Sunday, January 19, 2014

Dividend Growth Investor Website Turns 6 Years Today

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.

Relevant Articles:

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

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