Monday, January 19, 2015

7 Years Dividend Growth Investor

Today marks the seventh year of me posting on Dividend Growth Investor website. I have posted different things on the site, but the overall theme has been to discuss investments, investment strategies, and thoughts on how to improve my dividend investing. The goal at the beginning, and right now and in the future is to build a portfolio of sustainable dividend growth stocks, which will produce enough in dividend income to cover my expenses every month. This is financial independence in a nutshell.

So why do I keep writing about dividend investing to the tune of seven consecutive years?

1) Make myself do the work to form an opinion. When you write things down, it is much easier to focus your thoughts and examine your thesis.
2) Share experiences and connect with like-minded individuals
3) Pass it forward – there is so much misinformation on internet about investing – I wanted to pass it forward and share the knowledge with others, same way I learned in the first place.

The thing that attracted me to dividend investing is that fact that I realized I would need a consistent return if I wanted to rely exclusively on investment income in FI/Retirement. When I earn dividends, I am reasonably certain about the amount and timing of dividend payments generated from my diversified portfolio. Hence I was instantly hooked once I learned about Dividend Growth Investing. However, I never really discussed that I had spent previously 9 years searching for the perfect strategy that delivers consistent returns to live off a nest egg. In the process, I found 100 ways of how NOT to make money, and only one of how to make money consistently - Dividend Growth Investing.

I don't mean to shamelessly self-promote myself but the truth my friends is that there are only two bloggers who have been writing continuously about dividend investing and documenting their strategy for over 7 years. That includes myself, and my friend Dividends4life. While the number of dividend investing sites has mushroomed, I have also witnessed the death of tens of other sites dedicated to dividend investing. Few have the dedication, patience and willingness to work hard for extended periods of time in setting up an income stream whose biggest fruits will be generated years down the road. Also, having the discipline to stick to one strategy, and not abandon it altogether are the cornerstones of investment success. Too bad few investors realize that they should find a strategy that works for them in realizing their own investment goals and objectives, while taking into consideration their knowledge and actual tolerance to pain. I know for a fact that when I start deviating too much from my strategy, I make mistakes. Hence, discipline has been key for my success toward potentially achieving my goals.

I believe that the skills that helped me continue writing my site for seven years are the same skills that have helped become successful as a dividend investor. With dividend investing, success is all about saving as much money as possible, and then investing that money in quality blue chip dividend growth stocks available at attractive valuations. The dividends generated by those companies are then plowed back into shares of more dividend paying companies, which pay more dividends on their part that gets put to use into more dividend paying companies etc. You get the picture.

The other item of equal importance is the fact that I was willing to sit through thick and thin on most of my investments, without selling too quickly. I say most, because I have done the mistake of thinking I was smart and trying to outsmart everyone else by replacing one company for another. In 9 out of 10 cases, I would have been better off simply doing nothing. Patience is an essential skill in dividend investing, and the need to act at all times is actually counterproductive. Successful dividend investing requires patience.

I have built my portfolio with quality dividend paying companies, which I will be happy to hold even if they closed the stock market for 10 years. In fact, in the event that I die or became incapacitated, my portfolio could simply exist in its current form, and just spit out dividends every month to the person/entity that gets ownership to it. That person could be your one year old kid/nephew/niece or your 90 year old grandma who doesn’t know the difference between preferred stock and livestock. I won’t go as far as saying that your cat or dog will be fine if they inherited that portfolio to live off the dividends however, because this in my opinion is plain crazy. But then, who am I to tell you what to do with your money?

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22 comments:

  1. @DGI, I'm sure glad you decided to share your knowledge with us. I've learnt so much from you. Thank You.

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  2. Congratulations from down under (Australia)!!

    This is an excellent post with some very wise advise.

    I have also come to realise that it is imperative to form an investment philosophy and subsequently, investment strategy that is in line with your risk profile. Just as important is to stay the course through thick and thin. As they say, the best diet is the one you would stick to, along the same line, the best investment strategy is the one you would stick to.

    Reinvesting dividends in the accumulation phase is bound to produce very satisfying returns in the long run. I read somewhere that Warren Buffett hade 99% of his wealth after the age of 50. That's the power of compounding.

    Thanks for sharing your journey.

    All the best for the future!

    Cheers,
    Steve

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  3. Congratulations on the first 7 years of your journey. I started down the same path a decade ago, and have enjoyed being an avid reader of your articles from the beginning. Two lessons even the novice or first-time reader can take away from your writing are.

    1- As you stated above, by writing things down one is better able to assess the prospective business under consideration for investment.
    2- The value of a patient, disciplined, methodology, in selecting businesses that offer durable & sustainable dividend growth, that you stress in every company analysis.

    For many years I wrote down copious notes with pad & pencil, before graduating to Word & Excel to streamline the process, and make it easier to retrieve and review my research. Only last January did I venture to publish my dividend growth ideas, but when my wife became ill in the Spring, and passed away in the Summer, my writing came to an abrupt halt.

