ago - and today yields 0% and the share price has been cut in half? Of course whatever stock it was, in retrospect you can explain how that was totally foreseeable and claim you would never have invested in it. The problem is if you throw enough screens in the mix to minimize (but not eliminate) the chances of that happening, you're going to wind up with either a very, very small number of individual stocks (thus greatly magnifying your risk should your screens not pan out), or a 2%-ish yield.
You have a Real Example?
Last edited by olyveoil on Sat May 08, 2021 6:23 pm, edited 1 time in total.
cableguy
Posts: 205
Joined: Thu May 09, 2019 3:34 pm

Re: Critique my dividend stock strategy

Post by cableguy »

Two of the companies mentioned, Verizon and AT&T, are under severe competitive pressures and both have made disastrous M&A deals in the last 20 years. AT&T bought Direct TV for $67B 5 years ago and today can't give it away. I still think both companies are solid but be careful with believing "I'll never sell them" and assuming the dividends are forever safe. Frontier Communications was a dividend darling for many years. It vanished last year and is now coming out of bankruptcy.
Dontridetheindexdown
Posts: 215
Joined: Sat Feb 14, 2015 10:08 pm

Re: Critique my dividend stock strategy

Post by Dontridetheindexdown »

Nothing to critique, if you are comfortable with your allocation, nothing else matters.

We are 70 and 66, married, 50/50 dividend stocks and stable assets (actually 53/47 as of May 01, but not yet at the re-balance point).

Our stocks return a weighted average dividend of 6.35%, our stable assets have returned a weighted average dividend of .88% during the past 12 months, for a combined weighted average of 3.76%.

We do not care about the share prices of our stocks, as long as they pay the dividends.

We sleep well at night, knowing we could live beyond our expectations on either our stock dividends, or our stable assets.

Presently, we live beyond expectations on 2 Social Security Old Age annuities, 2 defined benefit pensions, and a single premium immediate annuity.

It is our personal construction of the 3-fund portfolio - dividend stocks, stable assets, and mailbox money.
Dave55
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Re: Critique my dividend stock strategy

Post by Dave55 »

WarAdmiral wrote: Sat May 08, 2021 5:49 pm
illumination wrote: Sat May 08, 2021 5:06 pm Even if you want to assume the dividend payout is safe and won't be cut (a big assumption) the underlying price of the stock can definitely go down. All sorts of "invincible" blue chip stocks have gone through this, from Exxon Mobil, General Electric, IBM, etc. Clinging to the dividend when the asset has been cut in half is cold comfort.

But I'm not totally against a dividend investment strategy for part of a portfolio, even though it's not really a pure "Boglehead" approach. But the biggest mistake you can make is picking these companies out individually yourself. Own a fund that's diversified (SCHD, VIG) otherwise you're going to pick 7-8 companies and 1-2 of them is going to be General Electric and PG&E.
I have been looking at this strategy as well and on lookout for high-dividend yield fund. However, these funds have yields of < 2%. So, they do not offer any significant dividend advantage over say, S&P500.

e.g. SCHD yield is 1.52%
VIG is 1.32%


Individual Stocks on the other hand have significant dividend yields.
VZ - 4.53%
AT&T - > 6%
IBM - 4.51%
SCHD's SEC yield is 2.99%, and the TTM yield is 2.81% not 1.52%.
https://www.schwab.com/research/etfs/qu ... mmary/schd

Dave
"Reality always wins, your only job is to get in touch with it." Wilfred Bion
Astones
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Re: Critique my dividend stock strategy

Post by Astones »

You are taking more risks, hence you have larger expected returns.
User avatar
WarAdmiral
Posts: 290
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Location: Boston

Re: Critique my dividend stock strategy

Post by WarAdmiral »

Dave55 wrote: Sat May 08, 2021 6:27 pm
WarAdmiral wrote: Sat May 08, 2021 5:49 pm
illumination wrote: Sat May 08, 2021 5:06 pm Even if you want to assume the dividend payout is safe and won't be cut (a big assumption) the underlying price of the stock can definitely go down. All sorts of "invincible" blue chip stocks have gone through this, from Exxon Mobil, General Electric, IBM, etc. Clinging to the dividend when the asset has been cut in half is cold comfort.

But I'm not totally against a dividend investment strategy for part of a portfolio, even though it's not really a pure "Boglehead" approach. But the biggest mistake you can make is picking these companies out individually yourself. Own a fund that's diversified (SCHD, VIG) otherwise you're going to pick 7-8 companies and 1-2 of them is going to be General Electric and PG&E.
I have been looking at this strategy as well and on lookout for high-dividend yield fund. However, these funds have yields of < 2%. So, they do not offer any significant dividend advantage over say, S&P500.

e.g. SCHD yield is 1.52%
VIG is 1.32%


Individual Stocks on the other hand have significant dividend yields.
VZ - 4.53%
AT&T - > 6%
IBM - 4.51%
SCHD's SEC yield is 2.99%, and the TTM yield is 2.81% not 1.52%.
https://www.schwab.com/research/etfs/qu ... mmary/schd

Dave
Thanks for the correction. I did a quick google search and 1.52 came up. Should have gone to the original souce.
tibbitts
Posts: 13950
Joined: Tue Feb 27, 2007 6:50 pm

Re: Critique my dividend stock strategy

Post by tibbitts »

olyveoil wrote: Sat May 08, 2021 6:23 pm
tibbitts wrote: Sat May 08, 2021 6:13 pm
WarAdmiral wrote: Sat May 08, 2021 5:49 pm
illumination wrote: Sat May 08, 2021 5:06 pm Even if you want to assume the dividend payout is safe and won't be cut (a big assumption) the underlying price of the stock can definitely go down. All sorts of "invincible" blue chip stocks have gone through this, from Exxon Mobil, General Electric, IBM, etc. Clinging to the dividend when the asset has been cut in half is cold comfort.

