No. of Recommendations: 16
I thought I’d take a look at DesertDave’s “secret” and stock portfolio. Fair enough, I think, as it’s repeatedly posted.

[…]like I've said many times before, my "secret" is to buy stocks that have been paying increasing dividends for at least 25 years.
Our stock holdings have been static for several years now as we've been reinvesting dividends in the companies that paid them.

I get why—in retirement, or not—some people are attracted to dividend growth stocks if they need, or want, dividend payments in cash to pay bills. Other than that, focusing exclusively on dividend growth stocks and reinvesting the dividends makes little strategic sense because over the longterm the dividend growth investor is unlikely to best the market (beat the S&P 500); this, at least is what I thought.

So, I decided to run some numbers to check it out. DesertDave constantly lists his stock holdings so I looked at the 17 he says he has at least 1,000 shares of.

I have no way of knowing when DD bought his shares, or what he paid, so my number crunching is based on the returns of an equal weight portfolio of these 17 stocks over the last decade. I compared the returns of the S&P 500 (with dividends reinvested) to the returns of the 17 stocks DD lists (with dividends reinvested).

If you invested $100 in the S&P 500 ten years ago you would now have $256.

Here is how DD’s 17 stocks stacked up.

$100 invested in XOM would now be $121
$100 invested in CVX would now be $187
$100 invested in T would now be $179
$100 invested in BKH would now be $213
$100 invested in ED would now be $299
$100 invested in NI would now be $518
$100 invested in NWN would now be $190
$100 invested in WRE would now be $138
$100 invested in WGL would now be $387
$100 invested in XEL would now be $327
$100 invested in DUK would now be $240
$100 invested in SO would now be $200
$100 invested in KO would now be $198
$100 invested in BNS would now be $218
$100 invested in ATGFF would now be $93
$100 invested in TMP would now be $165
$100 invested in ENB would now be $219

Of the 17 stocks 13 trailed the S&P 500 for the last 10 years (3/10/’08 - 3/10/’18) and 4 beat.

Assuming that DD’s portfolio was equally weighted it would have trailed the S&P 500 by 12% over the period.

Again, it’s how much you pay and when you buy. But there’s scant evidence that a portfolio of dividend growth stocks is likely to best the market. In this particular exercise the market won.

So DD’s “secret”? There seems to be no secret. My conclusion: expect average, or below average, total returns from a buy-and-hold dividend growth portfolio even when reinvesting all the dividends.

Should most investors take Warren Buffett’s advice and have their money in a S&P 500 index fund? Maybe, but now the index is pricey and individual stock picking could be potentially more profitable provided the focus is on price, company dynamics, and profitability. As for those stocks that many investors favor for their dividends rising interest rates are likely to be a headwind as bond yields become more attractive to the income crowd.

Yet, if you rely on dividends to live on and would like a pay raise every year then a basket of dividend growth stocks makes some sense. That is if you are hesitant to make your own dividends by taking some profits.

kelbon
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No. of Recommendations: 16
If you invested $100 in the S&P 500 ten years ago you would now have $256.

Here is how DD’s 17 stocks stacked up.

$100 invested in XOM would now be $121
$100 invested in CVX would now be $187
$100 invested in T would now be $179
$100 invested in BKH would now be $213
$100 invested in ED would now be $299
$100 invested in NI would now be $518
$100 invested in NWN would now be $190
$100 invested in WRE would now be $138
$100 invested in WGL would now be $387
$100 invested in XEL would now be $327
$100 invested in DUK would now be $240
$100 invested in SO would now be $200
$100 invested in KO would now be $198
$100 invested in BNS would now be $218
$100 invested in ATGFF would now be $93
$100 invested in TMP would now be $165
$100 invested in ENB would now be $219


That's a $100 stock purchase, right?

And the numbers at the right are what you could sell the stocks for today, right?

Your numbers don't count the dividends paid, right?

So what happens if you count ten years of dividends?

Also, I sleep well at night knowing I don't have to worry about any of my stocks being down in the morning because as long as they're paying their dividends I don't care about whether their price is down or up. When you're stock trading prices matter. When I'm stock investing a price move is irreverent because I'm not selling the stock.
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No. of Recommendations: 5
Your numbers don't count the dividends paid, right?

All the numbers account for all the dividends reinvested from whence they came, both in all your individual stocks and in the S&P 500.

If you read my post carefully you'll see that this was stated.
I compared the returns of the S&P 500 (with dividends reinvested) to the returns of the 17 stocks DD lists (with dividends reinvested).

kelbon
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No. of Recommendations: 3
kelbon,

As most people who are retired must have 20 to 30 year horizon, a 10 year comparison will not work. Especially when it is compared to a rising market.

I suggest you run the numbers from 1998, a 20 year and again from 1988 a 30 year horizon. The 1988 number will probably be the one that is most simular to today.

Cheers
Qazulight
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No. of Recommendations: 14
Of the 17 stocks 13 trailed the S&P 500 for the last 10 years (3/10/’08 - 3/10/’18) and 4 beat.

If you are retired, you do not need to beat the market. You just need those dividends to continue to be paid at ever higher rates. Hell, I'm not retired, and I've stated many times that I don't care if I beat the market. Beating the market is not the only recipe to wealth.

MR
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No. of Recommendations: 16
Your "analysis" should look at risk adjusted returns not just total returns. Simply comparing absolute returns over an arbitrary time period is not sufficient to really make an informed decision. Sacrificing some returns in favor of less overall risk may be a prudent trade off.


Yet, if you rely on dividends to live on and would like a pay raise every year then a basket of dividend growth stocks makes some sense. That is if you are hesitant to make your own dividends by taking some profits.


The strategy of owning "growth stocks" in a declining market (such as 2008 and 2009) or when stocks are in a decade long bear market (rare but could happen and do you really want to take that chance in retirement?) won't work out so well. Taking profits only works if there are profits and those profits rely on the whims and generosity of Mr. Market - not the most dependable character.

Rich
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No. of Recommendations: 9
Your "analysis" should look at risk adjusted returns not just total returns. Simply comparing absolute returns over an arbitrary time period is not sufficient to really make an informed decision. Sacrificing some returns in favor of less overall risk may be a prudent trade off.

The strategy of owning "growth stocks" in a declining market (such as 2008 and 2009) or when stocks are in a decade long bear market (rare but could happen and do you really want to take that chance in retirement?) won't work out so well. Taking profits only works if there are profits and those profits rely on the whims and generosity of Mr. Market - not the most dependable character.


The "safe withdrawal" rate in down markets has been studied in quite a bit of detail. You can even run your own simulations using historical data here:

http://www.cfiresim.com/

I have no interest in changing anyone's current investment preferences, but as people decide upon their retirement strategies by reading threads like this one, they should be aware that a dividend only strategy requires a substantially higher portfolio value (like 25-100% higher) to generate the same income as taking an inflation-adjusted percentage from a balanced portfolio.

On the subject of risks in a down market, recall that in 2008 and 2009 many of the Dividend Aristocrats got murdered. Companies like GE, Pfizer, KeyBank, Bank of America, Nucor, Eli Lilly, etc. all cut dividends.