    I look forward to resuming publication soon, and sharing once again, my ‘best ideas’. For 32 years I was blessed with a wife who could (and would!) challenge my thought process, so now more than ever, I am dependent on fellow dividend investors to help me cull the pretenders from the contenders on my ever-evolving watch list.

    Wish you another 7 years of success on your journey, and keep up the good writing.

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  4. Mazaltov and thanks. I look forward to your articles

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  5. Happy Birthday and Congratulations. Thank you for sharing your thoughts. Udo

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  6. DGI,
    First off, congratulations! 7 years doing anything is a long time. Your's is still the first site I check every day regarding dividend growth investing (or dividend investing in general). As I've said before, I like the systematic approach that you use and I value your opinion.

    It seems that your company analyses have slowed down over the last couple of years, although you link back quite frequently. I have concluded that this is because you have already written about most of the number of companies that you follow. Have you considered doing updated analyses of companies that you hold? Updating the charts and investment thesis, if you will? I would be interested if you do. Since I have only read your blog for about 2 years, you might already be doing this and I just don't recognize that fact.

    Anyways, thanks for all the work that you've done. I hope you keep writing for at least another 7 years.
    KeithX

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  7. Blogging on any subject for any length of time seems to be a challenge for most. Unless it's drivel of course, and I've seen a lot of that out there. It's a tough subject matter that's for sure, but I've certainly gleaned snippets from your offerings over the years, and I'm not even much of an investor at all. HOWEVER, either by osmosis, or having learned it directly from you, I have certainly learned to stay away from any company that simply wants an investor's money, while offering nothing in return. So thanks. Keep on truckin'.

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  8. Great work. Thank you and keep it up.

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  9. DGI - congrats on hitting another year. You're absolutely right about the ebb and flow of new bloggers. While you have half a decade on me in this regard, it is strange to be considered an old timer already.

    You mention the hardest part about this sort of investing, and that is limiting the times you "pull" the trigger and sell, no matter how hard it might be to hold on. Focusing on the core principles and values that you set out for yourself have certainly paid off, and to say anyone is free from error would be impossible. It is making the most of your successes and limiting the behaviors that lead to failure that you've provided a model on. Best of luck in this next year of your journey. I know I'll be following along.

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  10. Congrats on your 7 years work. I have followed your blog for 4-5 years and have adopted so many things from what I have learned. Please keep up the good work and continue to share.

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  11. Congrats, DGI. I really appreciate your shared wisdom on these pages -- you've helped me in more ways than one.

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  12. Congrats DGI! Glad to still have you aboard... Your blog has been a reference for many, including myself! I know your feeling as I've been blogging for almost a decade myself! Boy, things changed! ;-)

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  13. DGI,

    I'm relatively new to the DGI community, but have learned so much over the past few months. That's partly due to your blog, so thank you very much for keeping at it for seven years already!

    Keep it up,
    NMW

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  14. DGI...awesome...you are helping many many people

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  15. Congrats on 7 years! That is definitely a milestone

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  16. Congrats DGI! Long time reader!
    Mark

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  17. Happy birthday DGI...
    Keep inspiring us....Your posts and insights are always appreciated...

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  18. Seven more years! I am a big fan of your strategy. I retired at 40 and wish I had discovered DGI sooner. I'm mostly in high yield (low/no div growth) and municipal bonds. I make extra trading around my positions with options and a portion of the portfolio that is dedicated exclusively to writing options for income. The returns are high and risk the lower in my opinion that high yield. But as I accumulate new capital, I am going with DGI. It doesn't shoot out any lights but it very consistent. I enjoy the process of investigating and picking stocks but for those that don't, I recommend indexing to VIG. That is Vanguard's dividend growth ETF. Expense ratio is a tiny 0.10% and you stay diversified with one click. The first pick on my blog was Diageo (DEO). I see you like that one too. Devour your prey!

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  19. DGI,

    Big congrats!! Seven years is a huge achievement. I've only been at it for four years and I know firsthand how challenging it is.

    I know what you mean about blogs coming and going. Quite a few over the years. However, it's wonderful that the community has seen net growth in a big way. And I'd like to think that those of us that have been at it for a few years now have something to do with that.

    Keep up the great work. And I'll see you on the other side of FI. :)

    Best wishes.

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  20. Happy 7th Anniversary.......Baldy 2000

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  21. Congratulations from Germany!
    Blogging seven years is a long time. My Blog is just a little more than three years about financial independence.
    Your blog is very helpful for understanding that shares are not only just speculation for exchange gains, but dividend growth is a powerful way to become financial independence.
    I think after seven years, beyond of dividends you sure receive also from your blog a nice passive income :-)
    Best wishes

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Questions or comments? You can reach out to me at my website address name at gmail dot com.

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