Safe high dividend stock

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miamivice
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Safe high dividend stock

Post by miamivice »

I'm looking to invest $1,300 into safe, high dividend stock. Companies that are not likely to go bankrupt and pay good dividends. I current have investments in the following:

Exxon Mobile
BP
Lamb Weston
Pfizer
Proctor and Gamble
Southern Company
Vanguard Utilities ETF

Any suggestions on which I should invest in, or if I should consider a different company than listed above?
Topic Author
miamivice
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Joined: Tue Jun 11, 2013 11:46 am

Re: Safe high dividend stock

Post by miamivice »

One option is I could buy $1,300 of I-bonds. It appears that they are providing 9.62% interest right now. Should I go this route in lieu of stocks?
sailaway
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Re: Safe high dividend stock

Post by sailaway »

miamivice wrote: Fri May 20, 2022 8:25 pm One option is I could buy $1,300 of I-bonds. It appears that they are providing 9.62% interest right now. Should I go this route in lieu of stocks?
Yes, as long as you don't need it for the next 12 months.
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arcticpineapplecorp.
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Re: Safe high dividend stock

Post by arcticpineapplecorp. »

sailaway wrote: Fri May 20, 2022 8:28 pm
miamivice wrote: Fri May 20, 2022 8:25 pm One option is I could buy $1,300 of I-bonds. It appears that they are providing 9.62% interest right now. Should I go this route in lieu of stocks?
Yes, as long as you don't need it for the next 12 months.
and are willing to lose 3 months of interest if cashed within the first 5 years.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
mega317
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Re: Safe high dividend stock

Post by mega317 »

It might help to tell us your goals? $1,300 is a specific and frankly not that large amount of money. It makes me think there is something special about the situation.
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arcticpineapplecorp.
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Re: Safe high dividend stock

Post by arcticpineapplecorp. »

miamivice wrote: Fri May 20, 2022 8:18 pm I'm looking to invest $1,300 into safe, high dividend stock. Companies that are not likely to go bankrupt and pay good dividends. I current have investments in the following:

Exxon Mobile
BP
Lamb Weston
Pfizer
Proctor and Gamble
Southern Company
Vanguard Utilities ETF

Any suggestions on which I should invest in, or if I should consider a different company than listed above?
there is no such thing as a safe stock.

why do you need a high dividend stock?

why are you interested in creating a taxable event?

dividends are not a free lunch. chasing dividends is a mistake:
Thus, a dividend-paying strategy has become less and less diversified. In 1991, creating a portfolio that captured 50 percent of global dividends required about 320 companies. By 2012, that figure had dropped to just 220. By comparison, the Vanguard Total Stock Market Index Fund (VTSMX) had more than 3,200 stocks at the end of February, and the Vanguard Total International Stock Index Fund (VGTSX) had more than 6,100 stocks.

Although less volatile than the capital gain component of stock returns, the aggregate stream of dividend payments is subject to the same broad, macroeconomic risks that affect capital gains. For example, in 2009, 14 percent of firms around the world eliminated their dividend, and 43 percent reduced their dividend.

The evidence makes clear that there are no advantages in terms of returns to a strategy of investing in dividend-paying stocks. In addition, such a strategy sacrifices diversification benefits. More importantly, as we have shown in prior posts, neither a strategy of investing in high-yielding stocks or the stocks of companies that have shown a high growth in dividends has proven to be an efficient means of improving returns.

https://www.cbsnews.com/news/why-chasin ... a-mistake/
Thus, a dividend-paying strategy has become less and less diversified. In 1991, creating a portfolio that captured 50 percent of global dividends required about 320 companies. By 2012, that figure had dropped to just 220. By comparison, the Vanguard Total Stock Market Index Fund (VTSMX) had more than 3,200 stocks at the end of February, and the Vanguard Total International Stock Index Fund (VGTSX) had more than 6,100 stocks.

Although less volatile than the capital gain component of stock returns, the aggregate stream of dividend payments is subject to the same broad, macroeconomic risks that affect capital gains. For example, in 2009, 14 percent of firms around the world eliminated their dividend, and 43 percent reduced their dividend.

The evidence makes clear that there are no advantages in terms of returns to a strategy of investing in dividend-paying stocks. In addition, such a strategy sacrifices diversification benefits. More importantly, as we have shown in prior posts, neither a strategy of investing in high-yielding stocks or the stocks of companies that have shown a high growth in dividends has proven to be an efficient means of improving returns.

https://www.etf.com/sections/index-inve ... nopaging=1
Separate Mental Accounts
These results provide direct evidence that investors do, in fact, treat dividends in a more naive way than predicted by financial theory, creating separate mental accounts for them. The findings are also consistent with prior research, which has shown that investors prefer to consume out of their dividends.

Hartzmark and Solomon concluded that “the free dividends fallacy not only explains psychologically why dividends may be desirable, but also why the shifting attractiveness of dividends and capital gains can generate time-varying demand for dividends which firms respond to.” For example, as I’ve written about before, it has been well-documented that some mutual funds “juice” their dividends by buying stocks just before the ex-dividend date.

In addition, research has shown that firms tend to increase their dividends when dividends are more overvalued. The authors added that the mental accounting of dividends as an income stream can also explain the documented preference among older investors for dividends.

