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

To: Steve Felix who wrote (8821)	5/1/2011 7:56:54 AM
From: Bocor	1 Recommendation Read Replies (1) \| Respond to of 34328

thank you for doing this work each month and posting the results. It is helpful for many I'm sure!

To: Steve Felix who wrote (8821)	5/1/2011 11:02:53 AM
From: E_K_S	Read Replies (2) \| Respond to of 34328

Hi Steve - I noticed that from time to time you do re-balancing of the portfolio where you either close out some positions or trim back some holdings. For example, you closed out BMY which you held some time ( I also followed you on that trade but only sold 1/3) and now its at a 52wk high. What's your overall strategy on this type of portfolio turnover? Are you looking to turn the portfolio every five years or more? Or is it more of a buy the dividend achievers, harvest the dividend income and invest the proceeds into other emerging dividend stocks and basically hold "the achievers" for ever? Some investors (& mutual funds) must have a turnover rate of 3 years or less or they feel that they are not managing the assets well enough. I tend to go with the buy and hold approach but focus on quality. I believe my IRA account has a portfolio turnover rate of 10 years or more. I rarely close out a position and move the proceeds into something new. However, when I do an initial buy, I try to focus on quality specifically dividend achiever companies. I noticed that some of your best (recent) performers are non dividend achievers and smaller unknown companies (ie EGAS). So what's your strategy regarding overall portfolio turnover and trading in the IRA account? EKS

To: Steve Felix who wrote (8821)	5/25/2011 7:38:15 AM
From: Bocor	3 Recommendations Respond to of 34328

How to Live Off Dividends in Retirement The goal of every dividend investor is to generate enough in distributions every year that cover their basic expenses. After spending many years meticulously saving and investing in dividend growers, there comes a time when investors reach that elusive goal of living off dividends in retirement. The question is, how should one invest their hard earned dollars in retirement? Should they invest in higher yielding stocks or move everything to fixed income and call it a day? In this article I would try to answer these questions, propose more solutions and provide a basic outline of what my strategy is for living off dividends in retirement. First, I do not plan on changing my stock asset allocation in retirement. I do try to target an overall portfolio yield of 3% - 4% which would be sufficient to generate enough income to live off of. My dividend portfolio has three types of stocks which I discussed in this article. I am also interested not just in earning a dividend from the stocks I purchase, but I also in generating total returns that match the returns of S&P 500 over longer periods of time, with lower volatility cushioned by the regular dividend payments. The first type includes higher yielding stocks which are not expected to generate much in distributions growth. If they do, that would be a plus of course. This is the component that would increase your current portfolio yield. Stocks I own which fit this characteristic include: Kinder Morgan Partners (KMP) Yield: 6.40%\|10 Year Annual Dividend Growth Rate: 10.90% Realty Income (O) Yield: 5% \| 10 Year Annual Dividend Growth Rate: 4.50% Con Edison (ED) Yield: 4.50% \| 10 Year Annual Dividend Growth Rate: 0.90% The second type of stocks I own include companies in the sweet spot. These companies spot an average yield in comparison to the S&P 500, which I use to benchmark my dividend income against. They also spot on average higher dividend growth in the upper single digits. This is the component that would increase dividend income at or above the rates of inflation. Companies in the sweet spot include: Procter & Gamble (PG) Yield: 3.10%\| 10 Year Annual Dividend Growth Rate: 10.90% Coca-Cola (KO) Yield: 2.80%\| 10 Year Annual Dividend Growth Rate: 10% Wal-Mart Stores (WMT) Yield: 2.60%\| 10 Year Annual Dividend Growth Rate: 17.80% The third type of dividend stocks I own include companies which do not yield much today, but based on the distribution raises of the preceding years have a high chance of increasing dividends at a growth rate in the double digits. Companies like that include: Walgreen (WAG) Yield: 1.60% \| 10 Year Annual Dividend Growth Rate: 16.50% Yum! Brands (YUM) Yield: 1.80% \| 5 Year Annual Dividend Growth Rate: 32.60% Family Dollar (FDO) Yield: 1.30% \| 10 Year Annual Dividend Growth Rate: 10.80% Second, while I will maintain the structure of my dividend portfolio, I will look to add some fixed income exposure right before hitting the target retirement date. Based on studies of the 4% rule, which I have discussed before, it seems that even a modest 25% allocation to government bonds could provide some stability to portfolios during recessions, depressions and deflationary conditions. At the end of the day, placing a 25% allocation to fixed income would not detract from total return performance by much. It would also provide some stability that could be beneficial by decreasing the chance of outliving your money. Right now this is a miniscule portion of my portfolio, consisting mainly of long term CD’s purchased when interest rates were slightly higher. If I had a portfolio of $1,000,000 and four or five years until retirement I would start putting the dividends I received in US Treasury Bonds for half a decade until I reach a 25% allocation to fixed income in retirement. While many investors proclaim that we will have a massive inflation because of the Fed printing press, I doubt the future will turn out exactly as everyone expects it to turn out. I discussed this issue in this article. Japan has a high amount of debt, yet it has seen to inflation over the past 20 years, and government bonds have been the best investment during that time period. Last but not least, while I target an overall yield for my portfolio, I do not just look at yield alone. I tend to require a minimum number of consecutive dividend increases for stocks before I even place them on my watch list. After that I look at distribution coverage, business model, competitive advantages, potential for earnings and distribution growth and valuation. I also make sure that my portfolio is not concentrated in a few sectors as well. seekingalpha.com

To: Steve Felix who wrote (8821)	6/2/2011 7:43:14 AM
From: Steve Felix	1 Recommendation Read Replies (2) \| Respond to of 34328

