Sunday, August 31, 2014
Saturday, July 26, 2014
Saturday, June 28, 2014
Saturday, June 7, 2014
Saturday, May 31, 2014
Saturday, May 3, 2014
Saturday, April 12, 2014
There are several sites I read daily, as part of my routine to check what other investors are doing with their money. Many of those include dividend investing sites, but I also look at sites covering general investment and investor psychology. One sites I have been following religiously since 2011 is Dividend Mantra, written by Jason Fieber. There are several reasons why I personally start my day with his site.
1) His stock analyses
He thoroughly analyses companies he buys, including qualitative and quantitative factors. I enjoy the fact that he tells readers about the story behind each company, and reasons why he purchased it. It is very interesting how different dividend investors with somewhat different approaches to analyzing companies end up with a very high overlap of quality dividend paying companies in their portfolios.
2) He earns a middle class salary,
This makes his efforts relevant to a large base of investors. This is a very powerful lesson, which shows that everyone can make it in investing, as long as they find the right strategy, save high portions of income consistently, and keep being persistent for long periods of time. Even if you start with a few hundred dollars a month using a no-cost broker like Loyal3, you can still amass a sizeable collection of dividend paying stocks over time.
3) He is frugal with money.
Jason writes about his monthly income and expenses, which include things as mundane as delivery pizza he ordered to buying and selling a scooter. I think that one of the largest contributors behind his accumulation of a six figure portfolio is due to his high savings rate. I am lucky to also have a very high savings rate as well, which is a definite plus, because it allows be to find enough capital to deploy every month, and kick start my dividend growth compounding. It is a site where frugality meets dividend growth investing.
4) He plans to retire early.
Jason tries to retire at the age of 40, which is a pretty lofty goal. He started his journey at the age of 28 – 29, which means that he expects to be financially free within a decade of saving and investing. Given the fact that he has shown the stamina to keep putting money in dividend paying companies on a consistent monthly schedule, I am more than confident that he will achieve his goal. As I had mentioned earlier, in order to determine whether you can retire early, you need to determine how much you are spending. The next step is determining how much you will spend in retirement, and work backwards to achieve this goal. The key inputs in your financial independence calculation include money you are putting every month to work, investment returns and time you allow your capital to compound.
5) We have very similar personalities and strategies
The one thing that I like about Jason is that we have a lot of things in common. I am fairly frugal, and I put money in dividend paying stocks, because I think this is the best strategy for someone like me who wants to live off an investment portfolio. I also plan on achieving financial independence early in life, in order to achieve something else with my life, other than enduring a 50 – 60 hour weekly grind at my job.
6) He is able to motivate himself and readers to keep the good fight
One of the reasons I like reading his site is the dose of motivation that puts things in perspective. I think that few people really stop to think about the true cost of buying a new car or a new TV every few years. Jason discusses why those might not be important for your true happiness, and how you only live life once. Therefore, you need to spend it in the way that is best for you, not how others are telling you to spend it. He is able to visualize his ideal retirement, and how it would free up his time from having to exchange his time for money.
7) He had all odds stacked against him, yet he still persevered through hard work to get where he is today
Actually, he has had it much more difficult than I have ever had it. Some of his stories are really scary for me to read, although it does make it even more telling how far ahead he has come. It is great how he had his awakening moment in his late 20s, that has truly provided the spark that will lead him to greatness. I guess it is at the moments of despair that the seeds of future success are planted.
8) His dream is built in real time
He is a dividend growth investor who is building his dream in real time. Unlike most other stories of persons who retired early a long time ago where you hear about them only after they have retired, you get to see Jason save and invest his money in quality dividend stocks every single month in almost real-time.
9) He is a celebrity
Jason has been interviewed by the USA Today, CNBC etc. He is a role model for many people who want to be able to live life on their own terms. I see him as a positive role model, whose story should be more widely followed than the other celebrity gossip people usually waste their time on. I would much rather read about his monthly income and expenses on the cover of People magazine or on E!, than anything about the Kardashians. I don’t read those magazines, but I know a lot of people do, and their views are shaped by these publications.
When I started my own site in 2008, I planned on posting my monthly income and expense, as well as how much I earn in dividend income, but I decided against it. I didn’t feel safe revealing everything about myself to the world, and still don’t. Kudos to him for doing what he is doing, and motivating people to take ownership of their financial lives.
