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

To: Steve Felix who wrote (22403)	4/3/2015 12:09:06 PM
From: E_K_S	7 Recommendations Recommended By ekimaa JimisJim Mannie Max Fletcher Steve Felix and 2 more members Read Replies (1) \| Respond to of 34328

Dividend Portfolio: creating income streams from High yield investments and general observations Isn't it interesting what types of stocks/bonds we end up with in our portfolios after months, years and even decades pass. Most 'investors' like to trade their account and even create a metric called 'portfolio turnover' as a measure of how often they trade the value of their portfolio. I first found this presented in several of the mutual funds I follow and thought that more trades would mean higher returns. After years of buying and selling stocks, I find that my best gains measured by (1) total return and (2) yield on cost are those companies that I have held for years. Only in the past few years with the Fed's QE and interest rates at/near zero did I understand how important steady dividend payers are especially those with clean balance sheets (ie little debt) and slow growing revenues YoY (both in good times and bad). My best stocks are those I bought and held. In the 90's I got Texaco which became Chevron. I held OXY collecting many dividends and received several splits. In the 2000 w/ the tech bubble crash I bought GLW below $5.00/share, HAL around $7 with their asbestos problems and El Paso Gas a small pipeline w/ good growth prospects that eventually merged into KMI (10 years later). My other good gainers were scooped up in the 2009 market crash that included utilities and pipeline companies. I picked up some distressed debt in Albertsons/SUPERVALU w/ a yield to maturity over 20% and discovered high yield preferred equities and MLP Midstream companies searching for higher yields. My goal was to build new income streams from different investment sectors (non-banks) to replace/add low dividend payers and very low bank/S&L/Credit Union yields. Most recently, I moved more funds into distressed senior debt from Oil & NG companies that required me to look out at a longer time horizon (3+ years). My general observation is that having a longer term buy/hold period (many years rather than many months), I made better investments. I was able to capitalize on sector downturns and/or company specific problem stocks (that were fixed by merger or change in management) by buying quality undervalued assets at bargain prices. I also focused on planting new seed money in profitable small & micro cap companies that provided good risk/reward & growth at a reasonable price (GARP). Diversification is important too since a few of these picks seem to always go sour. Your table of stocks w/ yield and yield on cost is good. It would be good to add the 'original date of purchase' and/or some type of measure to show how long you have owned these assets. I guess 'yield on cost' does this especially when I look at my cost basis for my top 10 holdings. CHV is my No 1 position and has one of my lowest cost basis mainly do to my purchase of Texaco shares years ago. I no longer calculate my portfolio turn-over rate but rather monitor the performance of all my different income streams. These include those that are tax efficient (ie ROC vs max tax rate of 15%), my qualified dividends, distressed debt maturity and scheduled income payments, MLP distributions (coverage & growth), and the dividend growth rate for my dividend payers. The other thing I now do is KISS (Keep It Simple). If it isn't broke then do not sell. If, I need to sell (looking for a source of funds), sell 3%-5% (peel off the high cost shares) of my largest positions and/or try to use the generated income as the source of new funds for new buys and/or adds. If an equity goes sour, evaluate the risk/reward, buy more or close out the entire position. But never just sell because you have a huge gain and feel the need to 'trade' . This situation usually occurs w/ merger, split, acquisition or some very positive event that moves the stock higher. Some of my other best gainers are shares spun off from the parent company (ABBV, PSX, A, HYH, WPX). Just keep those shares and watch them grow. Finally, I now look ahead 18-24 months to see if there are any significant sells and or buys I want to do that may impact the portfolio by 5% or more. I may have a large purchase in mind and/or expense I need to make. I will look at bonds that may mature, a large inflow of funds (from a real estate sale) and/or a large sector move I want to own and/or sell. These larger buy/sell decisions are determined and then I try to execute them over the long term. This way I can do the specific transactions w/o stress and/or on a time constrained schedule. I also now keep a larger balance of cash available for emergencies and/or unexpected events so I am not forced to liquidate my best core holdings. Good job on building your equity holdings, documenting your decisions and presenting your results. I have followed several of your picks which have worked out quite well. Your high yield selections got me interested in building my basket of preferreds and MLPs. This area of investing is all new to me w/i the last 3 years and I have learned a lot from your discussion here as well as others on SI. Thank you for sharing your thoughts in this area. EKS