Dividend Stocks

[Scottydog]

Birchtree,

Isn't that too many stocks to invest in? It's one thing to only have say 3-4 individual stocks...but the opposite side is having more than 13+....

For one - nightmare in tracking how well you are doing - especially if it's a taxable account because of the cost basis if you are reinvesting dividends. Two - commission costs unless these are through DRIPs that don't charge for optional cash purchases. Carlson's books say that most porfolios can do well with dividend stocks with only 10 or less of them. To me...it's just a lot of stuff to track and maintain....plus time involved. Could you be overdiversified....BTW there is such a thing. Just curious. Thinking from a sector viewpoint....a conglomerate (like GE, MMM), a bank (WFC, USB, BAC, RF), a transportation (Union Pacific or Norfolk Southern), drugs (Pfizer, Merck), a medicial devices (JNJ, Boston Sci), consumer products (PG or Colgate Palm, PEP, KO), House Improvement (HD or LOW), Oil/Minerals (XOM, COP, BTU, ACI) and a utility (WTR, Southwest Water, Duke) should give you a pretty good spread of the economy in general....best of breeds (or the #2 company) for each sector should work out pretty well compared to the rest of their respective areas. You could have a great portfolio (long term) buy picking one from each sector and maybe a few more...but with a total of 12 or so stocks. Example Port would be:

GE, BAC, RF, MMM, JNJ, PG, PEP, WTR, NSC, BTU, LOW, PFE

Now the portfolio is not perfect...what whose is? It's not 500 stocks like the S&P 500...but then again the avg. yield of the above stocks right now would be close to 3%...you have growth, defensive, even cyclical. Most of them are also on the Dividend Aristocrats list....GE, BAC, RF, MMM, JNJ, PG, PEP, LOW, PFE....give it a couple years and WTR will be on there as well - it's increased it's dividend every year for a while now...but doesn't meet the # of years requirement yet.

BTW....wish you could send in more than $5,000 into a Roth this year....BAC is screaming to be bought....so is PFE...by year's end they will probably be 10% higher or more....which means the yield will be lower and I'll be buying less

 

[Birchtree]

Scottydog,

I have 228 individual stocks in my oceanic account. You can find my internal list from post #30 on the short term outlook between now and christmas thread. Some of these positions will undoubtedly be left to heirs and that is part of the plan. Merrill Lynch does all the record keeping and I keep track both with paper and the internet. With 38 years of accumulated experience a great deal of the homework has already been done. Not all my positions pay dividends - but if they did I would have 912 hits/year. I will be eventually taking some profits throughout the year to reinvest the income in new wall flowers. Last year I made 19 sales and took that income and made 522 individual purchases. Now all I have to do is figure my taxes. I essentially have built my own mutual fund - I can liquidate for cash at anytime - so this account provides me with a great deal of flexibility. I'm in the process of building accounts for my daughter so that her money never sleeps. She will end up with about 90 stocks that all pay dividends - that will give her 360 hits/year. That's money coming in all the time. If we get a runner we can always let it go and sell to reinvest the income. This is my way of building security for retirement because I'm very bullish on the long term future of this economy. Snort.

 

[Scottydog]

Birch - I see....thanks for the info.

I should have known something was going to happen to BAC....unbelievable! I was sitting on Wedn. afternoon during a break at work saying to myself...I should put all $5,000 of my 2008 Roth IRA money into BAC....this was around 2pm on Jan 9th....I was busy with meetings in the morning so I only had a chance to look at the market after lunch....I felt like pulling the trigger on it...it was like 37.45 or so....paying like a 6.83% yield....yes...look again...6.83% Then look what happen after than...it rallied 3%+ after 2pm......then on top of that today's news....them buying Countrywide. Well...that should put to rest anyone's invalid fears of a possible rate cut from BAC. If anyone would dig a little...they would see they have tons of cash on hand unlike Citigroup. Their dividend was never in jeopardy like some analysts that would lead you to think that. Well now it's $39.30 as of the close on Thurs. Jan 10...an increase of $1.85 or a nice 4.9% increase that I would have made + the dividend. I'm hoping for a drop tomorrow so I can lock in below $39.00. Even at $39.30....it's paying a 6.5% yield....excellent for these conditions and it shouldn't take too long to get to the mid 40s...which would be a 10%+ return + a 6.5% yield....16% this year? I'll take it

 

[Bullitt]

If anyone would dig a little...they would see they have tons of cash on hand unlike Citigroup. Their dividend was never in jeopardy like some analysts that would lead you to think that.

Analysts have been digging, but there's a reason why the stock hasn't moved any more than the bank sector. If they had a secret stash of cash somewhere, somebody would know. You'll get another chance at that 38 level in BAC. All that matters for these banks is their Tier 1 capital ratio. Don't forget that BAC spent some righteous bucks on the acquisition of LaSalle Bank in '07 and who knows what the 4th quarter writedowns will be. Taking on CFC's black box is a gamble but could make Lewis look like a genius in 5 years if it pans out. Besides, this could be a stock deal instead of cash. I wouldn't say this banking mess in the rearview mirror yet. Don't forget, BAC moved the market with their stake in CFC in Aug.

