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

To: Triffin who wrote (14322)	2/11/2013 9:21:07 AM
From: Elroy	Read Replies (1) \| Respond to of 34328

SELL - I only sell if the stock cuts, or freezes it's dividend. Odd. With such strict rules on buying you'd think the person would have more detailed rules on when to sell. I guess the theory is once a stock has made it into his club, it's there to stay unless it gets ill. Not sure if that is the best investment policy, but it's simple to understand.

To: Triffin who wrote (14322)	2/11/2013 2:56:37 PM
From: chowder	Respond to of 34328

>>> Here's hoping that Percy holds a patent on the "Chowder Rule" <<< I didn't name it the Chowder Rule. ... Ha! ... An author by the name of J.D.Welch did. Before it was called the Chowder Rule, I simply referred to it as total dividend return. Total dividend return is yield plus dividend growth. I chose the 5 year compounded annual growth rate (CAGR) because I thought it was a good intermediate term indicator. I thought it would show a smoother dividend growth pattern than if I chose a 3 year or 1 year. I could have selected a 10 year CAGR, but it was easier for me to pull up a 5 year number and I like easy. My total dividend return was based on my portfolio value increase objective. Based on my long term goals, my portfolio needs to produce an 8% compounded annual total return. If someone's objective is higher, then they might need to adjust the Chowder Rule numbers. I don't care where the 8% comes from. It can be share price, yield, dividend growth and added cash. It will probably come from a combination of all of them. I decided I would try to take as much pressure off share price as I could control. I can't control share price, but I can control who I select and what yield's and dividend growth rates they apply. Using the term "moat", I decided I would use a 12% total dividend return number to place a moat around that 8% number that is my objective. My guidelines call for purchasing companies with a minimum yield of 3%, so that meant I needed a 9% 5 year CAGR. If a company had a 4% yield, I needed a 5 year CAGR of 8% to get the 12%. That's how I started selecting my positions. I wouldn't consider buying companies that didn't meet the Chowder Rule. I did lower my Chowder Rule number for utilities. I use an 8% total dividend return number because utilities aren't growth companies, but they are reliable stewards as cash providers to share owners. I included telecom and oil and gas pipelines under the utility umbrella.