Also on the subject of risks, the Dividend Aristocrats have a history of increasing dividends. But has anyone looked to see if the increases match inflation? If dividends lag inflation by only a modest 1.1%, your income will decrease by 25% in just 20 years. This a non-trivial concern. The S&P's dividend yield has been decreasing for many decades, mostly for tax efficiency but for other reasons as well, and that trend is unlikely to reverse. Relying on dividends-only will become harder and harder as time goes on.

One final word on the subject of risk. The Dividend Aristocrats have dividend yield of 2.3%. The US 2-year Treasury pays, coincidentally, 2.3%. The DA makes zero sense on a risk-adjusted basis.
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No. of Recommendations: 12
"One final word on the subject of risk. The Dividend Aristocrats have dividend yield of 2.3%. The US 2-year Treasury pays, coincidentally, 2.3%. The DA makes zero sense on a risk-adjusted basis."

Not sure that is true if you are looking at a timeline of 10 years or more. I inherited some blue chip stocks and a municipal bond fund in October of 2015. I kept them and let them ride along with some other stuff. Looking at yield alone, the munis won hands down, especially if you looked at taxes.

Now, roughly 2 and 1/2 years later, the stocks are up about 30% and the munis are down. Over a long timeframe, the stocks are very likely to beat the fixed income investments by a huge amount. If you are looking at short term volatility, the fixed income assets win, but that is not the same thing as risk.

However, it is also difficult to pass judgment on the actions of another investor without knowing what they bought and when. For example, I bought a chunk of VIG and a chunk of VYM about two years ago. The VIG is up about 27% since I bought it and the VYM is up about 21% over the same time frame. But VYM wins when you look at 10 year charts.

However, I am not sure I agree with Dave's dividends above all else orthodoxy either. My VIG is beating the heck out of the VYM even though the VYM has a much higher yield. Yield is nice, but companies with piles of cash and lower payout ratios and better total return numbers also do well.

I think I just disagreed with everybody.
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No. of Recommendations: 8
Kelbon's static analysis doesn't account for the investing psychology differences between Dave's (and my) approach and his look at the broad market index.

One of the key things for my actual investing experience is the likelihood of staying and benefiting from a stock's growth and dividend between the two approaches.

The cap gains focus of Kelbon's sdsheet type holdings has me more sensitive to markets ups and downs. I was more likely to catch myself running to excess with the mob when I focused primarily on appreciation.

OTOH, with my focus shifted to well covered, growing distributions I've practically slept through 2004, 2008, 2011, 2014 and this recent bump. My investing psychology changed with this focus and my actual gains (and income) have increased mo' betta as a result.

The less I do, the better I do.
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No. of Recommendations: 5
Your "analysis" should look at risk adjusted returns not just total returns. Simply comparing absolute returns over an arbitrary time period is not sufficient to really make an informed decision. Sacrificing some returns in favor of less overall risk may be a prudent trade off.

It’s a stretch to call it an analysis. It was curious to simply see if a real-life portfolio of dividend growth stocks beat the market over the last decade; it didn’t.

As for looking at risk adjusted returns, unless a stock goes to zero, there is Beta, which doesn’t represent risk for the longterm buy-and-holder, unless they panic and sell a stock. I don’t know if DD’s portfolio contained additional stocks over the period that flamed out spectacularly. In which case survivor bias was built in at the get-go.

That my “analysis should look at[…]” (don’t look there; look over here), can be taken as a call to do something different and come up with a result that’s more comfortable for you. Same goes for running the numbers for 20 and 30 years. I encourage anyone, and everyone, to do just that, and please share your findings.

kelbon
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No. of Recommendations: 1
Not sure that is true if you are looking at a timeline of 10 years or more.

Not sure either. But Rich asked specifically about the risk adjusted return. Today, the risk adjusted return of the Dividend Aristocrats is shockingly bad. If risk adjusted return is your concern, you should run away screaming.
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No. of Recommendations: 10
To summarize: some thoughts that surfaced after running numbers on DD’s portfolio.

First, selecting a portfolio of stocks from the limited number of longterm dividend growers doesn’t appear to give an edge when it comes to returns. Rather, because it’s a little pond it is more likely a handicap than a help when it come to total returns.

I’ve never yet seen a convincing article about “how dividend growers beat the market” that hasn’t resorted to survivor bias and retroactively selecting stocks that thrived, all neatly tied up in a fortuitous timeline.

I don’t have a drum to beat when it comes to dividend growers; if DD’s portfolio had handily beaten the market, with dividends reinvested, over the last ten years I would have been surprised, but prepared to revise my thinking. In other words: I was open to any outcome. The outcome was what it was; not my doing.

Dividends are one way companies allocate earnings. What makes sense for one company doesn’t necessarily make sense for another. Broadly focusing on the company; the business; looking at the forest rather than the trees is likely to result in a better understanding of a companies value and prospects, which, when all is said and done, is of paramount importance if you invest in a business. How much a company decides to distribute in dividend payments is of secondary importance in this larger context.

If you have a grasp on a business’s worth and valuation, within a historical and broader market context, then you are better able to sell high and buy low; thus making your own dividends (if you like) and boosting your returns. Focusing on whether a company raises its dividend, on a calendar year basis, and being content if it does even meagerly and then nodding off doesn’t seem to me as either particularly smart or responsible if you are anything but content to let the chips fall as they may when it comes to capital preservation and appreciations just as long as the dividend checks keep coming, and, if any of those checks do stop coming it will likely be a big surprise.

kelbon
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No. of Recommendations: 3
"Again, it’s how much you pay and when you buy. But there’s scant evidence that a portfolio of dividend growth stocks is likely to best the market. In this particular exercise the market won."

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Perhaps your goals require a different approach - over that particular
time period.

Howie52
Secrets tend to be more related to an individual's needs and goals and
less related to a specific portfolio.
I am happy when my portfolio generates sufficient cash-flow to meet my
needs - and dividend growth can be a major part of attaining that
result.
Other people may need greater returns - and may find alternative risks
more or less acceptable.
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No. of Recommendations: 10
To get an idea of how the relative performance between dividend payers and "growth stocks" play out over the course of a cycle, one could compare SPY to SDY over the last 10 year period which still includes the crisis years. This takes the "stock picking" factor out of the equation too. Scroll down a bit:

http://performance.morningstar.com/funds/etf/total-returns.a...

http://performance.morningstar.com/funds/etf/total-returns.a...

Note that in 2008, SPY declined roughly 37% compared to SDY's 23%. That's a significant difference.

Returns over the last 10yrs are remarkably similar, SPY at 10.2% and SDY at 11% with the dividend index outperforming slightly.

Personally, I find the less volatile dividend payers to be more attractive. This would also suggest that there is nothing being sacrificed in performance by demanding a dividend from the stocks owned. As always, past performance is no guarantee of future returns.

Rich
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No. of Recommendations: 11
It’s a stretch to call it an analysis. It was curious to simply see if a real-life portfolio of dividend growth stocks beat the market over the last decade; it didn’t.