Portfolio update: Investment Current Value Prior Value Period Change % Change Estimated Income Estimated Yield April totals $238,514.40 $230,809.64 $7,704.76 3.3% $13,720.92 5.8% May totals $238,173.07 $238,514.40 ($341.33) (0.1)% $13,901.12 5.8% Since Jan. 1, 2011: My IRA $218,516 to $238,173 = +8.9% Dow 11577 to 12570 = +8.6% S+P 500 1254 to 1345 = +7.3% Nasdaq 2653 to 2835 = +6.9% Since inception Jan. 1, 2010: My IRA $178,517 to $238,173 = +32.3% Dow 10428 to 12570 = +23% (includes 2.5% yield for 2011 ) S+P 500 1115 to 1345 = +22.6% (includes 2% yield for 2011 ) Nasdaq 2269 to 2835 = +25.7% (includes .8% yield for 2011 ) Dividend yield of the S+P is currently ( Jan. 1, 2011 ) 1.78% Trades: 05/16/2011 12:18:20 Bought 150 BOX @ 16.15 -2,432.45 05/16/2011 11:07:21 Bought 100 PPL @ 27.8593 -2,795.88 05/16/2011 11:05:40 Sold 100 DPL @ 30.2301 3,013.00 2011 Trading costs $90. Bottom line, estimated income: End Jan. 2010 $11,134 End Dec. 2010 $13,160 End Jan. 2011 $13,337 End Feb. 2011 $13,454 End March 2011 $13,671 End April 2011 $13,720 End May 2011 $13,901 March dividends: $1,161.34 2011 dividends: $5,656.04 Dividends: Date/Time Description Amount Net Cash Balance 05/31/2011 00:00:01 ORDINARY DIVIDEND (PSEC) 80.96 --- 05/31/2011 00:00:01 QUALIFIED DIVIDEND (EGAS) 67.50 --- 05/31/2011 00:00:01 ORDINARY DIVIDEND (LTC) 42.00 --- 05/25/2011 02:09:31 ORDINARY DIVIDEND (NRF) 77.30 --- 05/24/2011 01:49:45 ORDINARY DIVIDEND (CWH) 62.50 --- 05/16/2011 17:53:12 QUALIFIED DIVIDEND (CPLP) 209.25 --- 05/16/2011 00:00:01 QUALIFIED DIVIDEND (PG) 5.25 --- 05/16/2011 00:00:01 QUALIFIED DIVIDEND (ABT) 16.80 --- 05/16/2011 00:00:01 QUALIFIED DIVIDEND (CL) 6.96 --- 05/16/2011 00:00:01 ORDINARY DIVIDEND (O) 159.02 --- 05/13/2011 03:38:47 QUALIFIED DIVIDEND (CLX) 31.90 --- 05/13/2011 03:38:30 PARTNERSHIP DISTRIBUTION (CQP) 42.50 --- 05/13/2011 03:38:22 PARTNERSHIP DISTRIBUTION (SGU) 77.50 --- 05/13/2011 03:38:11 PARTNERSHIP DISTRIBUTION (CLMT) 58.90 --- 05/13/2011 03:37:44 RETURN OF CAPITAL (EPB) 138.00 --- 05/13/2011 03:37:30 PARTNERSHIP DISTRIBUTION (TCLP) 75.00 --- 05/12/2011 01:37:23 ORDINARY DIVIDEND (SNH) 148.00 --- Dividend reductions / eliminations: NONE Dividend raises None (way behind keeping track, hope to catch up soon) Holdings: Money Market Assets = $813.45 Symbol Qty Mkt Val Dividend Amount Dividend Yield ABT 35 1,817.20 0.48 3.698 BKCC 200 1,932.00 0.26 10.7661 BOX 150 2,674.50 0.22 4.9355 CIM 400 1,536.00 0.14 14.5833 CL 12 1,042.92 0.58 2.6694 CLMT 124 2,705.68 0.47 8.7076 CLX 58 4,021.72 0.60 3.4612 CPLP 900 8,127.00 0.23 10.299 CQP 100 1,796.00 0.43 9.4655 CWH 125 3,171.25 0.50 7.8833 D 100 4,712.00 0.49 4.1808 EGAS 1500 17,130.00 0.05 4.7285 EPB 300 10,203.00 0.46 5.4102 ESP 300 8,226.00 0.22 3.2823 HTGC 158 1,674.80 0.22 8.3019 JNJ 173 11,501.04 0.57 3.4296 LTC 300 8,610.00 0.14 5.8537 MCGC 400 2,592.00 0.17 10.4938 MO 200 5,584.00 0.38 5.4441 MPW 1300 15,600.00 0.20 6.6667 NRF 773 3,231.14 0.10 9.5694 NTLS 150 3,045.00 0.28 5.5172 O 1100 37,631.00 0.14 5.0709 PG 10 664.00 0.52 3.1627 PPL 200 5,592.00 0.35 5.0072 PSEC 800 9,016.00 0.10 10.7862 SFL 200 3,760.00 0.39 8.2979 SGU 1000 5,430.00 0.08 5.709 SNH 400 9,364.00 0.37 6.3221 SRV 300 3,132.00 0.22 8.6207 SYY 300 9,525.00 0.26 3.2756 TCLP 100 4,600.00 0.75 6.5217 TICC 300 3,000.00 0.25 10.00 TRP 300 13,209.00 0.44 4.0369 UVE 700 3,710.00 0.10 7.5472 VGR 162 3,078.00 0.40 8.4211