Another important finding involved investor preference for dividends during periods of high demand (low interest rates and bear markets), causing them to be relatively overpriced (which shows up in higher price-to-book value). This negatively impacted returns by 2% to 4%, resulting in a significant loss of the equity risk premium. Unfortunately, this isn’t the only negative impact of the preference for dividends.

https://www.etf.com/sections/index-inve ... nopaging=1
mental accounting. one of the many cognitive biases:
https://www.visualcapitalist.com/every- ... tive-bias/
No Tax Or Income Justification

While fund manager behavior is consistent with an underlying investor demand for dividends, it cannot be explained by either taxes or the need for income. Funds can generate equivalent tax-free distributions by returning capital instead of acquiring and then distributing dividends.

Similarly, investors in individual stocks can generate self-dividends by selling shares. If investors sell shares, generating the same proceeds that a dividend would have paid, they will end up with an identical amount of dollars invested in the company’s stock as they would have had if they’d kept all of their shares and the company instead had paid a dividend. This occurs because the company’s share price would drop, reflecting the dividend that has reduced the company’s assets.

However, while distributing cash to fund shareholders is easy, such distributions can only be labeled as “dividends” if they correspond to dividends received by the fund on its underlying securities. As a result, mutual funds must hold dividend-paying securities in order to pay out dividends themselves.

There are two ways a mutual fund can meet investors’ desire for large dividend payments. Either it can buy high-dividend-yield securities, or it can artificially increase their dividend yields by “buying the dividends” (or “juicing” them). The process involves purchasing stocks before the day on which the dividend will accrue to investors (known as the “ex-dividend day”), collecting the dividend and then selling the stock afterward.

https://www.etf.com/sections/index-inve ... nopaging=1
In his post, Larry Swedroe writes that Vanguard debunked the dividend myth:
Both theory and historical evidence demonstrate there isn’t anything unique about dividends. They are just another source of profit, along with capital gains. Yet many investors treat these two sources of profit very differently, with negative consequences in terms of lower returns, greater risks and less diversified portfolios.
source: https://www.etf.com/sections/index-inve ... nopaging=1
But Larry says (tongue in cheek):
Vanguard’s conclusion that a total-return approach is superior to one that focuses on dividend strategies is interesting in light of the fact that they offer dividend strategy funds: the Vanguard Dividend Appreciation ETF (VIG) and its mutual fund counterpart, the Vanguard Dividend Appreciation Index Fund (VDADX), as well as the actively managed Vanguard Dividend Growth Fund (VDIGX).
source: https://www.etf.com/sections/index-inve ... nopaging=1
please post according to "asking portfolio questions" in my link in my signature below.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
gougou
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Re: Safe high dividend stock

Post by gougou »

MPLX pays almost 10%. It’s a MLP so only buy it if you don’t mind K1s at tax time.

And take a look at PBR.A. Crazy 40% dividend yield.
Last edited by gougou on Fri May 20, 2022 9:05 pm, edited 1 time in total.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
DesertDiva
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Re: Safe high dividend stock

Post by DesertDiva »

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corn18
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Re: Safe high dividend stock

Post by corn18 »

gougou wrote: Fri May 20, 2022 9:01 pm MPLX pays almost 10%. It’s a MLP so only buy it if you don’t mind K1s at tax time.

And take a look at PBR.A. Crazy 40% dividend yield.
Neither of those is what I would consider safe.
Consistently sets low goals and fails to achieve them.
gougou
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Re: Safe high dividend stock

Post by gougou »

corn18 wrote: Fri May 20, 2022 9:10 pm
gougou wrote: Fri May 20, 2022 9:01 pm MPLX pays almost 10%. It’s a MLP so only buy it if you don’t mind K1s at tax time.

And take a look at PBR.A. Crazy 40% dividend yield.
Neither of those is what I would consider safe.
MPLX is as safe as you can get. Why would you not consider it safe?
The sillier the market’s behavior, the greater the opportunity for the business like investor.
summit
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Re: Safe high dividend stock

Post by summit »

Highly recommend Simon (SPG).
People first, then money, then things.
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corn18
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Re: Safe high dividend stock

Post by corn18 »

gougou wrote: Fri May 20, 2022 9:15 pm
corn18 wrote: Fri May 20, 2022 9:10 pm
gougou wrote: Fri May 20, 2022 9:01 pm MPLX pays almost 10%. It’s a MLP so only buy it if you don’t mind K1s at tax time.

And take a look at PBR.A. Crazy 40% dividend yield.
Neither of those is what I would consider safe.
MPLX is as safe as you can get. Why would you not consider it safe?
It went from $32.89 to $10.85 from Mar 2019 to Mar 2020. And what the heck happened in 2015?

Image
Consistently sets low goals and fails to achieve them.
gougou
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Re: Safe high dividend stock

Post by gougou »

corn18 wrote: Fri May 20, 2022 9:20 pm
gougou wrote: Fri May 20, 2022 9:15 pm
corn18 wrote: Fri May 20, 2022 9:10 pm
gougou wrote: Fri May 20, 2022 9:01 pm MPLX pays almost 10%. It’s a MLP so only buy it if you don’t mind K1s at tax time.