The “last decade” was pretty anomalous. There have only been a few times in history that the market has gone straight up for a decade. Perhaps it would have been the same if you looked at a 20- or 30-year time frame, and that might have been different, or perhaps not, I don’t know. I note that you also chose specific stocks, which you then compared against a large group of stocks. It may be that the stocks chosen underperformed because they were in bad sectors or were poorly performing companies at that time (GE in the 90’s vs. GE in the 2010’s, for example). Again, I don’t know (and can’t be bothered to run the numbers right now.) This surely changes the risk profile, doesn’t it? (No, not just beta. Actual “risk”.)

I would also simply note that while complaining of survivorship bias, *every* company eventually goes to zero. Some last a very long time (Westinghouse, GE), but nothing lasts forever. The whole capitalist theory is based on the idea that you, as owner, have a claim on the profits of the corporation. If you do not get dividends, you never, and I mean never get those profits. You may make money selling your claim to someone else, but that is a different thing. Dividends are the means by which corporations take the money they earn and distribute it to owners.

I realize most people don’t care about the distinction, but pick a company that has been profitable for a decade or two, never offered a dividend, and then suddenly go upside down and the issue becomes more tangible.
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No. of Recommendations: 0
Just a thought. Does the Crowder index play into this discussion?
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No. of Recommendations: 4
I would also simply note that while complaining of survivorship bias, *every* company eventually goes to zero. Some last a very long time (Westinghouse, GE), but nothing lasts forever. The whole capitalist theory is based on the idea that you, as owner, have a claim on the profits of the corporation. If you do not get dividends, you never, and I mean never get those profits. You may make money selling your claim to someone else, but that is a different thing. Dividends are the means by which corporations take the money they earn and distribute it to owners.

I realize most people don’t care about the distinction, but pick a company that has been profitable for a decade or two, never offered a dividend, and then suddenly go upside down and the issue becomes more tangible.


I'd modify that statement to say "dividends are one of the ways by which corporations take the money they earn and distribute it to owners." When company pays a dividend, the value of the company decreases by the amount of the dividend. So you got your money out, but your net worth is the same. Buffett's position is that the most effective way to take your money out of BRK is to sell shares (BRK of course does not pay dividends).

Another way owners can claim their share of the profits is by stock buy backs. The advantage of doing it that way is it is not a taxable event for the shareholders. A dividend is a taxable event of a size and schedule you do not control.

Back in the day, all companies paid dividends because there weren't liquid and transparent stock markets. In fact there were dividend paying companies before there even were stock markets. In the early part of the 20th century most of the return from the S&P was from dividends, not price. And even after stock markets become regulated and functional, transactions were costly and cumbersome, so dividends remained attractive. These days transaction costs are low and the process is easy, so getting your money out isn't the issue it once was. Accordingly, the dividend yield has slowly but surely decade after decade melted down to about 1.8% and most of the return comes from price, not dividends. I see no reason why that trend won't continue.

Again, I'm not trying to change anyone's investing philosophy, but be aware that these days most of your profits are being re-invested for you in the company, and at best only small portion gets returned to you in the form of dividends. So if the only way you are collecting your share of the profits is by getting dividends, you're leaving some of your money on the table.
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No. of Recommendations: 9
To get an idea of how the relative performance between dividend payers and "growth stocks" play out over the course of a cycle, one could compare SPY to SDY over the last 10 year period which still includes the crisis years. This takes the "stock picking" factor out of the equation too.

SPY is not a growth stock index; it’s a broad market index which contains many dividend paying stocks that are doubtlessly duplicated in SDY.

—————————————————

There have only been a few times in history that the market has gone straight up for a decade.

There are many ten year periods over which the market has gone up. Over time the direction of the market has always been up. Sure, it has been an interesting decade and over most of that time the market has successfully dug itself out of a deep hole. However, I think it worth pointing out that at the beginning of the last ten years; the point I calculated returns from, was the beginning of the slippery slope, not the bottom; stocks were starting to go down in March 2008 but they hadn’t yet picked up steam on their downward trajectory.

The whole capitalist theory is based on the idea that you, as owner, have a claim on the profits of the corporation. If you do not get dividends, you never, and I mean never get those profits. You may make money selling your claim to someone else, but that is a different thing.

You only never get those profits if you never sell a share. Selling your claim to someone else is not a different thing than claiming your portion of company earnings; it’s how you claim your stake.

Stocks sell at multiples of a company’s profits. If profits rise over the years stock prices do too, sometimes pausing along the way. An investor has to assess whether to take some of his tiny portion of a company’s earnings off the table by selling shares, or instead to believe that the company will continue to grow earnings and there will be better opportunities in the future to drawdown, or cash out entirely. It makes logical sense to take profits when a company’s shares are selling at a higher than average multiple to earnings while also keeping the valuation of the broad market in mind, and to buy shares when they are trading at a below average multiple to earnings.

I realize most people don’t care about the distinction, but pick a company that has been profitable for a decade or two, never offered a dividend, and then suddenly go upside down and the issue becomes more tangible.

It could be worse for an investor of a dividend paying company that goes bankrupt if the investor reinvested the dividends. In the case of the company that didn’t pay a dividend the investor ends up with nothing. With the reinvested dividends company the investor ends up with less than nothing if he paid taxes on the dividends he reinvested.
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No. of Recommendations: 2
Dividends are the means by which corporations take the money they earn and distribute it to owners.

Sadly, far too many people do not realize that when they own stock, **THEY** are the owners of the company that issued the stock. Nope. Too many still think that the CEO and corporate officers own the company.

MR
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No. of Recommendations: 0
I don’t know if DD’s portfolio contained additional stocks over the period that flamed out spectacularly.

Nope. With one or two small exceptions what you see is what I got years ago.

Desert (CVX, XOM, T, BNS, BKH, ED, ATGFF, NI, NWN, TRP, ENB, WRE, WGL, XEL, DUK, SO & KO, WTR, O) Dave
(Bolded = 1000+ shares)
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No. of Recommendations: 17
... ; if DD’s portfolio had handily beaten the market, with dividends reinvested, ...

kelbon, I'm not interested in beating the market. I just want to provide a safe income for my wife and I and for my wife if I go first.

All of these hot shot wiz bang strategies that beat the market take more chances than I am willing to take.
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No. of Recommendations: 2
The whole capitalist theory is based on the idea that you, as owner, have a claim on the profits of the corporation. If you do not get dividends, you never, and I mean never get those profits. You may make money selling your claim to someone else, but that is a different thing. Dividends are the means by which corporations take the money they earn and distribute it to owners.

Thank you Goofy, I couldn't have said it better.

Dave
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No. of Recommendations: 4
Accordingly, the dividend yield has slowly but surely decade after decade melted down to about 1.8% and most of the return comes from price, not dividends.

