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Category Archives: Dividends
You’d have to have been living in a cave, or dry camping in the wilds for 6 weeks like I was until a few weeks ago, to not have been bombarded by the 2 words that I allude to in the title of this post. I’ll try and spare you and only say them a few times in the post. Needless to say the ‘fiscal cliff’ fears have taken a bit of a toll on income investments, in particular equity income investments that have performed well so far this year. I thought it wold be useful to take a look … Continue reading
In my last post I covered the easiest and most obvious way to get exposure to dividend stocks, by investing in dividend ETFs. While dividend ETFs give you one of the biggest benefits of dividend investing, higher returns, they fail to deliver on other key benefits of dividend investing; lower volatility, lower drawdowns, and more consistent dividends. By far the better choice is to invest in high quality individual dividend paying stocks. The challenge of course if finding those high quality dividend payers. In this post I’ll cover the best and easiest way I know to find a potential list … Continue reading
“OK, I buy the dividend argument, now what?” This is something I hear quite a bit. After going through the argument for investing based on dividends, which I summarized in my blog summarizing my top dividend posts, many investors don’t know what to do next. Basically, there are two choices which I will discuss in this and the following post. The first choice is to use dividend ETFs to gain exposure to dividends. The second is individual dividend stocks which I’ll cover in the next post. Lets take a look at dividend ETFs and if they stack up to the … Continue reading
Time for guide #2 to the blog. This post lists what I think is a good introduction to dividend investing and some of the nuances behind it. Enjoy! Core strategy: dividend investing – why dividend investing makes up the core of my investment strategy. Simple really. Better long term returns. Dividends; the great bear market protector – the 2nd best reason for dividend investing. Dividends protect your portfolio in down markets and actually enhance returns due to reinvested dividends. Yield on cost; a critical dividend metric – how dividend growth leads to rising returns over time and how to calculate … Continue reading
Earlier this week my wife and I were discussing the stock market events that were taking place in front of us; markets gripped by political intrigue, both domestic and overseas, violent swings in volatility, slowing economic growth, and lots of uncertainty. I then started telling her about what my plan was (I was actually getting excited) and she chimed in “it’s like the Hitchhiker’s Guide to the Galaxy!” I stared at her a bit taken aback while I searched my memory banks for any relevant investment wisdom from that hilarious tome. And then it hit me…… Right there, printed in … Continue reading
Today I wanted to touch on another common behavioral issue that most investors fall prey to, anchoring. I’ve commented previously on the behavior gap, how behavioral issues lead to investor under performance and specifically how more information often leads to worse investment performance. Anchoring is another behavioral pitfall for investors. I’ll describe what it is first and then show a common way it affects income investors. Anchoring describes the effect of irrelevant numbers in people’s behavior. It turns out that irrelevant numbers impact our decision making in dramatic ways. James Montier in this piece on behavioral issues uses the following … Continue reading
The 4% rule of thumb for retirement savings is under threat. After 10 years of retirement, through the end of 2009, individuals who retired at the beginning of the year 2000 are potentially on a path to run out of money before the end of their 30 year retirement period. In this post I’ll compare the current path of the year 2000 retiree to the two worst previous times in history to retire and what that could mean to current and up and coming retirees. The 4% rule is the probably the most popular way of determining how much a … Continue reading
The price you pay for an investment is the primary determiner of risk. Plain & simple. As legendary value investor Seth Klarman puts it; Risk is not inherent in an investment; it is always relative to the price paid. Uncertainty is not the same as risk. Absolutely! I find that too many income investors are way too focused on uncertainty, i.e. volatility, as a measure of risk and often view valuation as of lesser importance. Today I want use the example of Johnson and Johnson (JNJ) to show the importance of valuation for dividend investors. JNJ is a classic bread … Continue reading
Sometimes a problem IS a nail and the solution IS a hammer. The famous maxim, ‘to one with a hammer every problem looks like a nail’ is used very often to warn against using the same solutions to solve encountered problems. By the way, this maxim is known as Maslow’s maxim, after Abraham Maslow, the father of modern management technique. But sometimes there is no need for more tools. You just need to find the damn hammer. I liken the problem of long term investment outperformance as a nail. And the best way to drive that nail through the wall … Continue reading