Wednesday, May 4, 2016

Building a Core Dividend Growth Portfolio With These Eight Companies

This is a guest post by Mike, aka The Dividend Guy. He authors The Dividend Guy Blog since 2010 and manages portfolios at Dividend Stocks Rock. He is a passionate investor.

I had the chance to start my investment journey at a relatively young age, I was 22 when I made my first trade on the stock market. Back then, I didn’t have a detailed investment process designed. If there is one thing that I have learned since then is that investing success goes through a solid investment process. If I want to build a strong portfolio, I must have a strong methodology to select the right companies. This is the way to go for any investing strategy, and it is also the case for dividend growth investing.

I’ve noticed that not all dividend investors think the same. To my surprise, there are some important differences between most of us in the manner in which companies are selected. For example, I’m definitely not a yield seeker. In fact, if there is one thing I don’t consider during my investment selecting process, it is the dividend yield! I focus on the dividend growth as a pillar of my investing strategy. I’ve established 7 investing principles around dividend growth to manage my portfolio.

I wanted to share these principles with you by giving you 8 examples of companies that meet my investing criteria and should create a solid base for any dividend growth portfolio.

Monday, May 2, 2016

Ten Dividend Growth Stocks That Keep Delivering For Their Shareholders

Dividend growth stocks are the gift that keeps on giving. I like the fact that most of the work in selecting good dividend growth stocks is upfront in analyzing those investments. What follows next is a lifetime of dividend payments, distributed every quarter, which grow over time. My goal is to assemble enough dividend growth stocks in my portfolio, in order to start generating income to pay for my retirement. My dividend portfolio is a silent worker in my household, who works 24/7 for me, and who dutifully shares all of their income with me. This income is completely passive in nature, and it does not require me to wake up at 6 am every day, shuffle TPS reports all day long, and make sure I do not forget to put a coversheet on those same reports.

I like watching dividend growth investing at work – this is when the companies I own keep rewarding me with a higher dividend check for a decision I made years ago. There were several notable companies which raised their dividends to shareholders. The list includes:

Friday, April 29, 2016

Why I Use Dividend Growth Investing to Get Wealthy

Mark Seed is passionate about personal finance and investing and is the blogger behind My Own Advisor. Mark is currently investing in dividend paying stocks on his journey to financial freedom. He is almost halfway to his goal of earning $30,000 per year in tax-free and tax-efficient dividend income for an early retirement. You can follow Mark on his path to financial freedom here.

I wasn’t always a dividend growth investor. In fact, for a good part of my 20s, I wasn’t much of an investor at all. As a young Canadian kid fresh out of university having secured my first full-time (real) job at a major pharmaceutical company, I didn’t think very much about my financial future. Sure, I knew enough to “pay myself first” (and I did) to the tune of about $50 per month in my registered investment account, similar to a 401(k), but I was focused on living for today. And who isn’t for the most part in their 20s – you only live once right?

The reality check
As you get older in life, you realize more and more you don’t know what you don’t know. You also figure out when it comes to investing in particular, by owning some pricey mutual fund investments, you’re paying steep money management fees for products that have no chance to outperform the market over time. You also learn the fees paid in money management fees is money you’ll never see again. It’s a massive double-whammy that occurs in Canada, and the United States, and pretty much anywhere around the world. This is part of the reality check that led me to dividend growth investing.

Thursday, April 28, 2016

13 Dividend Aristocrats for Further Research

Last week I shared with you the list of 2016 Dividend Aristocrats and its performance over the past decade. In addition, I isolated twenty-one companies for further research. In order to come up with the list, I looked for companies where:

1) P/E was below 20

For those of you who have read my stock analyses, you know that these are just the beginning criteria I use to reduce the list of investable opportunities to a more manageable level.

I also looked for:

2) Dividend Payout Ratio below 60%
3) Minimum yield of 2%

If you want to add more quantitative criteria, I would look for companies where the 5 and 10 year dividend growth rate exceeds a certain percentage such as 5% or 6%/year on average. After that, I would look at trends in earnings per share, dividends per share, and dividend payout ratios to further isolate the companies which have managed to prosper. I do this in order to eliminate companies that have managed to grow dividends not because they prospered, but because they are simply paying a higher portion of earnings out to shareholders.

Below, you could find the list of companies for further research. You may also check linked analysis for more details on each company:

Monday, April 25, 2016

How to have enough

I have shared with you early in the year, that I am essentially living off dividends and side income in 2016. I am saving my other income in tax-deferred accounts. I sleep like a baby*. I am happy with what I have achieved. However, I keep learning. I have a goal of generating a certain dollar amount from my portfolio within a certain timeframe. I also have figured out how to achieve that through regular screening, analyzing, and investing in quality dividend growth stocks.

Some people are never happy with what they have however. They never have enough. Their level of happiness is not dependent on what they have, but rather on what they don’t have. This is a slippery slope, which would put you in the rat race of its own. If you have a nice house, but your neighbor has a nicer and bigger house, you will succumb to a syndrome called ‘Keeping up with the Joneses”. If your portfolio generates enough dividends for you to live off, you should be happy. Many are not happy however, because their neighbor tells them they are doubling their money by investing in hot tech stocks. If you benchmark your success relative to the success of others, you will never be happy or accomplished. This is because there is always someone that is better than you at something else.

As an investor you need to have goals, and then create a strategy to achieve those goals.

For investors like you and me, the goal is to live off our nest eggs, and to never outlive them.

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