But I'm not totally against a dividend investment strategy for part of a portfolio, even though it's not really a pure "Boglehead" approach. But the biggest mistake you can make is picking these companies out individually yourself. Own a fund that's diversified (SCHD, VIG) otherwise you're going to pick 7-8 companies and 1-2 of them is going to be General Electric and PG&E.
I have been looking at this strategy as well and on lookout for high-dividend yield fund. However, these funds have yields of < 2%. So, they do not offer any significant dividend advantage over say, S&P500.

e.g. SCHD yield is 1.52%
VIG is 1.32%


Individual Stocks on the other hand have significant dividend yields.
VZ - 4.53%
AT&T - > 6%
IBM - 4.51%
What about a stock that paid 4% a couple of years ago - and today yields 0% and the share price has been cut in half? Of course whatever stock it was, in retrospect you can explain how that was totally foreseeable and claim you would never have invested in it. The problem is if you throw enough screens in the mix to minimize (but not eliminate) the chances of that happening, you're going to wind up with either a very, very small number of individual stocks (thus greatly magnifying your risk should your screens not pan out), or a 2%-ish yield.
You have a Real Example?
Yes, it is a real example. But as I thought I'd explained, it's easy to look at one example now and say "because of x, y, and z the results were predictable and inevitable", "nobody would ever have bought that stock", "my screens would have prevented purchasing that", etc. etc. And then you'll say "give me another example." And on and on, and I'm not going to get involved in that.

Sadly this wasn't my first unsatisfying experience with dividend stocks. My first personal experience with owning a stock having a very long history (at the time) of increasing dividends was GE, which has already been mentioned in this thread.
MishkaWorries
Posts: 949
Joined: Wed Aug 14, 2019 4:39 pm

Re: Critique my dividend stock strategy

Post by MishkaWorries »

OP if you're looking for income to replace bonds maybe better to look at a covered call strategy ETF.

I see people talking about QYLD with 10+% distributions and QQQX or QYLG as covered call ETFs for the NASDAQ and XYLD and CII for the S&P500.

I don't invest in these because I don't understand them but they are popular on YouTube, Reddit, etc.
We plan. G-d laughs.
olyveoil
Posts: 77
Joined: Thu Feb 04, 2021 8:47 am

Re: Critique my dividend stock strategy

Post by olyveoil »

MishkaWorries wrote: Sat May 08, 2021 8:58 pm OP if you're looking for income to replace bonds maybe better to look at a covered call strategy ETF.

I see people talking about QYLD with 10+% distributions and QQQX or QYLG as covered call ETFs for the NASDAQ and XYLD and CII for the S&P500.

I don't invest in these because I don't understand them but they are popular on YouTube, Reddit, etc.
include JEPI and RYLD.
some riskier stuff is GLDI and SVLO
olyveoil
Posts: 77
Joined: Thu Feb 04, 2021 8:47 am

Re: Critique my dividend stock strategy

Post by olyveoil »

tibbitts wrote: Sat May 08, 2021 7:18 pm
olyveoil wrote: Sat May 08, 2021 6:23 pm
tibbitts wrote: Sat May 08, 2021 6:13 pm
WarAdmiral wrote: Sat May 08, 2021 5:49 pm
illumination wrote: Sat May 08, 2021 5:06 pm Even if you want to assume the dividend payout is safe and won't be cut (a big assumption) the underlying price of the stock can definitely go down. All sorts of "invincible" blue chip stocks have gone through this, from Exxon Mobil, General Electric, IBM, etc. Clinging to the dividend when the asset has been cut in half is cold comfort.

But I'm not totally against a dividend investment strategy for part of a portfolio, even though it's not really a pure "Boglehead" approach. But the biggest mistake you can make is picking these companies out individually yourself. Own a fund that's diversified (SCHD, VIG) otherwise you're going to pick 7-8 companies and 1-2 of them is going to be General Electric and PG&E.
I have been looking at this strategy as well and on lookout for high-dividend yield fund. However, these funds have yields of < 2%. So, they do not offer any significant dividend advantage over say, S&P500.

e.g. SCHD yield is 1.52%
VIG is 1.32%


Individual Stocks on the other hand have significant dividend yields.
VZ - 4.53%
AT&T - > 6%
IBM - 4.51%
What about a stock that paid 4% a couple of years ago - and today yields 0% and the share price has been cut in half? Of course whatever stock it was, in retrospect you can explain how that was totally foreseeable and claim you would never have invested in it. The problem is if you throw enough screens in the mix to minimize (but not eliminate) the chances of that happening, you're going to wind up with either a very, very small number of individual stocks (thus greatly magnifying your risk should your screens not pan out), or a 2%-ish yield.
You have a Real Example?
Yes, it is a real example. But as I thought I'd explained, it's easy to look at one example now and say "because of x, y, and z the results were predictable and inevitable", "nobody would ever have bought that stock", "my screens would have prevented purchasing that", etc. etc. And then you'll say "give me another example." And on and on, and I'm not going to get involved in that.