I.8%? Am I figuring it wrong? Keep in mind that I am innumerate. Thanks in advance for the help, Dave

CVX, https://www.google.com/search?client=safari&channel=mac_...
Div yield 3.84%

XOM, https://www.google.com/search?client=safari&channel=mac_...
Div yield 4.09%

T, https://www.google.com/search?client=safari&channel=mac_...
Div yield 5.35%

BNS, https://www.google.com/search?client=safari&channel=mac_...
Div yield 4.08%

BKH, https://www.google.com/search?client=safari&channel=mac_...
Div yield 3.63%

ED, https://www.google.com/search?client=safari&channel=mac_...
Div yield 3.78%

ATGFF, https://www.google.com/search?client=safari&channel=mac_...
Div yield 9.18%

NI, https://www.google.com/search?client=safari&channel=mac_...
Div yield 3.37%

NWN, https://www.google.com/search?client=safari&channel=mac_...
Div yield 3.38%

TRP, https://www.google.com/search?client=safari&channel=mac_...
Div yield 5.00%

ENB, https://www.google.com/search?client=safari&channel=mac_...
Div yield 6.58%

WRE, https://www.google.com/search?client=safari&channel=mac_...
Div yield 4.48%

WGL, https://www.google.com/search?client=safari&channel=mac_...
Div yield 2.47%

XEL, https://www.google.com/search?client=safari&channel=mac_...
Div yield 3.48%

DUK, https://www.google.com/search?client=safari&channel=mac_...
Div yield 4.65%

SO, https://www.google.com/search?client=safari&channel=mac_...
Div yield 5.29%

KO, https://www.google.com/search?client=safari&channel=mac_...
Div yield 3.50%

WTR, https://www.google.com/search?client=safari&channel=mac_...
Div yield 2.40%

O, https://www.google.com/search?client=safari&channel=mac_...
Div yield
5.13%
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No. of Recommendations: 4
The amusing thing about these discussions is that the staunch Dividend Growth investors just assume that the dividends are safe and stable and it is impossible that they will ever go down or cease.

They state (correctly) that stock prices can go up and down, but assume that their favorite component of stock returns will never go down.

You see it all the time in these threads. "I don't care about the stock price, it will just keep paying me the dividend, even if the price gets cut in half like 2001 & 2008."

For sure, dividends are less volatile than prices, but LOW volatility doesn't mean NO volatility. Dividends (and dividend growth) and price growth both come from the same root source: the continual growth and increasing profitability of the company.
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No. of Recommendations: 11
I.8%? Am I figuring it wrong? Keep in mind that I am innumerate. Thanks in advance for the help, Dave

If you carefully read the paragraph of syke6’s, that you quoted from, you see that 1.8% is the current yield of the S&P 500. syke6 was commenting on the history of the market, not your individual stocks.

kelbon, I'm not interested in beating the market. I just want to provide a safe income for my wife and I and for my wife if I go first.

Everybody wants an adequate amount of money to pay their expenses from one source or another, or several sources. However, I was prompted to run the numbers on your portfolio because you wrote that you reinvested the dividends and didn’t need the income. Because of this I wondered why someone would focus exclusively on buy-and-hold “dividend champions” to the exclusion of all else? What was your “secret?” Logically, it could only be that it produced market beating returns. Anyone can achieve average returns by simply buying a market index fund. It takes work to produce below average returns.

Most people when they reached a point where they need an income from their nest-egg decide how to proceed and perhaps then shift more weight to stocks that provide a reasonable dividend income. In my book focusing exclusively on low return/high dividend paying stocks in anticipation of someday needing an income from dividends is putting the cart before the horse.

It’s drummed into novice investors that reinvesting dividends from whence they came accounts for, and is the easy road to, a superior return. This is only true in a very broad and vague sense. Certainly, if you buy the S&P 500 and reinvest the dividends you will get a better return than if you don’t. This is because risk is spread far and wide and as soon as a company in the index falters it is yanked out and replaced by a better prospect. For a portfolio of individual stocks reinvesting the dividends can be a very different story. Reinvesting dividends in a company that has little prospect of sustained or meaningful earnings growth is flushing money away. This is just one reason that if you invest in individual stocks it’s important to keep an eye on the company, that company’s valuation, and its prospects. Being asleep at the wheel and thoughtlessly reinvesting dividends isn’t the safest road to take; the safest road to take in that case would be a S&P 500 index fund.

DesertDave, taking one stock in your portfolio as an example: ED. Con Edison (ED) has grown earnings and raised its dividend at around 2% annually over the last five years. This barely accounts for inflation. The stock price has benefited from a low interest rate environment, but raising interest rates are likely to be a headwind going forward. Reinvesting dividends in ED is running in place but going nowhere.

Keep in mind that I am innumerate.

People who are innumerate should not buy individual stocks. If they are going to invest in stocks at all they should buy a S&P 500 mutual fund and hold for decades, through thick and thin.

On reading some of the comments in this thread the belief in dividends and their unassailability reads more like creed than objectivity.

kelbon
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No. of Recommendations: 6
Logically, it could only be that it produced market beating returns.


No, logically there could be other reasons. Like understanding one's personal investing psychology and that one's N=1 experiment has shown a focus on growing income yields best performance personally long term.

But those have been offered up in response to you many times so I don't see the point in casting those pearls again...
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No. of Recommendations: 12
Because of this I wondered why someone would focus exclusively on buy-and-hold “dividend champions” to the exclusion of all else?

Because, as I said, I feel more comfortable doing it that way. You are free to invest your money any way you see fit.

What was your “secret?” Logically, it could only be that it produced market beating returns.

No.

In my book focusing exclusively on low return/high dividend paying stocks in anticipation of someday needing an income from dividends is putting the cart before the horse.

You are entitled to invest any way you wish. But not to dictate.

It’s drummed into novice investors that reinvesting dividends from whence they came accounts for, and is the easy road to, a superior return. This is only true in a very broad and vague sense.

Oh, so 'experts' also use/recommend this method but you broadly and vaguely disagree?

Reinvesting dividends in ED is running in place but going nowhere.

Perhaps, but with current inflation rate at 2.2%
http://www.usinflationcalculator.com/inflation/current-infla...
I'm still ahead as of now:
https://www.google.com/search?client=safari&channel=mac_...
Div yield 3.79%

People who are innumerate should not buy individual stocks.

Thank you for the advice.

On reading some of the comments in this thread the belief in dividends and their unassailability reads more like creed than objectivity.

I do not speak for others. We each have our own objectives and tactics.
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No. of Recommendations: 8
You are entitled to invest any way you wish. But not to dictate.

I'm not dictating, I'm simple expressing my opinion.

Perhaps, but with current inflation rate at 2.2%
http://www.usinflationcalculator.com/inflation/current-infla......
I'm still ahead as of now:
https://www.google.com/search?client=safari&channel=mac_......
Div yield 3.79%


The yield is only a by product of a stock's current price.
Would you feel better if the price of the stock drops
and you can then boast of a higher yield?
If the current inflation rate is 2.2% and ED's earnings
and dividend payout is growing at 2%, then you are indeed
running on the spot and going nowhere.

Thank you for the advice.

You are welcome.
Yet, not advice, rather observations from my perspective.
It isn't my intention to tell anyone how to invest.
it is sorting through my thoughts about what is put before me.

kelbon
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No. of Recommendations: 1
If the current inflation rate is 2.2% and ED's earnings
and dividend payout is growing at 2%, then you are indeed
running on the spot and going nowhere.


The operative word in that sentence is IF.

And it ain't at 2%.
https://www.google.com/search?client=safari&channel=mac_...
Div yield 3.76%
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No. of Recommendations: 8
The operative word in that sentence is IF.
And it ain't at 2%.


DD,

I used Value Line data. They round numbers for their reported growth rates, either a whole number, or a whole number and a half. For example, for the last 10 year's they report ED's dividend growth at 1.5% annually, and for the last 5 years at 2% annually.

