Comments on Dividend Growth Investor: Why Dividend Growth Stocks Rock?

First off, I am a senior portfolio manager with a ...

2010-06-03T07:10:19.476-07:00

First off, I am a senior portfolio manager with a national firm. Secondly, I am close to retirement and have over the years built a dividend portfolio, but one that is not static. During the last market decline, many stocks, especially in the financial sector cut their dividend rates, many to zero or barely above. Some of these were great long term dividend stocks, such as Wilmington Trust, Pfizer and GE. My point in what I guess is limited space, is to not marry most of these stocks unless one can withstand the punishing effect of cuts or the severe decline in the prices of many stocks. I've seen too many fall to the fear of the markets only to sell at the bottom as fear overcomes a sound investment strategy.

I believe that perhaps a better way is to manage a more "active" portfolio, with a long term view, around dividend equities, emphasis on "long term". As stocks rallied offvlows over the past year, yields have declined to levels, which may not be supportive of current price levels, and could easily be purchased at lower levels and therefore higher yields. Over the years I've had the pleasure of selling stocks whose yield dropped to low levels only to be able to repurchase them at much lower prices. Often a sell in one sector only to put funds into another where better opportunities might exist, perhaps oil stocks today. A long term study of yield levels on individual stocks find that many of them are contained within a range, best purchases are at the upper end of the yield range, and sold at the bottom, or perhaps a portion of one's position.

Though there is ample evidence of the merits of buy & hold on many of these so called dividend aristocrats, there is also reason to be wary of them as pure blind faith of the past. Therefore, I now manage around a universe of good solid dividend stocks, not letting anyone of them become a permanent part of my investments.....they might, but not for lack of oversight.

Annualgain, When there's more visibility abou...

2010-05-25T07:57:32.565-07:00

Annualgain,

When there's more visibility about the tax rates on dividends I would write an article. I won't write an article simply for speculation purposes. That being said dividend investing is valid, even if dividends were taxed at the ordinary tax rates.

Anon,

The rising tide did not lift the boats of non-dividend payers.

Another good, thought-provoking article. Using you...

2010-05-25T01:42:48.618-07:00

Another good, thought-provoking article. Using your criteria, I have already bought several Dividend Aristocrat stocks. I agree with you that such dividend stocks have many advantages. However, I am leery of statistics like these from the past 30-40 years. Why? Because that was one of the greatest secular bull markets of all times. Just as a rising tide raises all ships, an investor could have bought almost anything during that time period & made money. Now we are in an economic & investing climate that appears to be a secular bear market--one quite different from the past 30-40 years. Therefore, statistics like these are not necessarily relevant. What I would like to see is statistics from a more relevant period, such as 2000-2010.

Sorry this is a little off topic, but I'd love...

2010-05-24T07:25:56.020-07:00

Sorry this is a little off topic, but I'd love some commentary about dividend stocks with respect to anticipated dividend tax rate increases in 2011, back to the pre-Bush levels.