I find the discussion fascinating, probably because I sit somewhere in the middle. I have some stocks I would never sell as long as the dividends keep growing. Current yield not as important to me as continuous payment and growth.
They fit in here with Debt Free:
"seems to only make sense if you are never planning on selling your initial investment"
I have others that fit with Kip S:
"Sell your winner and put the proceeds in another 4% stock."
I do pay attention to what Dabum says in my taxable account, where I find myself buying stocks that could be "hold forever " stocks.
"Now you've got capital gains to worry about."
I'm no savant. If it is a stock I want to own, will I be able to buy it back 15%+ cheaper in the future. How many dividends do I miss out on?
"Since stocks run in cycles, an investment could have a poor performing year or two and then explode to the upside."
Using O as an example. 12/10/2004 close $25.97. 6/30/2006 close
$21.90. A year and a half of the price going nowhere but down, but the dividend kept rising. By Feb. 07 it hit a high of $30. Hindsight being 20/20 a perfect time to sell. In the debacle it was as low as $14.25. The only thing constant was and is the rising dividend.
Paul hit what we are all talking about in the end:
"I believe you have to consider the objectives of the stockholder "
My daughter has no interest in her Roth other than to know how much is in it.
I'm looking for some "perfect" mix of high yield, safety, and growing dividends, now and then picking up something that doesn't have a great dividend but I feel has upside, where later I can sell and put the funds into something higher yielding. EROC comes to mind.
Grommit appears to be one of the most structured and disciplined posters here, but as a value investor, at least imho, is mostly looking at top line growth, not dividend growth. There is certainly nothing wrong with wanting to grow the top line, in fact, not having that as your #1 priority puts you in a very small minority imho.
"I will take a 5% yield on an undervalued stock, before I'd take an 8% yield on a reasonably valued stock."
With nothing other than one stock showing undervalued, and both stocks increasing dividends at the same rate, I would go with the 8%.
At any time I can find a plethora of "undervalued" stocks. It is in the eye of the beholder. If it was as easy as that, a black box program would be created, adjusted to each industry, pe,bv,roe,debt, etc., etc., etc., etc...
The black box would kick out the best of each industry and we would retire in style, unless of course the market went flat line for a few years. Then we would live off our dividends :)
SVU was bantered about as undervalued a while back. I had had it on my list and thought about buying:
Message 26033108
Top line isn't down that much since then, but dividends are off 50%.
The thing is, IF I had had a black box that incorporated dividend investing, with its' value and dividend history, SVU would more than likely have been a selection. I just got lucky.
Everyone goes about it differently:
Growth, value, trading one stock for another, it doesn't matter. It is all a preconceived notion that a piece of paper that says you are part owner of a company will be worth more later than it is today.
Dividend $$ deposited today in my account are now and real. |