Saturday, March 29, 2014
Saturday, March 1, 2014
I spend a lot of time at my day job, spending time with my family, monitoring my investment portfolio and researching existing and potential dividend investments. I also spend a lot of time every single day, reading about investment articles and books about investing. I am usually very open to learning how other investors go about their investment process, and investment philosophy. I have highlighted a few articles from investors whose words I value a lot below:
Buffett's annual letter: What you can learn from my real estate investments
This was an excerpt from Buffett’s 2013 letter to shareholders, which discussed his experience purchasing real estate. The lessons learned are very applicable to stock market investors, and are lessons that are frequently mentioned by the Oracle of Omaha himself. The analogy of Mr Market and the reference to The Intelligent Investor are must reads for anyone who wants to be a long-term investor. To succeed in investing, think of yourself as a partial business owner in an enterprise, whose success is determined based on durability of the investment and its expected earnings, rather than the irrational nature of stock price fluctuations.In addition, he is also scheduled to post his full annual letter on the company website.
Separating Company Performance From Stock Performance
This article from Dividend Mantra was posted on the same day that the excerpt from Warren Buffett was posted on Fortune. I like the topic of focusing on the underlying business when investing, and ignoring the irrational nature of the stock market itself. Dividend Mantra walks us through the reasons why he kept adding to his exposure to Digital Realty Trust (DLR), despite the falling stock price. As a holder of Digital Realty myself, I found the decline in the stock price a welcome opportunity to add to my position there.
Kinder Morgan's Response to Barron's
The Kinder Morgan group of companies was featured in a very biased article by financial publication Barron’s over the past week. That Barron's article didn’t really add anything new, that hasn’t been discussed before. However, it quoted the opinion of an analyst whose faulty logic has already been refuted by others before. (Motley fools article ) Unfortunately, investors who did not do a very good analysis of Kinder Morgan Partners or Kinder Morgan Inc panicked and have been selling off their ownership stakes. I own both KMI and KMR, and am happy to say that both account for the largest position in my portfolio. I like to have smart people like Richard Kinder work for me. My only regret is that I didn't use the dip to add to my positions in the general or limited partner, given my high exposure to Kinder Morgan.
On the Merits of Being a Financial Historian
I liked this article, because it discusses why it is important for investors to learn about financial history. History doesn't repeat, it rhymes. If you want to be a successful investor, learn about history, and avoid chasing returns. Many investors I have met, tend to always focus on stocks when everyone talks about it, and avoid them when stock are unpopular. To be successful, you need to develop independent thinking, which could only be done if you continuously learn about investments.
The Buffett Formula - How To Get Smarter
I really like this article from Farnam Street, because it discusses a little known fact that explains Buffett's success as an investor. The truth is that the guy has managed to read 500 pages a day for 60 - 70 years in a row. As a result, his knowledge of investments is superior to most anyone else in the world, which allows him to act fast when opportunities arise. There are no shortcuts to investing, so you need to be willing to work hard at analyzing businesses, reading annual reports and industry publications and reading books, in order to do well. I personally read about 80 - 100 pages/day, but I also enjoy the process. After several years of following investments, it becomes much easier to spot what you are looking for.
Saturday, February 1, 2014
Sunday, January 19, 2014
I just wanted to post that this site just turned 6 years old today. I made the first post to the site on January 19, 2008. I want to thank everyone who reads it.
The purpose of this site was to make me a better investor. I am trying to achieve that by putting down investment thoughts on paper, and document my reasoning why I liked certain companies and strategies. By writing things down, and posting it out there, I am essentially pushing myself to do the actual work before committing money to an investment. By keeping a constant schedule, I am able to mentally maintain my persistence to keep plugging at my dividend investing. Dividend investing is a marathon, not a sprint, which is why it is important to be persistent, and patient all the time. Sometimes you will get low on motivation, which is why it is important to develop systems to get yourself out of it! For me, every time I receive a dividend, I am pretty ecstatic, because that is income I didn't have to work for, generated from an investment I may have made years ago.
I used this site to document aspects about dividend growth investing, which I learned through my research. As I keep learning more, I keep writing more. I also try to think ideas out loud, write them down, and see if they make sense.