Doing the math based on the dividend per share payments ED's dividend growth for the last 5 years was just a little over 2%

If you held ED for the last 10 years, taking inflation into account, the dividends you are now receiving are less than 10 years ago. The aggregate annual inflation rate (CPI) over the last 10 years was 2.1%. ED raised its dividend annually, on aggregate, 1.5% over the same period. I'd say you're behind; wouldn't you?

As far as I can tell, the link you provided doesn't provide information about dividend payment growth(?)

…I suppose it's possible you are confusing dividend yields with growth rates? If so there's no comparison to be made between the two. Apples and oranges. A stock's dividend yield is a function of a stock's price and changes a little almost every day. Current dividend yield is only of relevance (for an income investor) if you are considering buying a stock, close to the current share price, with a concern about how much, percentage wise, you will receive in dividend payments of the price you paid for the stock.

kelbon
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No. of Recommendations: 12
The irony of this discussion/debate is that it is occurring on a board entitled "Dividend Growth Investing." It seems that the purpose of this board more closely aligns with the interests of those who like Desert Dave (and me!) find value in a strategy that looks to build a portfolio of stocks that will provide a growing income stream. I have gotten a lot of value from some of kelbon's stock analyses over the years which I appreciate, but I frequent these boards to get ideas on what others are doing to build a dividend growth portfolio. The approach is not for everyone, but it aligns well with my goals and needs. Let's agree to disagree on strategy.
SBN
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Oh, you noticed?

Yeah, weaponized autism seems to be lurking around every corner in these forums.
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No. of Recommendations: 18
The irony of this discussion/debate is that it is occurring on a board entitled "Dividend Growth Investing.”

There is no irony here. This thread has been a discussion about dividend growth investing, and nothing else. What there has not been is every one of the same mind, which of course, is what makes for a discussion. And what it has assuredly not been is a fuzzy feeling back slapping everyone-on the-same-page love fest. If that’s what someone wants then probably internet financial message boards aren’t the optimum venue.

This thread started with a post about how I ran the numbers on DD's portfolio, with the premise that the stocks were all held for at least ten years with dividends reinvested. I then compared the capital appreciation to that of the S&P 500. The result was objective and no one has countered that it isn't accurate. My obvious conclusion, and observation, was that a dividend growth strategy doesn't necessarily mirror, or best, the market and my question was why do people do it if they reinvest all dividends and don't need, or want, the dividend income?

I suppose the reason some people do it, is that they feel that they might need a dividend income at any moment and hey presto there it is. There is also, I assume, the fear of needing money, that's not otherwise available, and finding themselves in the midst of a market meltdown; both understandable explanations. Perhaps some people believe that it is the best of all worlds; that it provides safety, income, and superior results. Seems like some people would like to believe it is the best of all worlds, hence the push-back and suggestions that I run the numbers with a different time-frame, or I allow for an added perception of safety, or whatever. Nobody seems to have run numbers themselves, rather they would have me do it and then atone for my original bad choice in data selection. What’s up with that? Bottom line: there usually is no best of all worlds.

I have gotten a lot of value from some of kelbon's stock analyses over the years which I appreciate, but I frequent these boards to get ideas on what others are doing to build a dividend growth portfolio.

Thanks. But, have you found any good ideas here on what others are doing to build a dividend growth portfolio? I have not. I’ve yet to see a post about a dividend growth stock that is a likely candidate for purchase now, and a reasoned argument why it might be.

Perhaps I could make my next subject just that; it’s past time.

kelbon
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No. of Recommendations: 5
Firmly believe the back and forth discussion has been educational to those on both sides of the fence and may have opened the eyes of some that blindly invest in dividend stocks merely to collect the dividend. There are many ways to skin a rabbit. Let's be educated about the choices available even if some feel uncomfortable with the tone of the discussion.
soybeans..............
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No. of Recommendations: 3
This has been a wonderful, "Motley" discussion. Opinions, facts and feelings expressed have been illuminating. I have entertained the concept of dividend growth investing and for my purposes the history of dividend growth is compelling, but insufficient for me to commit solely to such a strategy. I don't have a multiple of assets necessary to generate much more than my living needs during retirement, which begins phasing in for me in January.

I find that I want to outperform indexes, and realize that is difficult without encumbering risk; lower beta doesn't always work.

At any rate, this discussion has me thinking and doing additional research, and for that I thank the participants.

5
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5

Know yourself.

It hurts me to buy, and even more to sell. If there was anyway I could get a solid dividend portfolio and live on the dividends it would be a no brainer.

I would accumulate a portfolio and go sailing.

Not outperforming the market is not the worst thing that can happen in the stock market.

Cheers
Qazulight
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As I said before you are entitled to your opinion.
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As I said before you are entitled to your opinion.

This is the post you are referring to:

I used Value Line data. They round numbers for their reported growth rates, either a whole number, or a whole number and a half. For example, for the last 10 year's they report ED's dividend growth at 1.5% annually, and for the last 5 years at 2% annually.

Doing the math based on the dividend per share payments ED's dividend growth for the last 5 years was just a little over 2%

If you held ED for the last 10 years, taking inflation into account, the dividends you are now receiving are less than 10 years ago. The aggregate annual inflation rate (CPI) over the last 10 years was 2.1%. ED raised its dividend annually, on aggregate, 1.5% over the same period. I'd say you're behind; wouldn't you?


DD, for goodness sake, this isn't opinion it's simple mathematics.
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As I said before you are entitled to your opinion.

DD, for goodness sake, this isn't opinion it's simple mathematics.

I'm keeping ED you are still entitled to your opinion.

Any of my other stocks you'd like to go all mathematical on?

Desert (CVX, XOM, T, BNS, BKH, ED, ATGFF, NI, NWN, TRP, ENB, WRE, WGL, XEL, DUK, SO & KO, WTR, O) Dave
(Bolded = 1000+ shares)
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No. of Recommendations: 22
Let's agree to disagree on strategy.

Actually, let’s not. It’s entirely fair for someone to come to a board and post things to the effect of “Perhaps the underlying theory you’re espousing is wrong.”

After all, on the “Bitcoin will make you rich!” Board should the only posts be about how Bitcoin will make you rich? Did you only want to hear from the AOL devotees when AOL was on its rocketship ride? Might some people pointing out that their day in the sun was over have done some good for the people reading that board? Perhaps the people who invested in Theranos early could have profited from someone saying “Hey, this is a scam” rather than “Wow! Up and up and up!”

For the record, I like dividend stocks. I have invested in those for several years now, and in non-dividend stocks like Berkshire and Facebook as well. I have no problem with someone challenging my premise. It’s just possible they might be right.
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No. of Recommendations: 8
It would be nice if in challenging your premise they acknowledged the different variables you have taken into consideration that are not factored into their thinking in their challenge.

They don't have to accept the different variables are significant. They can argue they either are red herrings or 2nd, 3rd,... Nth factors of lesser or no importance. Just to continually harp of their numbers models and be dismissive of others who have suggested a different calculus works for them starts off as dense and winds up boorish.

Investing is not just a numbers game. On a personal investor level, I'd argue it's not even mostly a numbers game. It's mostly a psychological game. Otherwise there's be no wave after wave of lemmings rushing to buy high and sell low at tops and bottoms.