And take a look at PBR.A. Crazy 40% dividend yield.
Neither of those is what I would consider safe.
MPLX is as safe as you can get. Why would you not consider it safe?
It went from $32.89 to $10.85 from Mar 2019 to Mar 2020. And what the heck happened in 2015?

Image
It was overvalued in the last energy bull market. It grew its dividend every year since it went public, even during 2020. Not sure why you should care so much about its price actions.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
smectym
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Re: Safe high dividend stock

Post by smectym »

miamivice wrote: Fri May 20, 2022 8:18 pm I'm looking to invest $1,300 into safe, high dividend stock. Companies that are not likely to go bankrupt and pay good dividends. I current have investments in the following:

Exxon Mobile
BP
Lamb Weston
Pfizer
Proctor and Gamble
Southern Company
Vanguard Utilities ETF

Any suggestions on which I should invest in, or if I should consider a different company than listed above?
With a moderate sum to invest, if you’re committed to an individual stock that has a strategy of paying a consistent high dividend, suggest you look at the Dividend Reinvestment Programs (“DRIP”) maintained by a number of Fortune 500 companies, including several on your list.

I’ve been in Duke Energy’s DRIP since 2013 and it’s been a successful investment, though it’s tough to find a duller stock in or out of the S&P. Already a hefty percentage of a very decent balance is composed of reinvested dividends, which continue to compound, even if I were to cease new contributions altogether.

In such a program, you pay a modest amount such as $50 to join and then commit to investing at least an equally modest amount (though you can invest as much as you like) per month, and the company will automatically reinvest the dividends on your behalf in additional shares. The idea, of course, is that your investment grows over time. If your available cash increases, you can elect to increase your monthly investment with a few clicks. If you want to cash out, there’s typically no penalty, or at most a small administrative fee.

These programs have been around forever but few know of or take advantage of them. It’s not a complete investment strategy by any means, but can be the first step or a complementary one.

Just as an example, attached is a link to Southern’s DRIP plan. I am not in that plan and have no connection to Southern and just pulled it off their website, since it’s one of the companies on your list, as an example to assist you if you’re interested. If DRIP doesn’t sound like what you’re looking for, no need to click on the link. (All the disclaimers, sorry, just to fend off the few zealous truffle-hunters that fortunately roam this board rooting for conflicts of interest, the better to protect all us unwary ones.)

https://investor.southerncompany.com/sh ... fault.aspx

Good luck finding the right investment.
mega317
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Re: Safe high dividend stock

Post by mega317 »

smectym wrote: Fri May 20, 2022 9:32 pm In such a program, you pay a modest amount such as $50 to join and then commit to investing at least an equally modest amount (though you can invest as much as you like) per month, and the company will automatically reinvest the dividends on your behalf in additional shares.
But you can invest at any brokerage for free and reinvest dividends on your own also for free. Why would OP pay up front 3% of the whole sum for a service that’s free everywhere else?
CorradoJr
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Re: Safe high dividend stock

Post by CorradoJr »

Altria (MO) 6.97% yield currently.

They certainly have a long history of increasing their dividend each year.

I haven't followed them recently, but here is a press release from 2019:

RICHMOND, Va.--(BUSINESS WIRE)--Altria Group, Inc. (Altria) (NYSE: MO) today announced that its Board of Directors (Board) voted to increase Altria’s regular quarterly dividend for the 54th time in the past 50 years. The Board approved a dividend increase to $0.84 per common share versus the previous rate of $0.80 per common share. The quarterly dividend is payable on October 10, 2019, to shareholders of record as of September 16, 2019. The ex-dividend date is September 13, 2019.
Last edited by CorradoJr on Fri May 20, 2022 9:40 pm, edited 1 time in total.
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baldtaxguy
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Re: Safe high dividend stock

Post by baldtaxguy »

I would recommend the I-Bond route. But if you are set on an individual stock, I would recommend EPD.
smectym
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Re: Safe high dividend stock

Post by smectym »

smectym wrote: Fri May 20, 2022 9:32 pm
miamivice wrote: Fri May 20, 2022 8:18 pm I'm looking to invest $1,300 into safe, high dividend stock. Companies that are not likely to go bankrupt and pay good dividends. I current have investments in the following:

Exxon Mobile
BP
Lamb Weston
Pfizer
Proctor and Gamble
Southern Company
Vanguard Utilities ETF

Any suggestions on which I should invest in, or if I should consider a different company than listed above?
With a moderate sum to invest, if you’re committed to an individual stock that has a strategy of paying a consistent high dividend, suggest you look at the Dividend Reinvestment Programs (“DRIP”) maintained by a number of Fortune 500 companies, including several on your list.

I’ve been in Duke Energy’s DRIP since 2013 and it’s been a successful investment, though it’s tough to find a duller stock in or out of the S&P. Already a hefty percentage of a very decent balance is composed of reinvested dividends, which continue to compound, even if I were to cease new contributions altogether.

In such a program, you pay a modest amount such as $50 to join and then commit to investing at least an equally modest amount (though you can invest as much as you like) per month, and the company will automatically reinvest the dividends on your behalf in additional shares. The idea, of course, is that your investment grows over time. If your available cash increases, you can elect to increase your monthly investment with a few clicks. If you want to cash out, there’s typically no penalty, or at most a small administrative fee.

