I have invested in dividend growth stocks for over a decade now, and shared experiences and knowledge with you on the Dividend Growth Investor site along the way.
One of the lessons I have learned is that once I buy a solid company, I should hold on tightly and not sell no matter what "noise" I see or hear. When I evaluated my sales, I noticed that I would have been better off simply doing nothing, rather than sell to pay capital gains taxes, and to buy another company that did not do as well as the original one.
My evaluation of the Corporate Leaders Trust in 2015 confirmed the observation that time in the market trumps timing the market. It simply pays to be patient as an investor.
I recently learned of an interesting concept called the Coffee Can Portfolio:
The idea is that investors can craft a portfolio of large, blue chip stocks, and simply hold them forever. The idea is to never sell these investments, which serves several purposes.
First, investors will avoid fees and costs, that eat away at total returns.
Second, investors will let compounding interest work its magic.
This concept comes from an article by Robert Kirby from 1984, citing the investment performance of a client portfolio he managed. The article is titled " The Coffee Can Portfolio"
It definitely makes sense that by holding blue chip dividend stocks for the long-term, without selling, you will reduce investment costs and also reduce the impact of errors due to frequent transactions. Research has shown that investors tend to sell at the wrong times. This is why a do nothing approach may provide you with very good long-term results ( provided you also keep taxation costs low as well)
Do you follow the Coffee Can approach of not selling? I'd love to hear your thoughts on it.
Popular Posts
-
Dollar cost averaging is a process, where the same amount of funds is allocated to preset investment/s at regular intervals of time. It is ...
-
As an investor, I am aware that I have a lot of blind spots. Someone with a glass half full outlook on life might say that I have a lot of r...
-
Warren Buffett’s Berkshire Hathaway just received a dividend check for $194 million dollars from Coca-Cola. Berkshire Hathaway owns 400 mil...
-
I review the list of dividend increases as part of my monitoring process. This exercise helps me monitor existing holdings. It also helps me...
-
The Dow Jones U.S. Dividend 100 Index is designed to measure the performance of high-dividend-yielding stocks in the U.S. with a record of c...
-
The Procter & Gamble Company (PG) provides branded consumer packaged goods worldwide. It operates through five segments: Beauty; Groomi...
-
I review the list of dividend increases every week, as part of my monitoring process. This exercise helps in monitoring existing positions a...
-
One of my favorite charts shows a listing of eleven consumer goods companies, and the brands that they own. It reinforces my belief that str...
-
I review the list of dividend increases every week, as part of my monitoring process. This exercise helps me monitor existing holdings but a...
-
A pattern of steady dividend payments and dividend increases is only possible if a business can generate enough cashflows to support operati...