In addition, when I post something in public, I get the opportunity to get feedback, which could uncover ideas I might not have thought out about. Another benefit of having a website is that I have been able to connect with other investors, and learn more about their thought process, and resources they utilize in their stock research. I especially like when someone asks me a question, because by interacting, I might think about something I have not previously thought about.
My road to Dividend Growth Investing was a long and arduous one, but once I learned about it, I decided this was the strategy for me. For several years prior to becoming a Dividend Growth Investing, I learned all there was about charting, indicators, momentum investing, stock market history, and about the stories of successful traders. The thing that always made me shun those strategies was the fact that one could correctly identify a company that will grow in value, yet make little money because you get whipsawed when it has a correction. You get whipsawed, because when companies are on their way to greatness, they never go up in a straight fashion. I then decided that buy and hold is my preferred method of investing, since it involves less time, taxation costs and investment costs than active trading. I also wanted to be able to generate cash flow, no matter whether stock market was going up or down. I did put a large portion of my money in CD’s, which provided cash flow. The problem was that the income and principal were losing purchasing power due to inflation. I was looking for a strategy where I would earn more income over time on my capital, while my capital would also compound above rate of inflation as well.
As I kept doing research, I uncovered the beauty of Dividend Growth Investing. Once I saw how a company like Johnson & Johnson (JNJ) managed to keep earning more, and pay more dividends over time, I was instantly hooked. It isn’t that difficult to get excited about a company, where a single $1000 investment can generate hundreds of dollars in annual dividends after a certain period of time. In my experience, some people who learn about Dividend Growth Investing get it almost instantly. The rest will never get it, and will provide you with 100s of reasons why it is a bad strategy. While it is helpful to get opposing viewpoints, in order to avoid making stupid mistakes, I have found that arguing with the people who don’t get Dividend Growth Investing is a waste of my time. They probably do mean well, and sometimes have some good points such as don’t fall in love with a stock, focus on earnings growth and not just chasing yield, diversify etc. Of course, everyone has their choice of how to invest money, and I am fine when someone finds something that works for them. I chose Dividend Growth Investing, because it fits perfectly with my long-term goals of generating a rising stream of income from my portfolio. I didn’t want to be at the mercy of the stock market, and risk depleting my nest egg by having to sell during bear markets, in order to meet my living expenses. I also didn’t want to invest in shiny growth companies, with sky-high valuations ( or non-existent earnings), which may or may not survive, and where market sentiment about the stock price results in huge fluctuations.
I like the relative stability and predictability of companies like Johnson & Johnson, Coca-Cola, Philip Morris International, which quietly compound earnings, dividends and capital over time. They are there, in plain sight, making patient long-term investors rich, while everyone else is out there searching for the next Microsoft. I like that when I get a dividend it is mine to keep, and cannot be taken away from me. Dividends are more stable than capital gains, which makes dividends an ideal way to live off my nest egg. When dividends increase over time, they also preserve purchasing power of income and principal. Over time, as a company like Coca-Cola earns more, it pays more in dividends, and becomes more valuable to investors. Therefore I get the trifecta of goodiness.
I launched the site in early 2008, just as the global financial system was imploding. I started off converting most of my assets to Dividend Growth Investing between 2008 and 2009. I would be the first one to admit that the timing of my initial investments was based on pure luck in hindsight. Since then, I am spending my time saving money, looking for bargains, analyzing companies and learning more about dividend investing and quality companies. I am building my dividend machine one dividend paying stock at a time. I also encourage everyone to keep learning as much about stock selection as possible, by studying anything on Ben Graham, Peter Lynch, Warren Buffett, Charlie Munger, Philip Fisher etc.
I am a regular person, like everyone else that reads this site, who has a day job, saves some money from it, and then wants to find a place where my money can work for me. I am always low on time.
I do not write about myself on the site, because I do not think I am that interesting. I also do not write specifics about my financial situation. I already post my ideas on investing for free, so asking for extra like specific numbers is asking too much if you ask me. I don’t see why an anonymous person would be interested in how much I have, and ask me to post it online, unless their intentions are bad. In addition, anything I write about on this site, includes my thoughts about companies, strategies, is not a recommendation for anyone else to act on. You should do your own research before you make any investment decisions, and not rely on everything that anonymous people post on the internet.
