This article originally appeared on The DIV-Net September 12, 2008.
All investors have weaknesses that prevent them from achieving their long term goals. Some like to chase hot technology stocks while others tend to use excessive leverage in order to magnify their expected risks and returns. My biggest weakness as a dividend investor is that I am easily attracted by higher yielding instruments stocks, bonds and mutual funds.
In our society of instant gratification where you can get movies on demand and skip through commercials on your Tivo when watching your favorite TV show most investors don’t feel like waiting for one or two decades before achieving a double digit yield on cost. Most investors want to achieve above average returns, and they want to achieve them fast. It is very easy to open a brokerage account and actively trade stocks, options, futures and commodities. With the computerization of markets commission costs have decreased thus significantly decreasing the cost of entry for new market participants.
Many forget that markets are a reflection of what our lives are in general. It takes years of learning, investment and commitment before one can become a good doctor, lawyer and accountant. So why should a small investment in a stock or trading system bring a significant return right away? It’s not rational to expect that. Many will remind me that lottery winners make a great return on their investment when they hit the jackpot. The truth however is that this easy money is usually given away, gambled away or spent in its entirety.
In order for me to overcome my weakness, I have chosen for myself a system for picking stocks based off several parameters such as price earnings, dividend payout, minimum yield, history consistent dividend increases and solid dividend growth.
I am always reminding myself that a stock has an above average current yield for two reasons- either the stock has lost a lot of ground or the dividend is unsustainable and will be cut pretty soon. This happened with many of the wall street banks this year such as WB, FITB, KEY, C as well as with giants like GM.
Relevant Articles:
- My Dividend Growth Plan - Strategy
- My Dividend Growth Plan - Stock Selection
- My Dividend Growth Plan - Diversification
- My Dividend Growth Plan - Money Management
Popular Posts
-
A dividend champion is a company which has a 25 year record of annual dividend increases. There are only 129 such companies in the US today...
-
Readers of my Dividend Growth Investor newsletter just received a list of ten dividend growth stocks I plan to purchase on today. This is a...
-
The bull market is dead after an almost ten year run off the 2009 lows. The US stock market is now in a bear market – characterized by a 20%...
-
The goal of every dividend investor is to one day accumulate a portfolio of income producing stocks , which would throw off a large amount o...
-
Blackrock (BLK) is the largest investment manager in the world, with over $6.5 trillion in assets under management. Over the past decade, ...
-
Last week, we had Altria Group (MO) announce a major investment in JUUL, which makes e-cigarettes. You can read the press release here: w...
-
Exactly a decade ago, I wrote an article that outlined the best dividend stocks for the long run . I have used the criteria to create this ...
-
British American Tobacco p.l.c. (BTI) provides cigarettes and other tobacco products worldwide. It manufactures vapour and tobacco heating p...
-
As a dividend growth investor , my goal to purchase shares in a company at an attractive valuation, and then receive a rising stream of divi...
-
A dividend king is a company that has managed to increase dividends to shareholders for at least 50 years in a row. There are only 26 such...