In the short term the market is a voting machine but in the long term it's a weighing machine. Ben Graham

 

[Scottydog]

Well I pulled the trigger 3 times....over the past week and pretty much used up the $10,000 for FY08 in my Roth and my wife's Roth. I bought $4,000 worth of BAC a few days ago @ 38.00....then bought the remaining $1,000 in my account of BAC @ 37.12 today.....then at the end of the day bought $2,500 of BAC @ $37.00 under my wife's account. I'll probably spend the last $2,500 on PFE here within a few days and be done with this year's purchases in our Roth's. I don't like to "spend" that money this early in the year...but considering that the Fed will probably pull the trigger on interest rates soon....you need to be ahead to lock in the dividend yields. BAC is below a key support level though...which bugs me a little but all in all now....we'll be getting about $1,100 in dividends a year just from BAC.

The only reason why I said they have more cash than Citigroup in an earlier post is that when you look at the cash flow....their provision for loan losses is a lot lower than Citi's and they haven't need a cash infusion for the write-offs. The Countrywide purchase was stock only....that will dilute the earnings some but not a big deal. It's actually a great purchase considering that you got a couple more billion $$ in assets that were on a blue-light special. They did take a hit buy pumping 2 bill into Countrywide earlier but then got the rest of the company on sale. Lewis will be able to turn Countrywide into a money machine just like he did for MBNA and FleetBoston. It takes time...but I personally think that BAC will be getting some help from Uncle Sam on this one.....both tax breaks....and lower interest rates from the Fed. In an interview, Bernanke liked the idea of BAC buying Countrywide.....now most Fed chairmen won't comment on individual stocks...mergers...etc.....does he know something we don't? Plus I love the loophole with BAC buying Countrywide....the 10% deposits rule...well it doesn't apply here because Countrywides deposits are categorized as Thrifts....not normal "deposits"....which means you can funnel it over to the Thrift part....and grow. It'll be bumpy...but BAC really does put it's shareholders 1st....they have in the past and I don't see why they would change now. They have plenty of cash reserves to pay the current dividend for over a year....and by then the rates will be lower....we'll be out of the 6-9 month recession and the mortgage market will become stable (not thriving)....stable. Then the buy and hold shareholders will be rewarded....and the analysts will be recommending the stock....like they always do after the stock goes up 10-15%. Crazy to say the least....but the 6.90+% yield that I will be getting on the $3,500 today....I'll be smiling if the market goes no where for 1 year...I'll make my almost 7% while reinvesting dividends at flat prices. JUST wish the cap was higher than $5,000 on the Roths....guess I'll have to go taxable now

 

[Bullitt]

Thinking about starting a DRIP Fund?

From Dow Theory Newsletter: http://www.forbes.com/finance/2008/...-guru-in_rm_0128soapbox_inl.html?boxes=custom

From Smart Money:
(scroll down) http://www.smartmoney.com/ask/index.cfm?story=february2008-personal-finance-advice

 

[Bullitt]

Looking for a place to begin looking for dividend paying stocks? Try the Dividend Aristocrat Index from S&P. These companies have increased their dividend payout for 25 consecutive years. Not too many surprises on this list.

 

[RealMoneyIssues]

Digging up an old dividend stock thread.

Curious, anyone else looking at dividend paying stocks now that the market is improving, companies are going back to paying dividends, and some are starting to pay them?

 

[Steel_Magnolia]

Digging up an old dividend stock thread.

Curious, anyone else looking at dividend paying stocks now that the market is improving, companies are going back to paying dividends, and some are starting to pay them?

I own dividend stocks now for the first time, and got two dividend checks today. The one thing I've found out is that I've got to look first at how the stock is doing and not at the dividend. I've already found out the hard way that trying to dividend harvest is a good way to lose money.

 

[RealMoneyIssues]

I own dividend stocks now for the first time, and got two dividend checks today. The one thing I've found out is that I've got to look first at how the stock is doing and not at the dividend. I've already found out the hard way that trying to dividend harvest is a good way to lose money.

Yup, I just got my first one today and was looking at increasing my dividend (and solid) stocks for long term growth.

 

[Gumby]

I own dividend stocks now for the first time, and got two dividend checks today. The one thing I've found out is that I've got to look first at how the stock is doing and not at the dividend. I've already found out the hard way that trying to dividend harvest is a good way to lose money.

I like my utilities that pay dividends..... AEE, SO, and CWT

Slow and steady will a decent yield.

 

[Scout333]

Interesting Dividend investment list.

DIY Dividend Investors Club (Part 7): 9 Stocks We Purchased This Month - Seeking Alpha

 

[WorkFE]

Those look good Scout although there is one utility in there that seems a bit low on yield for a utlity.

 

[bmneveu]

Interesting Dividend investment list.

DIY Dividend Investors Club (Part 7): 9 Stocks We Purchased This Month - Seeking Alpha

I'll be interested in their next segment covering financials and REITs as well. Good find, thanks!

 

[Scout333]

I like their "Buy Zone" identifier in list at the bottom of their article.

DIY Dividend Investors Club (Part 7): 9 Stocks We Purchased This Month - Seeking Alpha