#InvestorPsychology

#Knowthyself
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NozRydr declared ... "It's mostly a psychological game."

On target !

The numbers are important, however the psychology of every buyer or seller of stock affects the ebb and flow of each fiscal quarter. Also, the quality of the business affects financial performance.

Some questions I ask to measure quality.

Do I understand the company culture and how people are incentivized ?
Does the company have a sustainable business model?
Is the management team trustworthy, competent, and capable?
Does current market sentiment favor or oppose the business?
Is this situation temporary or a multi-year market trend?
Will customers continue to buy this product or service?

...



istraveler
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No. of Recommendations: 9
Any of my other stocks you'd like to go all mathematical on?

No need…

If you look at the first post, there’s an example of one of your stocks that, even if you’d reinvested dividends for the last ten years, would still be worth less than a decade ago; taking inflation into consideration and the picture’s much worse.

AltaGas Ltd. (ATGFF)

$100 invested in ATGFF would now be $93

This is a specific example of why it’s sometimes not a good plan to reinvest dividends. I’m guessing with this high yield stock that if you’d taken your dividends, by now you would have been paid back your purchase price, and would still be holding the stock. A better outcome, I think.

In recent years I have given some thought to when to reinvest dividends or even if to at all. I also have had underperforming stocks in the past where I thoughtlessly reinvested all dividends. I realized that this wasn’t smart, or the best use for those dividends.

Now I think an investor should only reinvest dividends in companies that are growing earnings at a rate greater than inflation and at a stock price where you would consider buying the stock if you didn’t already own it.

If a stock is overvalued it’s not worth your money at that price, and this is as true for reinvested dividends as it is for a cash purchase.

The majority of stocks in Berkshire Hathaway’s portfolio pay dividends. None of the dividends have ever been reinvested; the cash from the dividends goes in the general fund. Warren Buffett’s no dummy and I think there are good reasons for this approach.

With stocks now generally generously valued I don’t reinvest any dividends and I am unlikely to, unless perhaps for an S&P 500 index fund if I snap it up cheap; not much chance of that short of the next recession though.

kelbon
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What are your stocks Kelbon?
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AltaGas Ltd. (ATGFF)

$100 invested in ATGFF would now be $93



Well that's half an answer for a person interested in growing and _income_ stream.

Just how much it matters to someone like that depends on the other half of the (unanswered) equation:

What would the dividend stream have gone from_to with reinvestment over that time frame?
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Well that's half an answer for a person interested in growing and _income_ stream

You, and others, are missing the point of my original post (and my subsequent posts), that is, DD's dividends were reinvested. They were NOT an income stream.
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No I'm not. Totally get your point.

You're missing the point about the psychology of someone who is focused on income stream. Or potential income stream.
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What are your stocks Kelbon?

How is this relevant to the discussion?
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What are your stocks Kelbon?
How is this relevant to the discussion?


Kelbon, you are losing credibility with this statement. If you are willing to criticize someone else's portfolio you should be willing to put your portfolio up as a better alternative.

Andy
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No. of Recommendations: 14
Hi Andy,

I don't think kelbon needs to put up the portfolio.

The arguments / point of view stand independently of the portfolio.

I've always found Kelbon's arguments and points to be worth listening to, well articulated and interesting.
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No. of Recommendations: 5
I don't think kelbon needs to put up the portfolio

Agreed. Providing his analysis along with his opinion as to a better approach is not a criticism. I think he is offering his view with the idea of helping. If you disagree don't use his approach, but no need to pick a fight.
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No. of Recommendations: 6
First a caveat to any post I lodge on this board. I don't comment substantively in depth on the topic of stock valuations because I am not competent to do so. I still work full time as a lawyer and stocks only interest me insofar as they are part of my retirement assets. However, I do have a relatively heavy position in dividend growers (and dividends) in the form of:

VIG https://advisors.vanguard.com/web/cf/fas-investmentproducts/...

VEIRX https://advisors.vanguard.com/web/cf/fas-investmentproducts/...

and

VYM https://institutional.vanguard.com/VGApp/iip/site/institutio...

My ten year numbers with these three positions pretty much match Kelbon's assessments of the dividend growers on this board. They do slightly underperform the S&P over the last ten years.

However, one of them, VEIRX, slightly outperformed the S&P over the last 15 years and it achieved that result without sizable positions in the FAANG stocks.

I like the fact that the 15 year result was accomplished despite the fact that it is a large value fund, does not have a position in the FAANG stocks (at least not in the top holdings that I can see), and is being measured against those stocks 9 years into a bull market run which I think may be a good result for a value fund.

I *hope* it will hold up well in a downturn. If not, I hope it will continue to generate cash throughout the downturn that I can spend and/or reinvest. I did undrip all three of those positions in October of 2017 with an eye toward rebuilding my cash cushion because everything I looked at seemed expensive to me. I felt like an idiot when markets raced upward thereafter, and I still don't know what the future holds.

In the end we all 'places our bets and takes our chances'.
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No. of Recommendations: 2
What are your stocks Kelbon?


What does it matter what stocks he is invested in? The level of validity of his argument(s) and statement(s) is independent of what he owns.

Y'know, I hear this all the time from DGI people, thinking that somehow they've landed a killing blow.
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...aaaaaaand the pure numbers guys drive right past factoring in (or attempting to argue away) investor psychology.

Again.



Methinks somewhere on the spectrum they lie.
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Kelbon, you are losing credibility with this statement. If you are willing to criticize someone else's portfolio you should be willing to put your portfolio up as a better alternative.

Funny.

Kelbon: "Smacking your thumb with a hammer is a bad idea."

Andy: "Okay, smart guy, tell us what *you* smack your thumb with. Otherwise you have no credibility."
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.aaaaaaand the pure numbers guys drive right past factoring in (or attempting to argue away) investor psychology.

Again.


There is investor psychology, of course. But the primary point of investing is to MAKE MONEY, not to feel safe or to sleep well at night. You can sleep well by not owning any stocks whatsoever, just invest all your money in T-bills.
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No. of Recommendations: 14
What are your stocks Kelbon?

How is this relevant to the discussion?


Kelbon, you are losing credibility with this statement. If you are willing to criticize someone else's portfolio you should be willing to put your portfolio up as a better alternative.


My takeaway:

- Many folks engaging in DGI feel similarly as Dave wrt their investing approach.

- Kelbon has considered that approach and concluded that there is more than initially meets the eye.

- While Kelbon used Dave's aft-published information as a springboard to the conversation, it is less about Dave's portfolio per se than it is about the approach.

- Dave's approach may be the perfect one for him, meeting all his needs, financial and otherwise. Good for him. I hope to be there some day.

- Others who engage in DGI (or considering it) may look at Kelbon's analysis and decide that perhaps Dave's approach to DGI is not what they thought it was and not the appropriate way for them to reach their goals. (financial and otherwise). Or it may confirm their approach. In either case, good for them.

- We all want to make the best decisions for ourselves. And having a good understanding of the situation is key to that. I thank Kelbon for taking the time to investigate and share on our behalf.