Sadly this wasn't my first unsatisfying experience with dividend stocks. My first personal experience with owning a stock having a very long history (at the time) of increasing dividends was GE, which has already been mentioned in this thread.
So GE is the real example?
tibbitts
Posts: 13950
Joined: Tue Feb 27, 2007 6:50 pm

Re: Critique my dividend stock strategy

Post by tibbitts »

olyveoil wrote: Sat May 08, 2021 10:30 pm
tibbitts wrote: Sat May 08, 2021 7:18 pm
olyveoil wrote: Sat May 08, 2021 6:23 pm
tibbitts wrote: Sat May 08, 2021 6:13 pm
WarAdmiral wrote: Sat May 08, 2021 5:49 pm

I have been looking at this strategy as well and on lookout for high-dividend yield fund. However, these funds have yields of < 2%. So, they do not offer any significant dividend advantage over say, S&P500.

e.g. SCHD yield is 1.52%
VIG is 1.32%


Individual Stocks on the other hand have significant dividend yields.
VZ - 4.53%
AT&T - > 6%
IBM - 4.51%
What about a stock that paid 4% a couple of years ago - and today yields 0% and the share price has been cut in half? Of course whatever stock it was, in retrospect you can explain how that was totally foreseeable and claim you would never have invested in it. The problem is if you throw enough screens in the mix to minimize (but not eliminate) the chances of that happening, you're going to wind up with either a very, very small number of individual stocks (thus greatly magnifying your risk should your screens not pan out), or a 2%-ish yield.
You have a Real Example?
Yes, it is a real example. But as I thought I'd explained, it's easy to look at one example now and say "because of x, y, and z the results were predictable and inevitable", "nobody would ever have bought that stock", "my screens would have prevented purchasing that", etc. etc. And then you'll say "give me another example." And on and on, and I'm not going to get involved in that.

Sadly this wasn't my first unsatisfying experience with dividend stocks. My first personal experience with owning a stock having a very long history (at the time) of increasing dividends was GE, which has already been mentioned in this thread.
So GE is the real example?
No. It's not conceivable that you could have read my response and asked that question.
olyveoil
Posts: 77
Joined: Thu Feb 04, 2021 8:47 am

Re: Critique my dividend stock strategy

Post by olyveoil »

tibbitts wrote: Sat May 08, 2021 10:39 pm
olyveoil wrote: Sat May 08, 2021 10:30 pm
tibbitts wrote: Sat May 08, 2021 7:18 pm
olyveoil wrote: Sat May 08, 2021 6:23 pm
tibbitts wrote: Sat May 08, 2021 6:13 pm
What about a stock that paid 4% a couple of years ago - and today yields 0% and the share price has been cut in half? Of course whatever stock it was, in retrospect you can explain how that was totally foreseeable and claim you would never have invested in it. The problem is if you throw enough screens in the mix to minimize (but not eliminate) the chances of that happening, you're going to wind up with either a very, very small number of individual stocks (thus greatly magnifying your risk should your screens not pan out), or a 2%-ish yield.
You have a Real Example?
Yes, it is a real example. But as I thought I'd explained, it's easy to look at one example now and say "because of x, y, and z the results were predictable and inevitable", "nobody would ever have bought that stock", "my screens would have prevented purchasing that", etc. etc. And then you'll say "give me another example." And on and on, and I'm not going to get involved in that.

Sadly this wasn't my first unsatisfying experience with dividend stocks. My first personal experience with owning a stock having a very long history (at the time) of increasing dividends was GE, which has already been mentioned in this thread.
So GE is the real example?
No. It's not conceivable that you could have read my response and asked that question.
Um. OK.
I read:
"What about a stock that paid 4% a couple of years ago - and today yields 0% and the share price has been cut in half? Of course whatever stock it was, in retrospect you can explain how that was totally foreseeable and claim you would never have invested in it. The problem is if you throw enough screens in the mix to minimize (but not eliminate) the chances of that happening, you're going to wind up with either a very, very small number of individual stocks (thus greatly magnifying your risk should your screens not pan out), or a 2%-ish yield."
--in that reply there is no real example. Just a hypothetical. So is there a real example?
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bertilak
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Re: Critique my dividend stock strategy

Post by bertilak »

tibbitts wrote: Sat May 08, 2021 10:39 pm
olyveoil wrote: Sat May 08, 2021 10:30 pmSo GE is the real example?
No. It's not conceivable that you could have read my response and asked that question.
Well, I ready your post and still don't know what your real example is. You did mention GE but in a way that was hard to interpret. Therefore I think the question was justified. I had the same question but chose not to push it. I was awaiting your answer to olyveoil.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
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Re: Critique my dividend stock strategy

Post by tibbitts »

bertilak wrote: Sun May 09, 2021 8:16 am
tibbitts wrote: Sat May 08, 2021 10:39 pm
olyveoil wrote: Sat May 08, 2021 10:30 pmSo GE is the real example?
No. It's not conceivable that you could have read my response and asked that question.
Well, I ready your post and still don't know what your real example is. You did mention GE but in a way that was hard to interpret. Therefore I think the question was justified. I had the same question but chose not to push it. I was awaiting your answer to olyveoil.
So now for the third and final time, this is the quote where I stated why more examples aren't relevant and why I'm not going to provide more:
Yes, it is a real example. But as I thought I'd explained, it's easy to look at one example now and say "because of x, y, and z the results were predictable and inevitable", "nobody would ever have bought that stock", "my screens would have prevented purchasing that", etc. etc. And then you'll say "give me another example." And on and on, and I'm not going to get involved in that.
I mentioned my experience with GE because GE had already been mentioned in this thread. Whatever stock anyone mentions, as with GE, in retrospect it's always possible to come up with criteria that would have excluded it, or sold it before it faltered, etc. No example will ever be sufficient to change someone's mind who believes it's possible to consistently do that.
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bertilak
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Re: Critique my dividend stock strategy

Post by bertilak »

tibbitts wrote: Sun May 09, 2021 9:17 am
bertilak wrote: Sun May 09, 2021 8:16 am
tibbitts wrote: Sat May 08, 2021 10:39 pm
olyveoil wrote: Sat May 08, 2021 10:30 pmSo GE is the real example?
No. It's not conceivable that you could have read my response and asked that question.
Well, I ready your post and still don't know what your real example is. You did mention GE but in a way that was hard to interpret. Therefore I think the question was justified. I had the same question but chose not to push it. I was awaiting your answer to olyveoil.
So now for the third and final time, this is the quote where I stated why more examples aren't relevant and why I'm not going to provide more:
No one was asking for "more" examples, just for the ONE you said was "real."
olyveoil wrote: Sat May 08, 2021 10:30 pm
tibbitts wrote: Sat May 08, 2021 7:18 pm
olyveoil wrote: Sat May 08, 2021 6:23 pm You have a Real Example?
Yes, it is a real example.
So GE is the real example?
You said "it is a real example" so asking what "it" refers to is a legitimate question.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
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Re: Critique my dividend stock strategy

