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

To: gregor who wrote (6065)	10/12/2010 2:08:58 PM
From: deeno	Respond to of 34328

"But isn't the theme of Steve's thread about yield on cost since his main objective is to buy stocks that have a solid history of raising the dividends every year? If that premise holds then the current price of the security is immaterial since your objective is about income stream" But if the above were true then it doesnt matter at all what the stock price is now or what you bought it for. It only matters if you can replace the current stock cash flow for one thats better with better expectations of increase. Certianly current prices would be more applicable.

To: gregor who wrote (6065)	10/12/2010 2:28:22 PM
From: chowder	Respond to of 34328

When I talk about the importance of yield on cost, I'm assuming the company I am part owner in is performing according to my expectations. I also assume that when a company is no longer meeting expectations, then yield on cost doesn't matter, it's time to find something else. I have PG in every portfolio I manage for family members and friends. Although I can do better than the 3% yield I'm getting, I own PG for other reasons. They have increased dividends every year for half a century. Good times and bad, the dividend not only is paid on time, it's also increased annually. PG has a 10 year CAGR of 10.7%, a 5 year CAGR of 11.71% and a 3 year CAGR of 11.79%. It's that consistency in dividend growth that I'm looking for and that's where yield on cost becomes important to me. Let PG lower the dividend and yield on cost is out the window. I'm moving on without them. I expect them to continue raising that dividend. Yield on cost, to me, helps me to focus on that dividend growth. It provides me with a better income stream down the road as opposed to say ED which has a yield of 6.1% but the 5 year CAGR is a meager 0.86%. PG will outperform with regard to dividend income down the road because of the dividend growth. That's where my focus regarding yield on cost is directed.