Dividend Stocks

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Show-me

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How about a thread to post long term dividend stocks. Here is a article to start it off.

http://www.briefing.com/Investor/Private/OurView/TakingStock.htm

Dividends can, and should, be used by investors as an investment tool to enhance performance over time. With corporate balance sheets flush with cash and corporations increasing share buybacks and payouts, dividends will become a significant part of total returns.
Since January 1980, the S&P 500 Index had a total return of 2,568% - 56% of which was derived from the receipt of dividends, according to Standard & Poor's.
Asset allocation, however, depends on the individual investor. These are stocks you buy for the long-haul, five to ten years. Therefore allocation will depend on your investment horizon and risk tolerance. There are tax benefits to consider as well.
When it comes to stock selection, there are several factors to consider. As economic growth prospects wane, performance within cyclical and non-cyclical sectors varies. Investors should use these trends to their advantage, buying cyclical dividend paying stocks during periods of economic growth and non-cyclicals during periods of decline.
 
Hey Show-me,

Nice article, there were several on there, that I would’ve loved to owned, but I had to draw the line somewhere. Here's pretty much what I do. I got into divvy stocks just to have some additional flexibility outside my TSP and the mutuals I have.

Dividend and decent yield stocks are pretty much all I buy, since it’s for my Roth and I really don’t have the amount of funds to make it worthwhile to be a trader to buy and sell, in sufficient quantity to make a profit based on percentage rises in stock prices, so I go the stock Divvy and yield route mainly, though I do have about 6 stocks that have a yield below 3%, but those 6 all produce decent divvy’s, ie JNJ, PG and UTX are part of those 6.

But the remainder of about 14 are above 3 % up 10% yield (Shipping stock DSX). But when I started buying back in October 2006, thru Sharebuilders, I decided on a strategy, that I later came to find out was called the Dogs of the Dow (DOD). So though I mainly follow that DOD strategy with T, GE, and PFE, etc, I also have thrown in a couple of Elec Utilities (nice divvies), a railroad/ethanol/highway congestion for pin action stock in TRN, some energy stock (BP, SLB and SPE) and a couple of pure international exposure stock in UL and NVS, though GE and UTX also have international exposure. Also ECOL, WFC and MCHP for added diversity. I try to have enough defensive stocks that the Dems can’t hurt me to much in 2008, at least that’s my idea. People still have to buy toilet paper and food, though Sheryl Crowe sure put a crimp in the old tp stock. :laugh:

So most every one of my stocks are pretty consistent Divvy producers, Oh yeah one spec stock in SYNM.

I also have one ETF XLB, cause it had so many stocks in it that I would have loved to have had, but ya can’t buy them all. So I’m pretty maxed out on the number of stocks, though I may pick up a water utility stock in the near future.

I’m a newbie and still learning, but it sure has been fun doing it and with Sharebuilders, I buy a few shares 5 or 6 times a month.

Well the NFL draft starts up here in an hour and I got all my outside work done, so I can loaf a little this weekend. :D And with 40 acres, I sure do enjoy my loafing time, when I can get it.

CB
 
Thank ya Show-me,

I'm hoping this will be a fairly active thread, cause I'm always looking for new ideas and advice.

See ya around,
CB
 
From John Lonski, Chief Economist, Moody's Investor Service.

"About half of all U.S. households own stocks either directly or through mutual funds, a three-fold increase since the early 1980s, according to a 2005 study by the Investment Company Institute. Much of that growth has resulted from the increased availability of defined-contribution retirement plans, especially the 401(K). While the growing concentration of stocks in retirement and college-savings plans have reduced their impact on immediate spending, a growing stock market can also have indirect effects by improving employment security and enhancing job opportunities. Will a rising stock market boost the economy by putting more money in people's hands? Maybe. But stock holdings are concentrated among the wealthiest Americans, (holy grail for Birchtree) who are least likely to spend their earnings. In 2001, the top 10% of all U.S. households owned three-quarters of all taxable stock, and the wealthiest 1% owned 29%." More than ever before, thanks to 401(K) plans, the stock market is of greater importance to households. Love those dividend reinvestment plans, money comes in every three months like clock work.
 