Post by tibbitts »

bertilak wrote: Sun May 09, 2021 9:33 am You said "it is a real example" so asking what "it" refers to is a legitimate question.
Each person can decide for themselves if it's a legitimate question or a stupid question. My opinion won't be changing and I'm sure everyone else's won't either.
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Re: Critique my dividend stock strategy

Post by tibbitts »

olyveoil wrote: Sun May 09, 2021 9:45 am If you disagree with dividend investing, that is perfectly fine. But non-sequitur / strawman arguments are a waste of time.
I have modest tilts to small, value, (high) dividend, and dividend appreciation. Honestly I might not choose that path again, but I'm maintaining it. Less than .5% of my investments are, or ever have been, in individual stocks. What I'm addressing is whether it's practical for the OP to select individual equities that will reliably meet the OP's stated objectives, not about the merits of equities considered high dividend or dividend growth (or some combination thereof) as a group.
Last edited by tibbitts on Sun May 09, 2021 10:16 am, edited 1 time in total.
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retired@50
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Re: Critique my dividend stock strategy

Post by retired@50 »

tibbitts wrote: Sun May 09, 2021 9:52 am
bertilak wrote: Sun May 09, 2021 9:33 am You said "it is a real example" so asking what "it" refers to is a legitimate question.
Each person can decide for themselves if it's a legitimate question or a stupid question. My opinion won't be changing and I'm sure everyone else's won't either.
I really don't know if this will settle anything but here is some real data on GE.

In 2007 GE paid out $1.10 per share in dividends - about 27+ cents per quarter.

In 2020 GE paid out $0.04 per share in dividends - or 1 cent per quarter.

Since the OP said:
...Plan on never selling them...
The plan to "never sell" might be one of the most dangerous parts of the strategy.

Regards,
This is one person's opinion. Nothing more.
olyveoil
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Re: Critique my dividend stock strategy

Post by olyveoil »

retired@50 wrote: Sun May 09, 2021 10:12 am
tibbitts wrote: Sun May 09, 2021 9:52 am
bertilak wrote: Sun May 09, 2021 9:33 am You said "it is a real example" so asking what "it" refers to is a legitimate question.
Each person can decide for themselves if it's a legitimate question or a stupid question. My opinion won't be changing and I'm sure everyone else's won't either.
I really don't know if this will settle anything but here is some real data on GE.

In 2007 GE paid out $1.10 per share in dividends - about 27+ cents per quarter.

In 2020 GE paid out $0.04 per share in dividends - or 1 cent per quarter.

Since the OP said:
...Plan on never selling them...
The plan to "never sell" might be one of the most dangerous parts of the strategy.

Regards,
True.
If GE is a large part of or all of the dividend allocation.
Plenty of MF's owned GE all the way down as well.
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Re: Critique my dividend stock strategy

Post by tibbitts »

olyveoil wrote: Sun May 09, 2021 10:16 am True.
If GE is a large part of or all of the dividend allocation.
Plenty of MF's owned GE all the way down as well.
Although I'd like to give myself credit for not owning GE quite all the way down, the truth is that was mostly because at the time I rolled over my GE employer plan, I didn't have a brokerage IRA account, and wasn't inclined to create one.
Da5id
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Re: Critique my dividend stock strategy

Post by Da5id »

nbseer wrote: Sat May 08, 2021 4:30 pm 69, retired, married. With my CD's now maturing, and interest rates virtually zero for CDs or bond funds, I've been buying stocks of companies that pay healthy dividends in the 2% to 5% range, in most cases increasing dividends year to year. They are in my Roth and tIRAs. Plan on never selling them. Isnt this better than a bond fund, which pays virtually nothing and has an ER to boot?
As others have said, comparing stocks to bonds is an error. Asset allocation (stocks vs bonds/fixed income) is a much more important choice than which funds/strategy you pick within each category.

As to critiquing it, you should clarify your rationale further. If you think dividends are a free lunch, that is not correct. If you think dividend companies are more stable, you believe in getting income because it makes you feel better about your investments, whatever, those might be reasonable points, though not my personal cup of tea.
Last edited by Da5id on Sun May 09, 2021 11:20 am, edited 1 time in total.
delamer
Posts: 11519
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Re: Critique my dividend stock strategy

Post by delamer »

olyveoil wrote: Sat May 08, 2021 5:42 pm OP,
I am doing the same thing. for whatever reason, there is a lot of animosity to dividend paying stocks on this forum that repeat the downside of dividend stocks and use the same examples over and over.
There are a lot of stocks that fit your criteria. Lots.
There is also a downside to mutual funds that focus on dividend stocks in that they are very unpredictable in distributions.
There are also plenty of ETF's that pay consistent dividends. Plenty.

I am migrating 25% of my portfolio to dividend paying stocks/ETF's over time.