Anyway, thanks for reading my site. I have a lot of articles written over the past six years, which I have posted in the archive accessible from here. I hope to be able to share my investment experiences over the next 5- 6 years as well.
- Dividend Growth Stocks – The best kept secret on Wall Street
- Dividend Growth beats Dividend Yield in the long run
- Frequently Asked Questions (FAQ) About Dividend Investing
- The Dividend Investment Journey
- My Dividend Goals for 2014 and after
Saturday, January 11, 2014
The past year was the sixth year in which I have been sharing ideas on dividend investing on this site.
I have outlined the top five articles written in 2013, which readers found to be the most useful. I have also added a brief summary behind each article.
1) Best Dividend Stocks for 2013 and Beyond
I presented a list of 20 quality dividend paying companies, which were attractively priced, and are great long term holdings. Some of these companies like Walgreen (WAG) went up in price considerably, and I could only consider them great holds. Others like Phillip Morris International (PM) are available at attractive valuations today. After all, the name of the game is to select a quality company at a reasonable price, which grows earnings and raises dividends for you. Your job is to then hold on to that compounding machine, and let the power of compounding work for you.
2) Warren Buffett's Dividend Stock Strategy
In this article I analyzed some of Warren Buffett’s largest investments at Berkshire Hathaway. I found out that the Superinvestor likes to generate growing distributions from the companies he invests in, and then uses those to purchase more businesses that distribute excess cash to him. The similarities with what dividend growth investors do on a monthly basis are strikingly similar, which is why I believe that Buffett is a closet dividend investor.
3) Ten Dividend Paying Stocks I Purchased in my Roth IRA
Last year, I had the realization that I am paying too much in taxes. As such, I am trying to defer taxes as much as possible, by tapping every legally allowed way to put money in 401 (k), SEP IRA and Roth IRA. In this article I discussed ten companies which I purchased using Sharebuilder for my Roth IRA. The purpose of this series of articles on Roth IRA investing was that one could invest $5,500 over a three month period, make 25 – 30 individual investments, and pay $24 in total commission costs. By reducing investment and taxation costs to a minimum, the investor will keep more money for themselves. You can create you tax-free dividend compounding machine today by making a Roth IRA contribution, and won’t have to pay any taxes on income when you withdraw it at age 59 ½. By my estimates, a $5,500 investment today could generate approximately $200 in annual dividend income. If dividends grow by 6%-7%/year and are reinvested into securities yielding 3% - 4%, the annual income stream would grow to $1600 in 30 years and $3200 in 40 years.
4) Why Most Dividend Investors Never Succeed
In this article, I outlined a few behavior items that can prevent investors from achieving their investment objectives. I believe that most buy and hold dividend investors have an edge because of the relative passivity of their strategy. However I believe that succumbing to behavior issues could jeopardize investment success. While the article was more geared towards new investors, I think that those who have experience in dividend investing could benefit from reminding themselves about psychological pitfalls of investing in general.
5) Twenty Dividend Stocks I Recently Purchased for my IRA Rollover
The last article I am outlining lists twenty companies I purchased for my IRA. I rolled this account over from an old 401 (k) at Fidelity in the past year. The process took less than a day, as I kept the IRA at Fidelity. It was difficult to find 20 companies to put my money to work in at almost the same time, but I managed to pull it off. My retirement accounts are the only places where I automatically reinvest dividends.
It is very interesting that the readers like to hear more about purchases I have made, or specific companies I discuss, rather than income investing strategy. I actually believe that the strategy piece is the most important one, whereas individual stock selection is a result of having a sound investment plan.
6) A few other information resources I enjoyed covered an interview with Peter Lynch and a documentary about Sir John Templeton. You can find the links below.
Interview with Peter Lynch
Documentary about Sir John Templeton
Sir John Templeton and Peter Lynch
Thank you for reading Dividend Growth Investor. I hope the new year brings us a correction, which would allow us to get more dividend paying stocks for our bucks.
Saturday, December 7, 2013
Saturday, November 9, 2013
If you have any ideas on topics that I could cover, please write down below. I would add them to y to-do the list promptly.
Saturday, October 19, 2013
Saturday, October 12, 2013
Saturday, October 5, 2013
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