These programs have been around forever but few know of or take advantage of them. It’s not a complete investment strategy by any means, but can be the first step or a complementary one.

Just as an example, attached is a link to Southern’s DRIP plan. I am not in that plan and have no connection to Southern and just pulled it off their website, since it’s one of the companies on your list, as an example to assist you if you’re interested. If DRIP doesn’t sound like what you’re looking for, no need to click on the link. (All the disclaimers, sorry, just to fend off the few zealous truffle-hunters that fortunately roam this board rooting for conflicts of interest, the better to protect all us unwary ones.)

https://investor.southerncompany.com/sh ... fault.aspx

Good luck finding the right investment.
PS If you want diversification, another way to go would be Vanguard’s high dividend yield fund (VHDYX) or exchange-traded fund (VYM). Several of the funds you list are among the holdings, and Exxon near the top. VHDYX typically has a $3,000 minimum investment, but you probably have a brokerage account, and you can buy the ETF for as little as one share.
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arcticpineapplecorp.
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Re: Safe high dividend stock

Post by arcticpineapplecorp. »

smectym wrote: Fri May 20, 2022 9:43 pm PS If you want diversification, another way to go would be Vanguard’s high dividend yield fund (VHDYX) or exchange-traded fund (VYM). Several of the funds you list are among the holdings, and Exxon near the top. VHDYX typically has a $3,000 minimum investment, but you probably have a brokerage account, and you can buy the ETF for as little as one share.
except for the fact that it underperformed the simple total stock market index fund since vym's inception (2006) in risk adjusted terms:

Image

source:

https://www.portfoliovisualizer.com/bac ... ion2_2=100

it's total return that matters.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
smectym
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Re: Safe high dividend stock

Post by smectym »

arcticpineapplecorp. wrote: Fri May 20, 2022 10:03 pm
smectym wrote: Fri May 20, 2022 9:43 pm PS If you want diversification, another way to go would be Vanguard’s high dividend yield fund (VHDYX) or exchange-traded fund (VYM). Several of the funds you list are among the holdings, and Exxon near the top. VHDYX typically has a $3,000 minimum investment, but you probably have a brokerage account, and you can buy the ETF for as little as one share.
except for the fact that it underperformed the simple total stock market index fund since vym's inception (2006) in risk adjusted terms:

Image

source:

https://www.portfoliovisualizer.com/bac ... ion2_2=100

it's total return that matters.
Arctic, the anti-dividend camp has its case to make, and I agree, it’s well worth considering. I’m just responding to OP’s stated interests. And of course, Vanguard’s dividend offerings are well-regarded, high performing, very low ER funds that have delivered for investors who prioritize companies that pay dividends.
smectym
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Re: Safe high dividend stock

Post by smectym »

smectym wrote: Fri May 20, 2022 10:19 pm
arcticpineapplecorp. wrote: Fri May 20, 2022 10:03 pm
smectym wrote: Fri May 20, 2022 9:43 pm PS If you want diversification, another way to go would be Vanguard’s high dividend yield fund (VHDYX) or exchange-traded fund (VYM). Several of the funds you list are among the holdings, and Exxon near the top. VHDYX typically has a $3,000 minimum investment, but you probably have a brokerage account, and you can buy the ETF for as little as one share.
except for the fact that it underperformed the simple total stock market index fund since vym's inception (2006) in risk adjusted terms:

Image

source:

https://www.portfoliovisualizer.com/bac ... ion2_2=100

it's total return that matters.
Arctic, the anti-dividend camp has its case to make, and I agree, it’s well worth considering. I’m just responding to OP’s stated interests. And of course, Vanguard’s dividend offerings are well-regarded, high performing, very low ER funds that have delivered for investors who prioritize companies that pay dividends.
Also, referring to the informative chart you post, what do you bet that TSM line crosses down through the VYM line one day soon? Could happen.
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corn18
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Re: Safe high dividend stock

Post by corn18 »

gougou wrote: Fri May 20, 2022 9:27 pm
corn18 wrote: Fri May 20, 2022 9:20 pm
gougou wrote: Fri May 20, 2022 9:15 pm
corn18 wrote: Fri May 20, 2022 9:10 pm
gougou wrote: Fri May 20, 2022 9:01 pm MPLX pays almost 10%. It’s a MLP so only buy it if you don’t mind K1s at tax time.

And take a look at PBR.A. Crazy 40% dividend yield.
Neither of those is what I would consider safe.
MPLX is as safe as you can get. Why would you not consider it safe?
It went from $32.89 to $10.85 from Mar 2019 to Mar 2020. And what the heck happened in 2015?

Image
It was overvalued in the last energy bull market. It grew its dividend every year since it went public, even during 2020. Not sure why you should care so much about its price actions.
Because the OP's $1300 would have turned into $429. If that's what you consider safe, then we'll have to disagree.
Consistently sets low goals and fails to achieve them.
smectym
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Re: Safe high dividend stock

Post by smectym »

corn18 wrote: Fri May 20, 2022 10:41 pm
gougou wrote: Fri May 20, 2022 9:27 pm
corn18 wrote: Fri May 20, 2022 9:20 pm
gougou wrote: Fri May 20, 2022 9:15 pm
corn18 wrote: Fri May 20, 2022 9:10 pm

Neither of those is what I would consider safe.
MPLX is as safe as you can get. Why would you not consider it safe?
It went from $32.89 to $10.85 from Mar 2019 to Mar 2020. And what the heck happened in 2015?