Yield on cost is a great metric. Wealth capitalist has a great google sheet template for tracking dividends, yields and monthly income streams and growth of income stream.
If you don’t understand the “whatever reason(s)” then you haven’t done your due diligence.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
delamer
Posts: 11519
Joined: Tue Feb 08, 2011 6:13 pm

Re: Critique my dividend stock strategy

Post by delamer »

olyveoil wrote: Sat May 08, 2021 6:20 pm OP,

My holdings
PSX 4.3%
MPC 3.9%
DHT 2.75%
ABBV 4.5%
BGS 6.4%
BMY 3.05%
C 2.73%
NUSI 8.44%
GAIN 6.15%
QYLD 11.7%
MRK 3.34%
NEWT 7.17%

Watchlist
AM 9.86%
BMO 3.58%
BNS 4.5%
CAH 3.47%
CPB 2.97%
CRT 7.4%
EPD 7.74%
FLO 3.24%
GPC 2.46%
IRM 5.94%
K 3.44%
KO 3.08%
LYB 3.68%
MET 2.87%
MFC 4.23%
NAVI 3.77%
NWL 3.16%
OKE 7%
PPL 5.76%
PRU 4.36%
REYN 3%
SO 4%
TFC 2.95%
WBA 3.43%

Watchlist REIT
ACC 4.14%
CHCT 4.33%
DOC 5.07%
GMRE 5.93%
LTC 5.6%
STAG 4.05%
UMH 3.49%
VICI 4.28%

Watchlist ETF
FDL 3.65%
HDEF 4.69%
JEPI 6.61%
KBWD 6.8%
PFFA 7.53%
PFFD 5.11%
PGX 4.95%
RYLD 11.2%
HYLB 4.92%
SRET 6.6%
YYY 9%
XYLD 9.55%
SDOG 3.81%
I can’t imagine taking the time as an individual investor to do all that tracking, without evidence that it provides a huge advantage in risk-adjusted returns.

One of the advantages of indexing is simplicity.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
olyveoil
Posts: 77
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Re: Critique my dividend stock strategy

Post by olyveoil »

delamer wrote: Sun May 09, 2021 10:47 am
olyveoil wrote: Sat May 08, 2021 5:42 pm OP,
I am doing the same thing. for whatever reason, there is a lot of animosity to dividend paying stocks on this forum that repeat the downside of dividend stocks and use the same examples over and over.
There are a lot of stocks that fit your criteria. Lots.
There is also a downside to mutual funds that focus on dividend stocks in that they are very unpredictable in distributions.
There are also plenty of ETF's that pay consistent dividends. Plenty.

I am migrating 25% of my portfolio to dividend paying stocks/ETF's over time.

Yield on cost is a great metric. Wealth capitalist has a great google sheet template for tracking dividends, yields and monthly income streams and growth of income stream.
If you don’t understand the “whatever reason(s)” then you haven’t done your due diligence.
Um. OK.
Then explain it to me.
What is your due diligence?
olyveoil
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Re: Critique my dividend stock strategy

Post by olyveoil »

delamer wrote: Sun May 09, 2021 10:51 am
olyveoil wrote: Sat May 08, 2021 6:20 pm OP,

My holdings
PSX 4.3%
MPC 3.9%
DHT 2.75%
ABBV 4.5%
BGS 6.4%
BMY 3.05%
C 2.73%
NUSI 8.44%
GAIN 6.15%
QYLD 11.7%
MRK 3.34%
NEWT 7.17%

Watchlist
AM 9.86%
BMO 3.58%
BNS 4.5%
CAH 3.47%
CPB 2.97%
CRT 7.4%
EPD 7.74%
FLO 3.24%
GPC 2.46%
IRM 5.94%
K 3.44%
KO 3.08%
LYB 3.68%
MET 2.87%
MFC 4.23%
NAVI 3.77%
NWL 3.16%
OKE 7%
PPL 5.76%
PRU 4.36%
REYN 3%
SO 4%
TFC 2.95%
WBA 3.43%

Watchlist REIT
ACC 4.14%
CHCT 4.33%
DOC 5.07%
GMRE 5.93%
LTC 5.6%
STAG 4.05%
UMH 3.49%
VICI 4.28%

Watchlist ETF
FDL 3.65%
HDEF 4.69%
JEPI 6.61%
KBWD 6.8%
PFFA 7.53%
PFFD 5.11%
PGX 4.95%
RYLD 11.2%
HYLB 4.92%
SRET 6.6%
YYY 9%
XYLD 9.55%
SDOG 3.81%
I can’t imagine taking the time as an individual investor to do all that tracking, without evidence that it provides a huge advantage in risk-adjusted returns.

One of the advantages of indexing is simplicity.
It's not for everybody, for sure.
But dividend investing as part of a portfolio is oft-dismissed here. I adamantly disagree with those dismissals.
From what I can tell the disagreement with dividend investing here are--in no particular order:
>>creates taxable events every month/quarter
>>It's not simple enough
>>dividend investors cannot do math
>>Dividend investors haven't done their due diligence

First two--fair enough. Again, not for everyone.
Last two -- absurd on their face and nothing more than arrogance.
anonsdca
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Re: Critique my dividend stock strategy

Post by anonsdca »

nbseer wrote: Sat May 08, 2021 4:30 pm 69, retired, married. With my CD's now maturing, and interest rates virtually zero for CDs or bond funds, I've been buying stocks of companies that pay healthy dividends in the 2% to 5% range, in most cases increasing dividends year to year. They are in my Roth and tIRAs. Plan on never selling them. Isnt this better than a bond fund, which pays virtually nothing and has an ER to boot?

Lots of posts already, most nonsense as usual when it comes to dividend investing. No one can critique your strategy unless you list the equities.