I've never bought an individual fund. I've always held mutual funds throughout my lifetime, but am thinking about taking the plunge and buying some individual stocks. Birch and others, what would you all recommend as a start? I'm not looking for high risk, but something to build some confidence in buying individual stocks.
 
Just a suggestion VB,

When I first started looking, GE (GE) and AT&T (T) were the first 2 stocks I added to my Roth. They were 2 historically solid stocks with good divvies, different sectors and the price was right, mid $30, though now I've added a few stocks in the $60 range, but of course it does take longer to build up the shares in those stocks, especially the way I can afford to do it.

Then study, study, study. One hint that I found useful, esoecially early on, was to look at the best growth, value or divvy paying mutual funds (just google them) and see what their top 10 holdings may be, that'll give ya an idea of what the better stocks are. As I said earlier, I definately prefer stocks that historically have paid divvies, but I also got an odd ball or 2, but they were much later additions as I became more familiar with stocks.

Rus
 
What is the rules for getting a dividend anyways? Do you only need to own the stock for one day to get it? If so, why doesn't everyone just buy the stock for the day the dividend pays? Probably something like the share price takes a hit the same day the dividend pays?
 
I'm not sure. I know there is a cut off. Give me some time and if no one answers I'll try to find something out this evening.
 
I'm not sure what the time period either. I know most pay quarterly. Checking back on my records, I received a divvy on my Duke stock and had only owned it for about a month and a half.

This sounds like something for someone like Birch, who has invested in stcoks a whole heckuva longer than I have. I'm curious about this also.

CB
 
VirginiaBob said:
What is the rules for getting a dividend anyways? Do you only need to own the stock for one day to get it? If so, why doesn't everyone just buy the stock for the day the dividend pays? Probably something like the share price takes a hit the same day the dividend pays?
Click to expand...

Interesting question. Id be interested in hearing peoples thoughts/experiences with it.
 
Most individual stocks post a day of record for the dividend payment. If you own the stock during this period of time and sell within that window you will still receive the dividend. Most stocks will increase their dividends yearly. I know one fellow with a Sharbuilder deferred account with 46 stocks and he takes down 184 dividend hit/year. It's money coming in all the time. That day of record should read date of record. And I almost forgot some stocks will reach a certain level in price and do a split. I have one splitting tomorrow 2 for 1.

Virginia bob,

Take a look at EBF or AP, they've both done well for me and I continue to hold them both.
 
Birchtree said:
Most individual stocks post a day of record for the dividend payment. If you own the stock during this period of time and sell within that window you will still receive the dividend. Most stocks will increase their dividends yearly. I know one fellow with a Sharbuilder deferred account with 46 stocks and he takes down 184 dividend hit/year. It's money coming in all the time. That day of record should read date of record. And I almost forgot some stocks will reach a certain level in price and do a split. I have one splitting tomorrow 2 for 1.

Virginia bob,

Take a look at EBF or AP, they've both done well for me and I continue to hold them both.
Click to expand...
How do you know when they'll split?? I'll admit I just opened a sharebuilder account. Stuck between one time buying and the investing over a stock monthly. Need more capitol for sure in the money market account w/sharebuilders.
 
O gurus of the market! I understand the date of record concept i.e. if you own the stock on the date of record you get the dividend. The one I have a problem with is the "ex-dividend date". As I understand it, it is a date set by the brokerage to allow for processing of transactions prior to the date of record? Appears that the share price is adjusted to account for the fact that it is being sold ex- or without dividend? Is my understanding correct? I generally avoid doing transactions within a week or so of the date of record to keep from getting an unexpected result.
 
This thread has the potential to be something really good.

Unfortunately, during a bull run, too many investors get caught up in the growth trap brought on by TV and Wall Street. Just ask the people who think they are ever going to break even on FRPT, CROX, JSDA, and Heelys. Dividends are the only true indicator of company profits. As we saw in 2006 companies lured speculators towards their stock by 'buying back shares'. Despite the rah rah this subject gets, share buybacks do nothing for the individual investor. The only group this benefits is Wall Street as they are the only ones buying low and selling high. What's a company like CROX going to do with those shares they bought back at 60? Sell them to raise capital?

