Comments on Dividend Growth Investor: The right time to buy dividend stocks

Are there any trends or tactics to trading that I ...

2010-03-22T09:05:55.665-07:00

Are there any trends or tactics to trading that I should stay CLEAR of? I'm new to the stock market, so I'm trying to take in as many tips and advice as I possibly can.

Thanks for the reply to my question on buying on d...

2010-03-19T06:54:44.532-07:00

Thanks for the reply to my question on buying on dips! That makes sense.

-Anon2

Dividend Growth Investor, Really awesome site her...

2010-03-19T00:35:12.436-07:00

Dividend Growth Investor,

Really awesome site here, I bookmarked it.

I recently read The Ultimate Dividend Playbook and I have to say the concept really makes sense to me and it seems practical enough an individual can do the necessary research and while being a normal person balancing a job and family etc..

One point I am having trouble on is determining when a good time to buy is. I noticed in your company analysis posts you say at what price you would buy.

How do you arrive at this number? Once I get that part down I think I have a fairly good grasp on everything else. Thanks!

dividend paying stocks have the potential for both...

2010-03-18T00:04:44.220-07:00

dividend paying stocks have the potential for both capital gain and income production. In order to provide potential capital growth, income, and protection against the erosion of purchasing power, we must buy the best dividend growth stocks and hold them for a very long time.

Thanks for a great post. I can't help but thi...

2010-03-17T19:55:31.350-07:00

Thanks for a great post. I can't help but think I'm in a similar position as yourself with an added twist. I'm looking to deploy my cash in a number of high quality dividend paying stocks seeing as how the strategy has worked well so far. The added twist is that, as a Canadian investor, with a Canadian dollar that I think will break par with the American dollar (and stay there for a long time), I'm looking for Canadian high-quality dividend stocks or relatively faster growing international dividend stocks that can outpace the appreciation of the Canadian dollar and make up for the the dividend witholding tax.

Have you written anything on high quality Canadian companies?

Thanks

If a stock is still passing your 3% yield test, an...

2010-03-17T19:11:18.168-07:00

If a stock is still passing your 3% yield test, and you are confident in its future growth, then a small difference in price shouldn't matter much over the long haul. If you try too hard to get the best price, you might become guilty of trying to time the market.

Even though stock prices are way up since the 2009 lows, I think you can still find some good ones that are "on sale" compared to their historical yields. For example, JNJ's div yield, even at $65, is a lot better than at almost any point in the past 10 years.

That said, if you believe there's a good chance of a broad mkt downturn ahead, you could park some cash in a utility company... if a "correction" doesn't happen, then hey, you still got a fat (PEG) or (ED) dividend.

I feel that EMR is a bit too highly valued right n...

2010-03-17T14:28:26.483-07:00

I feel that EMR is a bit too highly valued right now. I own it in my portfolio, and think it's a great company, though I bought it at a much lower valuation than it is currently at. I'm holding it, because I think they'll do well over the next decade, love the dividend, and certainly don't think it's a sell, but I'm not buying more shares either.

I think entry price matters very much. Even a tiny percentage point that doesn't seem like much can snowball into a ton of money 20 years down the line. Every extra percent of annual return will turn into several thousands of dollars later.

There are dividend companies out there that are worth looking into, especially in the smallcap space. I like NPK right now.

Anon1, If EMR double dividends over the next deca...

2010-03-17T13:59:07.851-07:00

Anon1,

If EMR double dividends over the next decade it shoudln't really matter whether my yield on cost is 5.6% or 6%. But I do agree that every little bit might count and also that EMR is overvalued right now.

Anon2,

Dips to me are typically characterized by entry yield of 3% or above.. For Realty Income the dip would be a move below 28 . Ideally I would enter Realty around $25...

Arti,

My performance has been good, and I have outperformed the markets since 2008 ( since I started wrting this blog). My costs are zero since I use Zecco, which give you 10 free trades/month if you qualify.

Angryman,

No I haven't read the book. Will check out the sumamry you provided.

To all:

Thanks for commenting!

Have you read "Value Averaging," by Mich...

2010-03-17T12:06:32.796-07:00

Have you read "Value Averaging," by Michael Edelstein. I recommend that serious investors read it at least once. It provides a disciplined framework for putting into practice a "buy low/sell high" strategy, whereas most people only practice the "buy" side of dollar cost averaging. William Bernstein has a good overview of the book on his site, efficientfrontier dot com.

I've been following your blog for quite someti...

2010-03-17T10:02:47.614-07:00

I've been following your blog for quite sometime and have few questions regarding your strategy.

What is your performance like over the past two years?

Given that you dollar-cost into ten stocks per month, what is your cost percentage (fee)? Assuming you invest $10,000 per month with transaction fee of $10 / trade, that amount to 1% per month.

Thanks!

How do you determine when to buy on a dip? I woul...

2010-03-17T07:14:50.840-07:00

How do you determine when to buy on a dip? I would think waiting for a dip with relatively stable, solid dividend companies like these would normally lead to buying at a higher price on average?

It does matter whether you buy at 45 or 48. At 45...

2010-03-17T05:55:58.388-07:00

It does matter whether you buy at 45 or 48. At 45 it is a 3.0% yield and at 48 it is a 2.8% yield. At 48, you've already given up the next year's worth of dividend increase (assuming a typical raise of 7% which is probably right since it took them ten years to last double the dividend).

On the other hand, it doesn't matter whether you buy at 45 or 48 because either price is too high for EMR which is trading at about 20x earnings, especially if you think in the next 10-20 years the economy will grow slower than the previous 10-20. I'm not willing to buy it at a 5 (or even a 6%) earnings yield.

I share your frustration that some of our dividend stocks have run away from us but my experience has been that chasing valuations leads to poor returns. I'll be patient and look in other areas. FWIW, at various times in 2010 I've bought XOM, KO, MKC, PEP, KMB, CVX, ARKR and CAW, but even most of those have moved outside where I would buy them.

BTW, I've had your blog bookmarked for some time now and enjoy reading it. Keep up the good work!