The critique would come from that, not the strategy.
Da5id
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Re: Critique my dividend stock strategy

Post by Da5id »

olyveoil wrote: Sun May 09, 2021 11:03 am But dividend investing as part of a portfolio is oft-dismissed here. I adamantly disagree with those dismissals.
From what I can tell the disagreement with dividend investing here are--in no particular order:
>>creates taxable events every month/quarter
>>It's not simple enough
>>dividend investors cannot do math
>>Dividend investors haven't done their due diligence

First two--fair enough. Again, not for everyone.
Last two -- absurd on their face and nothing more than arrogance.
Point 3 most often comes up when dividend investors assert that there is no cost to dividends. e.g. that they don't impact share appreciation. Or that the stock price doesn't fall ex-dividend. Other than that, it is an unfair attack on those who prefer dividends for whatever emotional or philosophical reasons.
Last edited by Da5id on Sun May 09, 2021 12:15 pm, edited 1 time in total.
delamer
Posts: 11519
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Re: Critique my dividend stock strategy

Post by delamer »

olyveoil wrote: Sun May 09, 2021 11:03 am
delamer wrote: Sun May 09, 2021 10:51 am
olyveoil wrote: Sat May 08, 2021 6:20 pm OP,

My holdings
PSX 4.3%
MPC 3.9%
DHT 2.75%
ABBV 4.5%
BGS 6.4%
BMY 3.05%
C 2.73%
NUSI 8.44%
GAIN 6.15%
QYLD 11.7%
MRK 3.34%
NEWT 7.17%

Watchlist
AM 9.86%
BMO 3.58%
BNS 4.5%
CAH 3.47%
CPB 2.97%
CRT 7.4%
EPD 7.74%
FLO 3.24%
GPC 2.46%
IRM 5.94%
K 3.44%
KO 3.08%
LYB 3.68%
MET 2.87%
MFC 4.23%
NAVI 3.77%
NWL 3.16%
OKE 7%
PPL 5.76%
PRU 4.36%
REYN 3%
SO 4%
TFC 2.95%
WBA 3.43%

Watchlist REIT
ACC 4.14%
CHCT 4.33%
DOC 5.07%
GMRE 5.93%
LTC 5.6%
STAG 4.05%
UMH 3.49%
VICI 4.28%

Watchlist ETF
FDL 3.65%
HDEF 4.69%
JEPI 6.61%
KBWD 6.8%
PFFA 7.53%
PFFD 5.11%
PGX 4.95%
RYLD 11.2%
HYLB 4.92%
SRET 6.6%
YYY 9%
XYLD 9.55%
SDOG 3.81%
I can’t imagine taking the time as an individual investor to do all that tracking, without evidence that it provides a huge advantage in risk-adjusted returns.

One of the advantages of indexing is simplicity.
It's not for everybody, for sure.
But dividend investing as part of a portfolio is oft-dismissed here. I adamantly disagree with those dismissals.
From what I can tell the disagreement with dividend investing here are--in no particular order:
>>creates taxable events every month/quarter
>>It's not simple enough
>>dividend investors cannot do math
>>Dividend investors haven't done their due diligence

First two--fair enough. Again, not for everyone.
Last two -- absurd on their face and nothing more than arrogance.
You misunderstood my comment regarding due diligence.

You originally noted that “for whatever reason” dividend investing was not in favor on this forum.

My point was that if you didn’t understand the reasons for that disfavor, then you hadn’t explored the topic enough to make a good choice on the issue.

Two people can explore a topic thoroughly and come to different conclusions, obviously. As long as you are comfortable that you understand the pros and cons, that’s what matters.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
olyveoil
Posts: 77
Joined: Thu Feb 04, 2021 8:47 am

Re: Critique my dividend stock strategy

Post by olyveoil »

delamer wrote: Sun May 09, 2021 12:12 pm
olyveoil wrote: Sun May 09, 2021 11:03 am
delamer wrote: Sun May 09, 2021 10:51 am
olyveoil wrote: Sat May 08, 2021 6:20 pm OP,

My holdings
PSX 4.3%
MPC 3.9%
DHT 2.75%
ABBV 4.5%
BGS 6.4%
BMY 3.05%
C 2.73%
NUSI 8.44%
GAIN 6.15%
QYLD 11.7%
MRK 3.34%
NEWT 7.17%

Watchlist
AM 9.86%
BMO 3.58%
BNS 4.5%
CAH 3.47%
CPB 2.97%
CRT 7.4%
EPD 7.74%
FLO 3.24%
GPC 2.46%
IRM 5.94%
K 3.44%
KO 3.08%
LYB 3.68%
MET 2.87%
MFC 4.23%
NAVI 3.77%
NWL 3.16%
OKE 7%
PPL 5.76%
PRU 4.36%
REYN 3%
SO 4%
TFC 2.95%
WBA 3.43%

Watchlist REIT
ACC 4.14%
CHCT 4.33%
DOC 5.07%
GMRE 5.93%
LTC 5.6%
STAG 4.05%
UMH 3.49%
VICI 4.28%

Watchlist ETF
FDL 3.65%
HDEF 4.69%
JEPI 6.61%
KBWD 6.8%
PFFA 7.53%
PFFD 5.11%
PGX 4.95%
RYLD 11.2%
HYLB 4.92%
SRET 6.6%
YYY 9%
XYLD 9.55%
SDOG 3.81%
I can’t imagine taking the time as an individual investor to do all that tracking, without evidence that it provides a huge advantage in risk-adjusted returns.

One of the advantages of indexing is simplicity.
It's not for everybody, for sure.
But dividend investing as part of a portfolio is oft-dismissed here. I adamantly disagree with those dismissals.
From what I can tell the disagreement with dividend investing here are--in no particular order:
>>creates taxable events every month/quarter
>>It's not simple enough
>>dividend investors cannot do math
>>Dividend investors haven't done their due diligence

First two--fair enough. Again, not for everyone.
Last two -- absurd on their face and nothing more than arrogance.
You misunderstood my comment regarding due diligence.

You originally noted that “for whatever reason” dividend investing was not in favor on this forum.

My point was that if you didn’t understand the reasons for that disfavor, then you hadn’t explored the topic enough to make a good choice on the issue.

Two people can explore a topic thoroughly and come to different conclusions, obviously. As long as you are comfortable that you understand the pros and cons, that’s what matters.
I *think I understood your point quite fine.
Either
1> I didn't do DD on dividend investing in general
or
2.> I didn't do DD on dividend investing on this forum.