Image
It was overvalued in the last energy bull market. It grew its dividend every year since it went public, even during 2020. Not sure why you should care so much about its price actions.
Because the OP's $1300 would have turned into $429. If that's what you consider safe, then we'll have to disagree.
Hilarious, and I’d say OP has already gotten his money’s worth on this string.
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Schlabba
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Re: Safe high dividend stock

Post by Schlabba »

smectym wrote: Fri May 20, 2022 10:24 pm
smectym wrote: Fri May 20, 2022 10:19 pm
arcticpineapplecorp. wrote: Fri May 20, 2022 10:03 pm
smectym wrote: Fri May 20, 2022 9:43 pm PS If you want diversification, another way to go would be Vanguard’s high dividend yield fund (VHDYX) or exchange-traded fund (VYM). Several of the funds you list are among the holdings, and Exxon near the top. VHDYX typically has a $3,000 minimum investment, but you probably have a brokerage account, and you can buy the ETF for as little as one share.
except for the fact that it underperformed the simple total stock market index fund since vym's inception (2006) in risk adjusted terms:

Image

source:

https://www.portfoliovisualizer.com/bac ... ion2_2=100

it's total return that matters.
Arctic, the anti-dividend camp has its case to make, and I agree, it’s well worth considering. I’m just responding to OP’s stated interests. And of course, Vanguard’s dividend offerings are well-regarded, high performing, very low ER funds that have delivered for investors who prioritize companies that pay dividends.
Also, referring to the informative chart you post, what do you bet that TSM line crosses down through the VYM line one day soon? Could happen.
That will probably happen.

A typical case of "Past Performance Is Not Indicative Of Future Results". On this board we call this "recency bias".

The latest Vanguard market outlook heavily favors value stocks (which this dividend index is over weight in).

I'd also say go for a high dividend yield etf, much safer than picking individual stocks.
gougou
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Re: Safe high dividend stock

Post by gougou »

corn18 wrote: Fri May 20, 2022 10:41 pm
gougou wrote: Fri May 20, 2022 9:27 pm
corn18 wrote: Fri May 20, 2022 9:20 pm
gougou wrote: Fri May 20, 2022 9:15 pm
corn18 wrote: Fri May 20, 2022 9:10 pm

Neither of those is what I would consider safe.
MPLX is as safe as you can get. Why would you not consider it safe?
It went from $32.89 to $10.85 from Mar 2019 to Mar 2020. And what the heck happened in 2015?

Image
It was overvalued in the last energy bull market. It grew its dividend every year since it went public, even during 2020. Not sure why you should care so much about its price actions.
Because the OP's $1300 would have turned into $429. If that's what you consider safe, then we'll have to disagree.
You turn $1300 into $429 when you chase overvalued hot stocks that pay less than 3% dividends. I almost doubled my money on MPLX when I bought it at over 15% yield in 2020-2021. With a booming pipeline business, safe and growing 9.5% dividend plus special dividends MPLX is undervalued and more likely going to appreciate in prices.

If historical return means so much to you, maybe you should go all in TSLA and according to your theory you’ll 10x your money in the next couple of years.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
Grt2bOutdoors
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Re: Safe high dividend stock

Post by Grt2bOutdoors »

CorradoJr wrote: Fri May 20, 2022 9:39 pm Altria (MO) 6.97% yield currently.

They certainly have a long history of increasing their dividend each year.

I haven't followed them recently, but here is a press release from 2019:

RICHMOND, Va.--(BUSINESS WIRE)--Altria Group, Inc. (Altria) (NYSE: MO) today announced that its Board of Directors (Board) voted to increase Altria’s regular quarterly dividend for the 54th time in the past 50 years. The Board approved a dividend increase to $0.84 per common share versus the previous rate of $0.80 per common share. The quarterly dividend is payable on October 10, 2019, to shareholders of record as of September 16, 2019. The ex-dividend date is September 13, 2019.
The dividend is now $0.90 per share.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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corn18
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Re: Safe high dividend stock

Post by corn18 »

gougou wrote: Fri May 20, 2022 11:15 pm
corn18 wrote: Fri May 20, 2022 10:41 pm
gougou wrote: Fri May 20, 2022 9:27 pm
corn18 wrote: Fri May 20, 2022 9:20 pm
gougou wrote: Fri May 20, 2022 9:15 pm

MPLX is as safe as you can get. Why would you not consider it safe?
It went from $32.89 to $10.85 from Mar 2019 to Mar 2020. And what the heck happened in 2015?

Image
It was overvalued in the last energy bull market. It grew its dividend every year since it went public, even during 2020. Not sure why you should care so much about its price actions.
Because the OP's $1300 would have turned into $429. If that's what you consider safe, then we'll have to disagree.
You turn $1300 into $429 when you chase overvalued hot stocks that pay less than 3% dividends. I almost doubled my money on MPLX when I bought it at over 15% yield in 2020-2021. With a booming pipeline business, safe and growing 9.5% dividend plus special dividends MPLX is undervalued and more likely going to appreciate in prices.

