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Investment Analysis Clubs / The BMW Method
|Subject: Re: A learning curve||Date: 9/11/2012 7:05 PM|
|Author: culcha||Number: 40710 of 42001|
Thanks, Denny. I appreciate your remarks.
A dollar in dividend is exactly the same as a dollar in capital gains. What counts is the portfolio's CAGR.
Well, the money is the same (if you're making the money-is-fungible argument). But one difference between collecting dividends and making capital gains is that you have to sell in order to collect capital gains. With dividends, you don't. And if you've been careful to choose companies that raise their dividends at least as much as inflation, the dividend stream will actually grow.
I use a mixed approach ...
I do too -- somewhat. I recently had some BRK-B --no dividend, right?-- but sold for a gain. But in this thread I'm talking about my own learning curve. When I started investing (about 12 years ago), I didn't pay any attention to dividends. Now, growing older (65), I pay much more attention to them; in fact, dividends are really central to my investing. And I think the BMW Method helps me here. Mike Klein's charts show me fast moving trains that I want to climb aboard when the RF is high and the RMS is low, PROVIDED that the stock (the "train") has a good dividend record. (I really like Mike Klein's charts, and I wish he would include at least the current dividends there; I think the historical record on dividends is extremely important too, and here I use the work of David Fish (over on the Dividend Growth Investing board and also on Seeking Alpha).
My approach is becoming more and more dividend centered, and focused on income streams.
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