Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Dividend investing for retirement -- Ignore unavailable to you. Want to Upgrade?

To: JimisJim who wrote (3857)	2/23/2010 1:16:14 PM
From: Steve Felix	1 Recommendation Read Replies (2) \| Respond to of 34328

I find that if I am swapping out one for another I just do it. When I have built cash in my account I am more selective and look at the price more. I'll throw out what I have just done with my daughters account here, although I'll probably hear about it. lol! I seem to have brought it up at just the right time, as she was very receptive. I explained that I used our home town bank to get her started, and they could be bought out tomorrow at a much higher price. Odds are though that that doesn't happen and their dividend doesn't grow like it could in some other stocks. I then explained that because of when she had added money, PSEC was bought (at 10.91 and they had already declared their next .40 dividend) for short term, not long term. We talked a little about diversification. I threw out ED and PPL as nearby utilities and WM in the garbage business, doing a little steering. Between ED and PPL she wanted to know which has been raising their dividend more. I couldn't believe the interest! I told her I wanted to set up dividend reinvestment and just add to the positions for the next few years. She told me that she would give me two $2500 checks each year, but that she may want to buy something new with one of them. I was having a hard time believing what I was hearing. I think having her own apartment for the month of January while her fiance was here gave them a chance to settle some of her worries about the future. She wanted to know if there weren't any 3% dividend stocks that could well outpace the market over the next 20 plus years. Good or bad, we settled on one, but I would like to see what others would choose. Anyway, ACNB and PSEC are gone, PPL, WM and ? are added. I've already sent an e-mail to get reinvestment of all started. Discussion with my daughter was as they say, priceless.

To: JimisJim who wrote (3857)	2/23/2010 1:31:04 PM
From: chowder	Read Replies (2) \| Respond to of 34328

Jim, I think it depends on whether you plan on selling the stock or not. In my opinion, Dividend Investing needs specific objectives! The thread header says, Dividend Investing for retirement. Dividends are usually associated as income replacement for our later years when we can't afford further risks. If the objective is to hold on and not sell and have a steady, reliable, predictable and increasing income ... then it doesn't matter what you pay at entry. If you wish to buy a dividend stock with the objective of selling it in a year or two, then price is very important. In my mind, I have come to conclude that I either go after income or capital gains. Wanting both is tough to do most of the time. So I prioritize. If you do a good job of buying quality, then over the long run, quality usually wins out. So again, your entry price should be determined by your objectives.

To: JimisJim who wrote (3857)	2/23/2010 1:33:01 PM
From: Kip S	Read Replies (2) \| Respond to of 34328

What I do is come to a decision about a stock. I then "target" a price and implicitly a current yield. Example: I want to buy some KMB at a price below 60, so my current yield will be greater than 4%. What usually happens is that I wait and, due to naturally occurring fluctuations in the stock price, I will get it around 58 or so. If it doesn't look like it will come down below 60, I will likely "give in" and buy it in the low 60s. If it is "too high," then I will pass. This has worked for me far more often then not. A couple dollars on a stock usually amount to a year's dividend--sometimes more. An added benefit for me is that this process allows me to practice patience in my stock decisions, which I believe to always be a good thing. I'm sure others have different approaches. Note that this is sort of similar to writing cash-covered puts (with a strike price below the market price) discussed awhile back. My approach gives you more flexibility. For example, if you wrote a put with a 55 strike in this example and the stock fell to 57 and you wanted to buy it there, you would have to buy your put, perhaps at a loss. On the other hand, with the put you get the premium. In any event, I prefer doing it without the put. Edit: Geez, no Replies when I started typing and now three! I have to politely differ with dabum's statement that entry price does not matter. If I can purchase the stock I want at 5% below current market price, I buy 5% more shares and get 5% more income--forever. To me, entry price most emphatically does matter, regardless of whether one is investing for dividends or capital gains. YMMV