If historical return means so much to you, maybe you should go all in TSLA and according to your theory you’ll 10x your money in the next couple of years.
I don’t chase anything, including dividends.
Consistently sets low goals and fails to achieve them.
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burritoLover
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Re: Safe high dividend stock

Post by burritoLover »

Dividends do not increase your net worth - they are irrelevant from the perspective of money in your pocket. All else equal, you should have no preference for a company with a dividend yield of say 10% compared to say one of 1% (or even no dividend). You aren't getting "paid" more with the 10% yielding stock - it is not the same as a bond interest payment. A dividend paying stock is not any "safer" than a non-dividend paying stock, all else equal.

Some investors understand the above but "collect" very high dividend paying stocks because they believe the market has underpriced these companies. While that may be one piece of a fundamental analysis, focusing solely on that as a metric for choosing stocks to speculate in is not a very good strategy. Very high dividend paying stocks are priced that way for a reason and the market is highly efficient - enough so that professional money managers have a hell of a time trying to generate alpha.
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Re: Safe high dividend stock

Post by Nate79 »

Sad to see Bogleheads being infested by single stock roulette gamblers. It's getting as bad as when crypto was allowed and almost feels like reddit.
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anon_investor
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Re: Safe high dividend stock

Post by anon_investor »

Nate79 wrote: Sat May 21, 2022 7:45 am Sad to see Bogleheads being infested by single stock roulette gamblers. It's getting as bad as when crypto was allowed and almost feels like reddit.
If someone wants a "safe" dividend stock so badly, wouldn't a diversified dividend index ETF make more sense?
aristotelian
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Re: Safe high dividend stock

Post by aristotelian »

anon_investor wrote: Sat May 21, 2022 7:48 am
Nate79 wrote: Sat May 21, 2022 7:45 am Sad to see Bogleheads being infested by single stock roulette gamblers. It's getting as bad as when crypto was allowed and almost feels like reddit.
If someone wants a "safe" dividend stock so badly, wouldn't a diversified dividend index ETF make more sense?
Or low volatility ETF such as USMV.
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nedsaid
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Re: Safe high dividend stock

Post by nedsaid »

miamivice wrote: Fri May 20, 2022 8:18 pm I'm looking to invest $1,300 into safe, high dividend stock. Companies that are not likely to go bankrupt and pay good dividends. I current have investments in the following:

Exxon Mobile
BP
Lamb Weston
Pfizer
Proctor and Gamble
Southern Company
Vanguard Utilities ETF

Any suggestions on which I should invest in, or if I should consider a different company than listed above?
The word "safe" and "stock" should probably not be used in the same sentence. That being said, there are stocks with less risk than others. Here is an idea, why not buy a bunch of such companies rather than just one? Vanguard has a High Dividend Index fund and its Value Index is chock full of such stocks as well.
A fool and his money are good for business.
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nedsaid
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Re: Safe high dividend stock

Post by nedsaid »

miamivice wrote: Fri May 20, 2022 8:18 pm I'm looking to invest $1,300 into safe, high dividend stock. Companies that are not likely to go bankrupt and pay good dividends. I current have investments in the following:

Exxon Mobile
BP
Lamb Weston
Pfizer
Proctor and Gamble
Southern Company
Vanguard Utilities ETF

Any suggestions on which I should invest in, or if I should consider a different company than listed above?
The word "safe" and "stock" should probably not be used in the same sentence. That being said, there are stocks with less risk than others. Here is an idea, why not buy a bunch of such companies rather than just one? Vanguard has a High Dividend Index fund and its Value Index is chock full of such stocks as well.
A fool and his money are good for business.
dbr
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Re: Safe high dividend stock

Post by dbr »

There needs to be a mechanism to somehow eliminate use of the word "safe" from financial discussion.

The replacement concept would be to ask what are the objectives of the investment and then to discuss suitable ways to meet those objectives.

Also the word "best" should be avoided.
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Re: Safe high dividend stock

Post by DesertDiva »

anon_investor wrote: Sat May 21, 2022 7:48 am
Nate79 wrote: Sat May 21, 2022 7:45 am Sad to see Bogleheads being infested by single stock roulette gamblers. It's getting as bad as when crypto was allowed and almost feels like reddit.
If someone wants a "safe" dividend stock so badly, wouldn't a diversified dividend index ETF make more sense?
A total market index fund or an S&P 500 index fund has beaten dividend index funds over the past decade.
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Nate79
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Re: Safe high dividend stock

Post by Nate79 »

anon_investor wrote: Sat May 21, 2022 7:48 am
Nate79 wrote: Sat May 21, 2022 7:45 am Sad to see Bogleheads being infested by single stock roulette gamblers. It's getting as bad as when crypto was allowed and almost feels like reddit.
If someone wants a "safe" dividend stock so badly, wouldn't a diversified dividend index ETF make more sense?
We should encourage questions about gambling in individual stocks. But Bogleheads should encourage investing in ways that align with the Bogleheads philosophy which would not include individual stock gambling. If that is a broad mutual fund that is low cost whether it is a dividend fund, SP500, or TSM I think is a minor detail.
exodusNH
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Re: Safe high dividend stock