Either way my answer stands.

It is not for everyone. It does play a part of many investor's portfolio. And, I believe a good part.
Plus, I do not intend on reading every post in this forum to understand why many here dismiss dividend investing. I gave the most recent 4 examples I can think of. And two of them are absurd.

So, again....what due diligence am I missing?
youraveragejoe
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Re: Critique my dividend stock strategy

Post by youraveragejoe »

nbseer wrote: Sat May 08, 2021 4:30 pm 69, retired, married. With my CD's now maturing, and interest rates virtually zero for CDs or bond funds, I've been buying stocks of companies that pay healthy dividends in the 2% to 5% range, in most cases increasing dividends year to year. They are in my Roth and tIRAs. Plan on never selling them. Isnt this better than a bond fund, which pays virtually nothing and has an ER to boot?
I agree with others as you are comparing apples to oranges. You have to ask yourself what is the purpose of bonds/CDs in your portfolio? If you don't care about risk, then dividend funds are OK. Risk meaning loss of capital, stock company going bankrupt, etc. People on this forum like to talk about Total Return instead of dividend yields, since we care about the total amount instead of a piece of the pie.

How much of CD's are you talking about? You don't have to answer, but right now I-Bonds are looking like the best risk-free investment no matter what age you are and timeframe you are using these for. The only problem is the $ limit set, and that they are part of your taxable account not Roth /tIRAs.

If you are hard set with dividend-paying companies, I would advocate for an easy, low-cost fund like Vanguard High Dividend Yield ETF (VYM) or Vanguard High Dividend Yield Index Fund Admiral Shares (VHYAX). The quality of the companies are the best (although I can't say for sure for ALL of the companies since there are over 400 companies in the fund), and the fund managers do all of the hard work for you with a 30-day SEC yield of 2.74% as of 4/30/21.
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nedsaid
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Re: Critique my dividend stock strategy

Post by nedsaid »

nbseer wrote: Sat May 08, 2021 4:30 pm 69, retired, married. With my CD's now maturing, and interest rates virtually zero for CDs or bond funds, I've been buying stocks of companies that pay healthy dividends in the 2% to 5% range, in most cases increasing dividends year to year. They are in my Roth and tIRAs. Plan on never selling them. Isnt this better than a bond fund, which pays virtually nothing and has an ER to boot?
This strategy can work and most often does work. I have a portfolio of 20 individual stocks in a Brokerage IRA and all but one are dividend paying stocks. The idea was to have a source of income with increasing payments over time, hopefully a stream of income that would grow faster than inflation. What I have found is that my stocks have about tracked the Vanguard Value Index. I have also found that a lot of the stocks that I own are in the Value Index and also in Vanguard High Dividend Index. I am actually thinking about replacing the stocks with one or both of those Vanguard Index funds.

An issue with individual stocks is that such a portfolio takes a certain amount of maintenance. You also want to diversify across industry groups. I think you can achieve the same goal with a whole lot less effort.
A fool and his money are good for business.
delamer
Posts: 11519
Joined: Tue Feb 08, 2011 6:13 pm

Re: Critique my dividend stock strategy

Post by delamer »

olyveoil wrote: Sun May 09, 2021 12:35 pm
delamer wrote: Sun May 09, 2021 12:12 pm
olyveoil wrote: Sun May 09, 2021 11:03 am
delamer wrote: Sun May 09, 2021 10:51 am
olyveoil wrote: Sat May 08, 2021 6:20 pm OP,

My holdings
PSX 4.3%
MPC 3.9%
DHT 2.75%
ABBV 4.5%
BGS 6.4%
BMY 3.05%
C 2.73%
NUSI 8.44%
GAIN 6.15%
QYLD 11.7%
MRK 3.34%
NEWT 7.17%

Watchlist
AM 9.86%
BMO 3.58%
BNS 4.5%
CAH 3.47%
CPB 2.97%
CRT 7.4%
EPD 7.74%
FLO 3.24%
GPC 2.46%
IRM 5.94%
K 3.44%
KO 3.08%
LYB 3.68%
MET 2.87%
MFC 4.23%
NAVI 3.77%
NWL 3.16%
OKE 7%
PPL 5.76%
PRU 4.36%
REYN 3%
SO 4%
TFC 2.95%
WBA 3.43%

Watchlist REIT
ACC 4.14%
CHCT 4.33%
DOC 5.07%
GMRE 5.93%
LTC 5.6%
STAG 4.05%
UMH 3.49%
VICI 4.28%

Watchlist ETF
FDL 3.65%
HDEF 4.69%
JEPI 6.61%
KBWD 6.8%
PFFA 7.53%
PFFD 5.11%
PGX 4.95%
RYLD 11.2%
HYLB 4.92%
SRET 6.6%
YYY 9%
XYLD 9.55%
SDOG 3.81%
I can’t imagine taking the time as an individual investor to do all that tracking, without evidence that it provides a huge advantage in risk-adjusted returns.

One of the advantages of indexing is simplicity.
It's not for everybody, for sure.
But dividend investing as part of a portfolio is oft-dismissed here. I adamantly disagree with those dismissals.
From what I can tell the disagreement with dividend investing here are--in no particular order:
>>creates taxable events every month/quarter
>>It's not simple enough
>>dividend investors cannot do math
>>Dividend investors haven't done their due diligence

First two--fair enough. Again, not for everyone.
Last two -- absurd on their face and nothing more than arrogance.
You misunderstood my comment regarding due diligence.

You originally noted that “for whatever reason” dividend investing was not in favor on this forum.

My point was that if you didn’t understand the reasons for that disfavor, then you hadn’t explored the topic enough to make a good choice on the issue.