Jim
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Coolprash,

I think Kelbon is very smart but I would like to see what he thinks is a good portfolio. I am not asking him to tell how much he has invested but to see what he thinks is a well constructed portfolio. I am not looking to tear him down but to better understand his investing philosophy. I think the only way to know that is to know what he is invested in. DD is a dividend investor so his portfolio makes sense to him. I am a growth investor with only a few dividend paying stocks so I have no credibility on this board. Is Kelbon a growth investor also?

Andy
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No. of Recommendations: 1
Andy: "Okay, smart guy, tell us what *you* smack your thumb with. Otherwise you have no credibility."

Ok Rayvt,
I smack my thumb with
Shop
NVDA
Anet
AYX
Blue
Unit (Uniti)
SQ
FB
BOFI
MELI
AMGN
PSTG
WPG
CBl

I never said I was smart Rayvt. But lets see what you smack your thumb with?

Andy
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No. of Recommendations: 2
- We all want to make the best decisions for ourselves. And having a good understanding of the situation is key to that. I thank Kelbon for taking the time to investigate and share on our behalf.

Jim


Agreed Jim, I have seen Kelbon show exactly why he thinks people should be careful of investing in Dividend stocks and he makes a great argument, but I have never seen what he thinks you should be invested in. Is it a mixture of growth and dividends? I would like him to show what he thinks is a great portfolio, and why, so we can study that and see if we agree with him. Showing only what not to invest in is only half of the equation.

Andy
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Andy.. good post. That about sums it up. I also as previously mentioned have a few dividend paying stocks and therefore also have less credibility than many here. He doesn’t have to say anything of course but since he has virtually taken apart DD’s portfolio, even though he states he hasn’t and just offers another point of view, which appears to be more than feasible, was just interested to see what his Companies were that he was attracted to and why and therefore gain additional knowledge and guidance from someone who “appears” to know more than many on this board.
Straight forward I would have thought but as Kelbon and others have mentioned, we are all faceless, anonymous and hiding begind a computer screen. At least DD tells us what he has invested in. If this is too much to ask, then I will say no more on this subject.
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I do have a relatively heavy position in dividend growers (and dividends) in the form of:

VIG

VEIRX

and

VYM


Thanks Joel I'm going to take your advice and look into those stocks. I'd have asked Kelbon for his list, but he's refused to list his investments (all hat no cattle) so I'm looking at those three since I am already a Vanguard investor.

Kelbon did accomplish one thing though; he scared me into selling all my shares in ALTGAS & ED.

I've got a little under $150,000 to invest.

I am open to suggestions from others if any of y'all want to chime in.
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Don't know enough to give advice. My best intentions would not cure that. I'll share possible mistakes instead.

In hindsight my veirx has better pretax returns over the 15 year stretch than post tax and the vti (index fund) holds up better from a taxation standpoint.

So, in hindsight maybe my veirx should have been in my tax advantaged account and my vti should have been in my taxable account. I have them bass ackward. Oh well.

Anyway, if you are looking at funds, don't forget to look for pre and post-tax numbers when looking at long term total returns because they can add up too. Vanguard has total return numbers, including pre and post tax numbers, plus before and after sale numbers when you use their comparison tool.
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Kelbon, you are losing credibility with this statement. If you are willing to criticize someone else's portfolio you should be willing to put your portfolio up as a better alternative.

Funny.

Kelbon: "Smacking your thumb with a hammer is a bad idea."

Andy: "Okay, smart guy, tell us what *you* smack your thumb with. Otherwise you have no credibility."


One more thing Rayvt, maybe this was to harsh, losing credibility, I could have phrased that better. I really would like to see what Kelbon thinks is a better portfolio and why.

Andy
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Kelbon did accomplish one thing though; he scared me into selling all my shares in ALTGAS & ED.

This is the last thing I wanted; someone taking action based on something I wrote.

And, this is why I'm wary of sharing my views on individual stocks, though I do occasionally with a reminder for people to do their own due diligence.

I once asked a poster—let's call him X—who was generous with generalities, but would never comment on individual stocks, ever, why this was? He told me that he used to, but got a very threatening email from a disgruntled reader who invested in one of the stocks X favored on the assumption that it was a sound "can't lose" recommendation (there is no such thing). He lost money and threatened to track down X down and do him bodily harm. Yikes!

I think… it might have been on this board even, that I've said as much before about due diligence and I got a response along the lines of "So your advice is not to take your advise?" Exactly right, not lightly, not quickly, not without other perspectives, and not without yes; "going all mathematical."

Everyone should do their own due diligence with their own situation and risk tolerance very much in mind.

kelbon
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. But lets see what you smack your thumb with?

I own about 100 different individual stocks, a couple dozen preferred stocks (which are bonds that trade like stocks), a dozen and a half CEFs, and about 8 various index funds.
Which ones would you like to talk about?

See, thing is, you can't get an understanding of investment philosophies just by looking at what someone owns. You need to look at the "why" and the "rationale/theory" for the particular investment strategy and then look at stocks that meet the pertinant criteria. Just looking at a list of stocks doesn't give you that information.

=================
I'd have asked Kelbon for his list, but he's refused to list his investments (all hat no cattle)
This represents a complete misunderstanding. If you want a list of stocks to buy, you subscribe to one of the myriad stock touting services. For a fee, they will tell you what to buy and (sometimes) what to sell. You have no idea WHY you should buy the stock, you're just blindly investing your money unknowingly.

Kelbon gave the correct response by saying "Do your own due diligence."

What you should be getting from these TMF boards is not a list of stocks to buy, but a method/system/strategy for picking WHICH stocks to buy.

And anyway, for all you know, Kelbon is a 12-year-old who doesn't own any stocks. Or a guy who pulls up a list of "10 stocks that paid huge dividends last decade" and gave them as the stocks that he owns. (Frankly, that's what I'd do if I was somehow forced to name my portfolio.)


====================
I really would like to see what Kelbon thinks is a better portfolio and why.

You're still not getting it.

You are aware, aren't you, that you are not restricted to investing with just one strategy?

No offense, but the about only people who talk in terms of "better portfolio" are typically beginners who don't yet grasp the concept of diversification. Diversification not merely in individual stocks but also diversification of strategies.

It's not a d*ck measuring contest. It's discussions on how best to make investment profits. Demanding to see what somebody owns is equivalent to asking for measurements.

I really would like to see what Kelbon thinks is a better portfolio and why.
You won't get that by seeing a list of the stocks that Kelbon owns. The only possible way you could get that would be for himto explain *why* he owns each of the stocks in his portfolio. And nobody is going to do that--at least, not for free.
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In hindsight my veirx has better pretax returns over the 15 year stretch than post tax and the vti (index fund) holds up better from a taxation standpoint.

OK, thanks! I'm not promising to follow anyone's advice, just asking for ideas.

We are all responsible for our own actions.

Desert (words have meanings, actions have consequences) Dave
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Thank you for recommending this post to our Best of feature.

This is the last thing I wanted; someone taking action based on something I wrote.

OK, thanks! I'm not blaming you for anything.

We are all responsible for our own actions.

Desert (words have meanings, actions have consequences) Dave
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Rayvt,

It's not a d*ck measuring contest. It's discussions on how best to make investment profits. Demanding to see what somebody owns is equivalent to asking for measurements

I am not trying to insult you but this makes no sense. How does asking someone what stocks they have in their portfolio come to a D*ck measuring contest? I didn't ask how much money he had nor did I ask what percentage of his portfolio he had in each stock.