Post by exodusNH »

miamivice wrote: Fri May 20, 2022 8:25 pm One option is I could buy $1,300 of I-bonds. It appears that they are providing 9.62% interest right now. Should I go this route in lieu of stocks?
I bonds are actually safe. They're a good option if you don't need the money for 12 months.
drill78414
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Re: Safe high dividend stock

Post by drill78414 »

NOTHING IS SAFE. Now that we're past that... Get MO. I know, it's a tobacco stock, get over it. We're trying to make money with limited funds. I've owned it for 8 years. It's paying a 7.05% yield. The price goes up, the price goes down, the cash is rich and dependable. (No K1's) I even trimmed it when it went to the 70's. Just more money. It's been raising and paying it's dividend for over 25 years. Yes, the FDA is supposed to ban nicotine in the USA which may impact the industry but it didn't when Canada banned it. My "safe" Vanguard fund VWIAX is down to it's original seed money from a decade ago. MO pays 4X what my Vanguard fund pays with no Russia/Ukraine exposure. Holding Vanguard (VWIAX) is costing me money. MO is making me money.
Note: The I Bond suggestion in the above thread has merit in this environment but it does not have the potential to grow. The I Bond isn't going anywhere but neither is MO. Ever tried to quit smoking?
dbr
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Re: Safe high dividend stock

Post by dbr »

Stocks and I bonds are such fundamentally different investments that to be undecided between the two would suggest going to the beginning and learning some fundamentals of investing and then deciding what one is trying to do.

The last step in investing is picking investments.

One starting place is here: https://www.bogleheads.org/wiki/Getting_started
Bama12
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Re: Safe high dividend stock

Post by Bama12 »

I have a little play money, five stocks and one ETF.
I use SCHD, Stag and LTC for dividend play money.


Stag-STAG
LTC Properties-LTC
Schwab US Dividend-SCHD
WhatsIRR
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Re: Safe high dividend stock

Post by WhatsIRR »

smectym wrote: Fri May 20, 2022 10:24 pm
smectym wrote: Fri May 20, 2022 10:19 pm
arcticpineapplecorp. wrote: Fri May 20, 2022 10:03 pm
smectym wrote: Fri May 20, 2022 9:43 pm PS If you want diversification, another way to go would be Vanguard’s high dividend yield fund (VHDYX) or exchange-traded fund (VYM). Several of the funds you list are among the holdings, and Exxon near the top. VHDYX typically has a $3,000 minimum investment, but you probably have a brokerage account, and you can buy the ETF for as little as one share.
except for the fact that it underperformed the simple total stock market index fund since vym's inception (2006) in risk adjusted terms:

Image

source:

https://www.portfoliovisualizer.com/bac ... ion2_2=100

it's total return that matters.
Arctic, the anti-dividend camp has its case to make, and I agree, it’s well worth considering. I’m just responding to OP’s stated interests. And of course, Vanguard’s dividend offerings are well-regarded, high performing, very low ER funds that have delivered for investors who prioritize companies that pay dividends.
Also, referring to the informative chart you post, what do you bet that TSM line crosses down through the VYM line one day soon? Could happen.
TSM (ITOT) has already crashed below VYM for me. I am new to taxable investing so I don’t have the full run up of 2010-2020 to help TSM. I bought my first ITOT share in 4/2020 and my first VYM share in 5/2020. I have bought them regularly since 2020 at a 2:1 ITOT:VYM ratio. As of this morning my VYM is down 0.46% and my ITOT 8.86%.
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miamivice
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Re: Safe high dividend stock

Post by miamivice »

Just to clarify:

The $1,300 is money earned from consulting. I want to spend the money that I earn from consulting on fun stuff rather than save, but don't want to live large one year and then shrink my lifestyle the next when the consulting revenue decreases. Thus, I invest it in high dividend stocks and spend the dividends.

So far, I have accumulated about $100,000 in consulting income that have gone in this account, so it provides about $4,000 a year in spending money for "fun stuff" that I wouldn't necessarily spend on my own.

It may not be a Boglehead strategy but since it's a tiny fraction of my overall portfolio, I don't mind.
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illumination
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Re: Safe high dividend stock

Post by illumination »

I wouldn't pick a handful of companies, all it takes is like 1 to implode and it will absolutely wreck your returns. Look at BP in your example, that one spill incident basically gave 10+ years of zero return and almost put the company under.

I would just pick an ETF like SCHD (Schwab US Dividend Equity) or VYM (Vanguard High Dividend Yield) if the goal is a dividend stream. Both have done well (especially SCHD) and are diversified enough that you can sleep well at night. A whole separate argument if dividend strategies are a good idea ( I like them in retirement accounts)
mega317
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Re: Safe high dividend stock

Post by mega317 »

If 100k is a tiny fraction of your portfolio then you're depriving yourself unnecessarily by tying the "fun stuff" to the consulting income.
Apathizer
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Re: Safe high dividend stock

Post by Apathizer »

miamivice wrote: Sun May 22, 2022 3:57 pm Just to clarify:

The $1,300 is money earned from consulting. I want to spend the money that I earn from consulting on fun stuff rather than save, but don't want to live large one year and then shrink my lifestyle the next when the consulting revenue decreases. Thus, I invest it in high dividend stocks and spend the dividends.