Two people can explore a topic thoroughly and come to different conclusions, obviously. As long as you are comfortable that you understand the pros and cons, that’s what matters.
I *think I understood your point quite fine.
Either
1> I didn't do DD on dividend investing in general
or
2.> I didn't do DD on dividend investing on this forum.

Either way my answer stands.

It is not for everyone. It does play a part of many investor's portfolio. And, I believe a good part.
Plus, I do not intend on reading every post in this forum to understand why many here dismiss dividend investing. I gave the most recent 4 examples I can think of. And two of them are absurd.

So, again....what due diligence am I missing?
I can’t possibly know whether you did your due diligence on dividend investing.

Hence, my initial statement starts with “If” not “Because.”

In any case, the OP is asking about dividend investing as an alternative to a bond fund. Is that your intended role for your dividend stocks?

As tibbitts has noted below, there’s a difference between owning dividend stocks as part of your equities allocation versus owning them as a substitute for bonds.
Last edited by delamer on Sun May 09, 2021 1:24 pm, edited 2 times in total.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
tibbitts
Posts: 13950
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Re: Critique my dividend stock strategy

Post by tibbitts »

Almost if not all Bogleheads support dividend investing to the extent it's already included in broad market index funds like Total Stock Market. Quite a few might somewhat tilt toward it indirectly or otherwise in tax advantaged accounts, if only as a sometimes-byproduct of value for example. A few might go so far as to use a fund that favors dividend growth, perhaps as associated with "quality." What I think almost everyone is disputing is both the idea of buying individual dividend-paying companies as a replacement for CDs or bonds, and the clear-at-least-to-me implication that it's reasonably likely for an individual to be able to "out-select" both an index of dividend-paying stocks, and active funds with the same objectives.

What isn't helping is that some of the usually-stalwart "stay the course" standard-bearers seem genuinely perplexed by the continuing low-interest-rate environment, and are jumping ship to alternatives, like dividend stocks, that they never would have previously considered.
User avatar
CyclingDuo
Posts: 4284
Joined: Fri Jan 06, 2017 9:07 am

Re: Critique my dividend stock strategy

Post by CyclingDuo »

nbseer wrote: Sat May 08, 2021 4:30 pm 69, retired, married. With my CD's now maturing, and interest rates virtually zero for CDs or bond funds, I've been buying stocks of companies that pay healthy dividends in the 2% to 5% range, in most cases increasing dividends year to year. They are in my Roth and tIRAs. Plan on never selling them. Isnt this better than a bond fund, which pays virtually nothing and has an ER to boot?
nbseer: You asked the same question on March 29th of this year and never responded to anyone in that thread.

viewtopic.php?f=1&t=344522&p=5911792#top
nbseer wrote: Mon Mar 29, 2021 10:30 am With bond fund interest rates so low, is there anything wrong in retirement with buying high dividend stocks and holding them forever? Seems a lot of people think buying stocks just for the dividends is a bad idea. I'm talking stocks that would hopefully not cut their dividends.
It appears based on your post in this thread that since March 29th, you have been purchasing shares of companies that pay dividends.

List out your portfolio of the dividend payers you purchased as that might get more specific feedback regarding your portfolio. There are also places on the internet with plenty of dividend stock discussion and portfolio review besides Bogleheads since dividend stock discussions always seem to get sorely derailed here.

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
dbr
Posts: 35928
Joined: Sun Mar 04, 2007 9:50 am

Re: Critique my dividend stock strategy

Post by dbr »

CyclingDuo wrote: Sun May 09, 2021 1:26 pm
nbseer wrote: Sat May 08, 2021 4:30 pm 69, retired, married. With my CD's now maturing, and interest rates virtually zero for CDs or bond funds, I've been buying stocks of companies that pay healthy dividends in the 2% to 5% range, in most cases increasing dividends year to year. They are in my Roth and tIRAs. Plan on never selling them. Isnt this better than a bond fund, which pays virtually nothing and has an ER to boot?
nbseer: You asked the same question on March 29th of this year and never responded to anyone in that thread.

viewtopic.php?f=1&t=344522&p=5911792#top
nbseer wrote: Mon Mar 29, 2021 10:30 am With bond fund interest rates so low, is there anything wrong in retirement with buying high dividend stocks and holding them forever? Seems a lot of people think buying stocks just for the dividends is a bad idea. I'm talking stocks that would hopefully not cut their dividends.
It appears based on your post in this thread that since March 29th, you have been purchasing shares of companies that pay dividends.

List out your portfolio of the dividend payers you purchased as that might get more specific feedback regarding your portfolio. There are also places on the internet with plenty of dividend stock discussion and portfolio review besides Bogleheads since dividend stock discussions always seem to get sorely derailed here.

CyclingDuo
One can try here: http://discuss.morningstar.com/NewSocialize/forums/

It may be necessary to finagle being a Morningstar Subscriber of some kind.
User avatar
patrick013
Posts: 3183
Joined: Mon Jul 13, 2015 7:49 pm

Re: Critique my dividend stock strategy

Post by patrick013 »

nbseer wrote: Sat May 08, 2021 4:30 pm I've been buying stocks of companies that pay healthy dividends in the 2% to 5% range, in most cases increasing dividends year to year.
And the best way to do that is with indexes.

S&P 500 High Dividend Index

Ticker SPYD has a long history as an index taking the largest dividends from the 500 index while
stalling in the COVID era. Ticker QDIV has a long history as an index and lately became available
to the general public. Both should shine again in a bull market. I think they cover large cap
dividend opportunities well while the 500 index has an overall payout ratio over 40% anyway.

Other choices are VPU or XLU taking positions in utilities and have increased dividends slightly
even in COVID.

Individual stocks are for the adventurous especially MLP's which can drop 100% overnight
while index replacement makes investing more comfortable for the less adventurous when
a stock investment really needs to be replaced.

Hopefully the overall economy will stay positive.
age in bonds, buy-and-hold, 10 year business cycle
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