No offense, but the about only people who talk in terms of "better portfolio" are typically beginners who don't yet grasp the concept of diversification. Diversification not merely in individual stocks but also diversification of strategies.

No offense taken, but it seems you are talking in circles and trying to sound smart. Of course everyone thinks they have a better portfolio, if you do not then you should just put your money into index fund. Maybe you should have also mentioned a diversification of time. There is many ways to diversify but that would also explain why someone thinks they have a better portfolio. Also this whole discussion was about DD's portfolio and why it might not be the best portfolio.

I really would like to see what Kelbon thinks is a better portfolio and why.
You won't get that by seeing a list of the stocks that Kelbon owns. The only possible way you could get that would be for himto explain *why* he owns each of the stocks in his portfolio. And nobody is going to do that--at least, not for free.


We are just going to have to disagree on this. I do not need him to explain why he owns the stocks because I could look at them myself and determine what I think he is trying to do. Whether I am correct or not is irrelevant. It would allow me to see for myself how he might be investing. Also, if this is what you think then why would you ever ask someone "let's see what you smack your thumb with"? I am starting to think that some people on this board are really not trying to help anyone out. After reading your post, you basically stated that no one on the internet can be believed and you shouldn't listen to anyone. I wasn't looking for a stock tip, only to better understand his investing rationale. I wouldn't even care if they were not stocks he owned but just a representation of how he invests. What anyone decides to sell or buy is up to them and really isn't the responsibility of the any poster.

Andy
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You won't get that by seeing a list of the stocks that Kelbon owns. The only possible way you could get that would be for himto explain *why* he owns each of the stocks in his portfolio. And nobody is going to do that--at least, not for free.

Saul does. For free.

You best know yourself. Know his method and have an iron stomach.

I have followed him for years. Invested some like him for a year. Even at that, I have less than 5 percent of my equities in that type of stocks, and I feel like a wild and crazy guy.

Cheers
Qazulight
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No. of Recommendations: 5
C'mon folks. It's not unusual for someone to ask 'so what stocks are you holding?' when someone else explains to them why what they're holding is inferior to the indexes. No need to get into delicate parsings of words, intentions and meanings. It's a basic natural reaction.

Everyone on these boards is trying to learn something or to affirm what they believe. No need to take offense when people ask questions.

I'm a longtime reader of Ray and Kelbon and sometimes their 'tone' can run towards the brusque. I've observed in Kelbon's case, it seems to come from an effort to be detached, objective and factual. I haven't read Ray as closely, but I'd think that at least part of that applies.

We've been in a tough spot for several years where stock and therefore index valuations have been on the higher end. Investing in the indexes is not the automatic slam-dunk it often was for those not gifted in math and economics.

It doesn't cost anything to be congenial. Treat people as you'd like to be treated. (Unless you enjoy being humiliated or beaten, then you're on the wrong boards.)

SD
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The best reason for not disclosing your portfolio is the same as WEB's reason for not doing it at BRK.
I might be be buying or selling any of the positions and don't want to affect the market by disclosing any current information on those positions:)

Thanks kd
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No. of Recommendations: 7
I'm a longtime reader of Ray and Kelbon and sometimes their 'tone' can run towards the brusque. I've observed in Kelbon's case, it seems to come from an effort to be detached, objective and factual. I haven't read Ray as closely, but I'd think that at least part of that applies.

And because people in general (and especially relative beginners) have a tendency to unknowingly do things that are much more risky & dangerous than they realize. Some then take umbrage at a shouted warning.

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How does asking someone what stocks they have in their portfolio come to a D*ck measuring contest?

Because what he owns does not matter.

Of course everyone thinks they have a better portfolio,

Wrong.

... if you do not then you should just put your money into index fund.
Only in the sense of defining "better" as "different than an index fund". That's a tautology and hence is not useful.

I think maybe the problem is that you are personalizing this. It. does. not. matter. what stocks Kelbon owns. What matters is the ideas & philosophy. To make a stupid analogy---when a paraplegic says to not smack your thumb with a hammer, demand to know what he smacks *his* thumb with.


I could look at them myself and determine what I think he is trying to do. Whether I am correct or not is irrelevant...

"Whether I am correct or not is irrelevant."???? Are you serious?

It would allow me to see for myself how he might be investing.
Not possible. This would be an example of what Scott Adams calls "the mind-reading illusion."

Nontheless, I'll bite.
Here's a list of stocks I own in an IRA account:
Set 1: JNJ XOM JPM AMZN AAPL
Set 2: TGNA UTHR GILD DISCA AMCX MSGN AGX

What can you see about how I am investing? (I've already given a hint by saying that it is 2 sets.)
A case of beer (via paypal) to the first person who can correctly answer that.


I wasn't looking for a stock tip, only to better understand his investing rationale.
Then ask about his investing rationale, and not what he owns.
He could be making solid advice like "invest 50% in SPY and 50% in BND"..... but own exclusively Bitcoin & AGNC.


I am starting to think that some people on this board are really not trying to help anyone out.
That's because you think that people can only help by doing it in the way you want them to.

you basically stated that no one on the internet can be believed
Yes.
"On the internet, no one knows you are a dog."

...and you shouldn't listen to anyone.
No.
But you have to listen to what they are actually saying -- not what you want them to say.
And you have to verify, to the best of your ability, the validity of what they say.
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No. of Recommendations: 1
Goofy

The 2nd most valuable stock in 1900 was U.S. Leather. the largest was the just put together U.S. Steel. The first one is long gone. But big Steel was the dominant compa=y even after WW-II for a couple of decades. It still exists and even pays a dividend, but it is nowhere as influential as it was previously.

The bluest of the blue stock used to be Pennsylvania RR and that too is gone.

Probably the companies that have been the most resilient are GLW and IBM that have reinvented themselves at least a couple of times. Campbell soup has done a good job too although its major product is still soup.

brucedoe
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No. of Recommendations: 6
kelbon

I don't know when you feel a stock is worth buying, but GPC pays a dividend of over 3% so historically it is not overpriced now and they have increased their dividend for 62 years.

And in REITs, VTR stock has been murdered (52-wk high of 72.36/sh) and is well below its former 52.wk low/sh of about $50/sh. It pays a dividend of 6.44% and has increased it for 8 yrs. It is not in danger from Amazon and does not have exposure any more to skilled care. Personally, I don't know what the matter is. Their own reports seem good to me.

Well, this is two candidates from me.

brucedoe
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No. of Recommendations: 0
I don't know when you feel a stock is worth buying, but GPC pays a dividend of over 3% so historically it is not overpriced now and they have increased their dividend for 62 years.

Actually, I bought a very small amount (relatively speaking) of GPC last November. The stock has pulled back significantly from its high of $107 in late January, but I'm still in the black! On a risk/reward basis GPC seems like a decent bet. On the recent pull back I revisited it and decided to hang in there.

Usually, I shy away from REITs. Given a rising interest rate environment they face a headwind, and this, I think, has started to impact their stock prices. Specific to VTR earnings guidance is soft as well.

kelbon
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