So far, I have accumulated about $100,000 in consulting income that have gone in this account, so it provides about $4,000 a year in spending money for "fun stuff" that I wouldn't necessarily spend on my own.

It may not be a Boglehead strategy but since it's a tiny fraction of my overall portfolio, I don't mind.
Since it's just for fun and you plan to spend it sooner than later, there's no reason to take any significant risk. As others have said, focusing only on dividend stocks is riskier since this will necessarily reduce diversification.

Just put it in savings or a mm account and use it as you're inclined.
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Re: Safe high dividend stock

Post by NYCaviator »

miamivice wrote: Sun May 22, 2022 3:57 pm Just to clarify:

The $1,300 is money earned from consulting. I want to spend the money that I earn from consulting on fun stuff rather than save, but don't want to live large one year and then shrink my lifestyle the next when the consulting revenue decreases. Thus, I invest it in high dividend stocks and spend the dividends.

So far, I have accumulated about $100,000 in consulting income that have gone in this account, so it provides about $4,000 a year in spending money for "fun stuff" that I wouldn't necessarily spend on my own.

It may not be a Boglehead strategy but since it's a tiny fraction of my overall portfolio, I don't mind.
I'm not following your logic at all and this seems like a weird attempt to generate passive income? You are buying $100,000 worth of high dividend stocks and just spending the $4,000 in dividends. You don't want to touch the "principal" because you are concerned that if your consulting income goes down it could "shrink your lifestyle." But you aren't spending that money anyway, right? And how much is your lifestyle going to shrink if you have $4,000 less a year to spend?

If you are truly concerned about liquidity, i.e. making sure money is set aside for a bad year, it needs to be in a savings account. A small handful of dividend stocks is WAY too risky. If the economy tanks, which causes your consulting income to tank, your dividend stocks will probably also tank.

If you are trying to use this as a passive income strategy, it doesn't seem worth it. You are tying up $100,000 in a small, risky handful of dividend stocks to generate $4,000, pre-tax, each year. That's less than $400 per month, before tax. Why not spend $4,000 of the $100,000 and then invest the other $96,000 in a safe bond fund (if you're concerned about having money during a bad year), or in a diverse index fund (that will be far more diverse and probably have greater returns)? I guess I'm missing something...
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Re: Safe high dividend stock

Post by nisiprius »

Schlabba wrote: Fri May 20, 2022 11:08 pm...The latest Vanguard market outlook heavily favors value stocks...
Not exactly. Let's look at the full report including the range of uncertainty in their forecasts.

Image

They are saying over the next ten years the annualized return for "U.S. large-cap" could be anywhere from a -2% average annual loss up to an average 12%/year gain. For U.S. value, anywhere from -2% to +14%.

They are saying that in their simulations, on the average, value beat untilted by, looks like, about 1.5% annualized... but that has to be seen against a background in which the uncertainty for either asset class is ten times that. Since we don't know what the forecast says for the correlation between the two we can't really draw any numeric conclusions, but with that huge range of uncertainty, it seems like it would not be all that unlikely for untilted to beat value.

Vanguard says
A key market theme of the post-global financial crisis era has been the outperformance of growth stocks (particularly large-caps) versus value in the U.S. Many explanations have been proposed, ranging from value definitions to industry concentration, and have even led some to question the existence of the value premium.

Our research indicates that a value premium does exist...
Saying that a value premium "does exist" doesn't seem like a terribly strong endorsement.
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Apathizer
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Re: Safe high dividend stock

Post by Apathizer »

nisiprius wrote: Sun May 22, 2022 6:56 pm Saying that a value premium "does exist" doesn't seem like a terribly strong endorsement.
Since Vanguard was founded on market principles and simplicity that makes sense. For most investors who favor simplicity/low-maintenance, index funds are probably the best approach.
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Valuethinker
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Re: Safe high dividend stock

Post by Valuethinker »

miamivice wrote: Fri May 20, 2022 8:18 pm I'm looking to invest $1,300 into safe, high dividend stock. Companies that are not likely to go bankrupt and pay good dividends. I current have investments in the following:

Exxon Mobile
BP
Lamb Weston
Pfizer
Proctor and Gamble
Southern Company
Vanguard Utilities ETF

Any suggestions on which I should invest in, or if I should consider a different company than listed above?
Berkshire Hathaway

That's a trick answer, because BH famously pays no dividend. But it buys back shares. It's worth searching out Warren Buffett's letter to investors on dividends v buybacks, and why he does not pay dividends.

Other than dealing charges and capital gains tax considerations, one should focus on Total Return, not Dividend Yield.
Valuethinker
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Re: Safe high dividend stock

Post by Valuethinker »

drill78414 wrote: Sat May 21, 2022 11:30 am Yes, the FDA is supposed to ban nicotine in the USA which may impact the industry but it didn't when Canada banned it.
I believe that Canada made tobacco advertising illegal, not nicotine?

(Canada has legalised other substances, under provincial regulation, so it would be strange if it went the other way on nicotine).

I am surprised their Supreme Court allowed it, tbh, but I haven't tracked the debate.
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