If you were to buy dividend paying stocks and reinvest the dividends, you'd be glad to see your company drop in price. While reinvesting dividends sounds easier said than done, it is still an effective method in the long run. For example, you could automatically reinvest dividends with your broker but you may only be able to buy a few shares with each quarterly divvy payout. You could also take your dividends and reinvest them in another company you've got your eyes on. Nobody said you have to reinvest in the same company that issues them.

Another idea would be to collect the dividends, let them sit in a cash money market account, and wait for the company share price to fall off a cliff. I know, I know, don't catch a falling knife and all but you probably don't have to worry about a wide moat company going under if you're planning 10+ years out. Do this and you're going to lower your cost average over time.

I suspect dividend stocks don't have as much appeal amongst the individual investor as it should because of the Growth Trap implemented by TV shows and get rich quick schemes. Every time you look on TV you'll see "Our market movers are XYZ, which is up 4.2% today on an announced share buyback while ABC is down 6% after writing down $2 Billion in bad loans." The retail investor takes this as, "Time to buy XYZ and sell my ABC". Hence the term 'Dumb Money'.

I'm not an advocate of DRIPs because of the hidden fees they impose to buy, reinvest, and liquidate. You're also stuck investing only in that company stock for the duration.

As much as I'd like to, I can't consider GOOG or CSCO long term holdings. Just my opinion, but unless you're trading them in and out, your gains are nothing but paper gains. There were lots of paper millionaires in 2000. Ask a Gold Bug how much money he's made in gold as a long term investment too if you get a chance. Don't fall for that one either.

It sounds simple, but a long term account could hold dividend paying stocks such as PFE, BAC, C, MO, XOM, WMT and it will be worth a lot of $$$ some day. On a side note, if you managed to pick a good dividend paying mutual fund, you'll probably get to reinvest cap gains as well. Dividends have begun to make a comeback as investors sought real earnings after the dot com debacle, but long term investors are not quite fully utilizing the power of them. Again, it's the great growth trap brought on to us by the Street. (Hey can you blame them? If there weren't retail investors, who would a Hedge Fund sell their growth stocks to at the top?) Wait a little while and build up your ammo before you decide to start shooting from the hip. Get rich slowly. It takes money to make money.;)

(If only I would've reinvested those dividends in BOS when I received them quarterly. BOS was Boston Celtics, my first stock holding ever, which was bought out sometime around '01.)

I'm wondering what you folks do. Do you reinvest via DRIP? Do you reinvest as soon as the dividend is payed out? Do you take the money as cash? Do you look for other opportunities?
 
My bundle of dividends are paid according to fate - they are all on auto-pilot. They make me feel better during weeks like we recently experienced knowing that I'm still buying regardless - especially during the low valleys. And dividend reinvestments become a self-feeding system - the lower the stock purchase price the greater the shares and the more dividend the next time around. I find that I do hate to sell a position because the income loss is what I miss. But a good capital gain makes the sacrifice worthwhile because that income will be redistributed to purchase other wall flowers that come with a dowry.
 
VirginiaBob said:
I've never bought an individual fund. I've always held mutual funds throughout my lifetime, but am thinking about taking the plunge and buying some individual stocks. Birch and others, what would you all recommend as a start? I'm not looking for high risk, but something to build some confidence in buying individual stocks.
Click to expand...

The best website I have ever found to get started buying on your own is The Motley Fool http://www.fool.com/index.aspx Solid advice, conservative and realistic. They cover everything from stock buying to planning retirement to car buying for the average person.
 
He is an interesting take on dividends. GE just increased their dividend by 11% to $0.31 per share per quarter. That works out to a 3.4% yield at the $37.00 price. Now think about a block purchase at $24.00 several years back and what the yield would be on that price with the increased dividend payout. The longer you hold the better the return looks.
 
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