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

To: Max Fletcher who wrote (6002)	10/1/2010 6:00:54 PM
From: chowder	Respond to of 34328

Yes, all brought up some valid points. Having said that though, I do plan on selling "some" KO when it hits a certain point to buy some PEP. I also plan on selling "some" MO at a certain point to buy some PM. I'll keep those buys in the same sector. I like the suggestion of selling some OKS for RDS.B. I might even sell some OKS to buy some EPD or MMP. Since income is the goal, any changes you make need to go into like yielding stocks, I would think.

To: Max Fletcher who wrote (6002)	10/3/2010 3:26:48 PM
From: chowder	Respond to of 34328

Max, here's an interesting response to your question by porciuscato, over on IV: >>> You have an excellent cost basis from what I can tell. Unless I am missing something, your distribution yield from OKS is exceptional! (double digit)." I disagree with that line of thinking. A 6% current yield is a 6% yield. It doesn't matter what you paid for it. You make investment decisions to maximize future returns, not to revel in past successes. The cost basis is relevant to the potential tax liability. But maybe less than you think. In my case the calculation goes something like this: 100 Shares OKS = $7500 Annual Distr = $448 (5.9%) Cost basis = $0 (most people will have a much higher basis and fewer taxes) Taxes = $2437 (I'm figuring about half cap gains and half ordinary income) Net value after taxes = $5062 So to match my OKS after taxes, I need to find a yield of $448/$5062 --- or about 8.8%. <<< =========================================================== Now, where do we find a stock that pays a safe 8.8% yield with the potential to grow that income? Yield on cost is important to me because most of the companies I buy grow that dividend, at a decent rate, every year. Since I'm picking off the best dividend growers for my portfolio, where do I turn if I sell when I think share price is fairly valued? Why do I even care about fair value on share price? Didn't I buy these companies for the way they are run? Companies that would share their profits with me as a partial owner in that business. Dividends aren't paid based on share price. They are paid based on the number of shares one owns. If the company is well run and continues to execute their game plan which has created your successful situation, then it becomes difficult for me to sell any of it if I don't need to add more positions for the benefit of diversification. I recall questioning Steve about his overweighted position in Realty Income - O. When you look at how they perform and how they execute, there's no need for concern at this point, even with his much larger portfolio position. O has performed in both good and bad times. They have performed so well that most people are afraid to own them because they haven't failed at anything so they must be overvalued. Shoot me! Because I don't get it. (har, har!) I would like to own a couple of more REITS and maybe one more MLP and utility, so I may use some profits from my exisiting positions in those sectors to complete that objective. Once that objective is met, my plan at this time is to let the winners run.