The Dividend Guy Blog

Weekly Dividend Investing Roundup - July 4, 2009

The Dividend Guy — Sat, 04 Jul 2009 11:00:47 +0000

Welcome to the July 4, 2009 edition of The Dividend Guy’s weekly roundup of posts and articles about investing, dividend and non-dividend related.

If you know of other blogs that are covering the topic of investing and dividends, please feel free to let us all know using the comment section below.

The DIV-Net

Reinvest at all costs

Investment psychology

Dividend cuts

Cash leads to options

Dividends at risk

Recurring Aristocrats

Hedging gas prices

Protect yourself from inflation

Best stocks to retire on

Is Bank of America a buy?

Capital losses in a tax free account

The Articles

The Dividend Guy lives in Norway

Want some Indian stocks in your portfolio?

80 year olds are wise

A net worth update

You need to know these valuation ratios

The Sleepy Portfolio

Credit card fraud

Wealth creation myths

How to find investment ideas

How often do you check your portfolio

Reverse convertibles are bad news

Buffet’s best advice

Are we ready to fly?

Stock competition stock picks?

Thanks for reading!

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Dividend Income Lessons I Have Learned

The Dividend Guy — Wed, 01 Jul 2009 11:00:32 +0000

One of the reasons I love the investment process so much is because every time I turn around I realize that I have learned something new. Just when you think you have “the game” down, something comes along and knocks you on your ass. Take those dividend cuts by Bank of America, Citigroup, and General Electric for crying out loud. GE was never ever supposed to have to cut its dividend. But it did and many of dividend investors learned a valuable lesson - never assume that dividend growth, even from the largest of blue-chip companies, is a foregone conclusion. That is the one of many dividend investing lessons I have learned through the years. Here are a few more I came up with.

1. Diversified dividend income is more important that growing dividend income

It does not matter how fast or how high that dividend growth is for a particular company if you are not diversified. As I to some extent, and many others like me learned, in truly awful markets broad diversification through a solid asset allocation is what is most important. No amount of dividend growth will make up for a portfolio that tanks by 75% because of improper asset allocation.

2. The term blue-chip is only a media title, not an investment philosophy

I believe the term “blue chip” has done great damage to many investors. It has created a sense of safety that lead people to drop their guards. This false sense of security creates huge risk in many a portfolio. I have learned not to get sucked into the feeling of safety by media labels placed on stocks. The numbers are what tells me if a stock is good or not (and even that can be a problem).

3. Even the best stock analysis can lead to stupid decisions

Mutual fund companies are very good at convincing us that investing is hard. It really isn’t as hard as they make it sound. The most important things is to ensure you have a sound asset allocation. With that you will be off to a good start. However, really good and reliable stock analysis takes time and even done with the highest degree of rigor can still turn out to be bad calls. At the end of the day it is very difficult for us as investors to foresee what the market will bring us.

Finally, because of these difficulties I have learned that I must form the core of my portfolio with broad based index funds across a number of asset classes. This provides effective diversification that is not tied to guessing what the market will do and not tied to a media label such as blue-chip. I still actively invest in individual dividend stocks, but I am always certain that my core is strong so that the benefits of dividend growth will not be overshadowed by a bad portfolio.

(Photo Credit)

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Weekly Dividend Investing Roundup - June 27, 2009

The Dividend Guy — Sat, 27 Jun 2009 11:00:09 +0000

Welcome to the June 27, 2009 edition of The Dividend Guy’s weekly roundup of posts and articles about investing, dividend and non-dividend related.

As a special note this week, I am glad to announce that I am once again in the running for the Best of the Money Blogs over at the Globe and Mail. Thanks to Rob Carrick for the mention - I personally have learned a lot from him and his articles over the years.

If you know of other blogs that are covering the topic of investing and dividends, please feel free to let us all know using the comment section below.

The DIV-Net

The Important Benefits with Dividend Investing

Screen for value

Dividend cuts happen due to competition (among other things)

Value Investing Pro is now live

Dividend Growers Beyond Just Large Cap Stocks

Dividends versus Share Buybacks/Stock Repurchases

3 Simple Steps For A Successful Retirement

401K Cuts to Matching Contributions Coming - Time to Exit?

Calculate Maintenance Capital Expenditure in FCF

Best Buy’s been a ‘best buy‘

A June update

The Next Sam Walton

The Articles

New ETFs to ponder over

Four ways to ruin your investments - guaranteed

The dividend reinvestment plan (DRIP) trap

Selecting mutual funds is in your mind

I like free tools

Changes to your investment manager?

Please don’t tax the rich

Sure-fire way to get rich off of investment newsletters

Dividends can fight inflation

Investing based on liabilities

Dividend slashers

How to construct a portfolio

Thanks for reading!

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Chopping Stocks to Lessen Your Risk

The Dividend Guy — Wed, 24 Jun 2009 11:00:42 +0000

As a subscriber to Kiplinger’s Personal Finance
magazine, every once in a while I run across a piece of information that I find really valuable. In this month’s edition, there was an article about hedging your bets and one of the topics was the impact if slightly reducing your equity exposure to reduce the volatility of your portfolio. Sure, you give up some future gains but the difference is not worth doing given the volatility and additional risk more equity exposure gives you.

In the image below, you can see the impact a slight reduction in stock exposure has provided. Pay particular attention to the “Worst” column as that is the thing that can get investors into a lot of trouble. Really bad volatility, and ultimately really poor returns from time to time, make investors act with their emotions and make stupid mistakes. I have done it, have to really try hard not to do it, and will probably do it again. However, I have protected myself slightly by reducing stock exposure (I still have work to do here!).

Click to Enlarge

The rule I like to use to determine the split between stocks an bonds is the simple one advocated by John Bogle - keep the fixed income component of your portfolio equal your age. If you are 35 years old you should have 35% in fixed income and 65% in equities. Easy, simple, and effective in my experience.

(Photo Credit)

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Weekly Dividend Investing Roundup - June 20, 2009

The Dividend Guy — Sat, 20 Jun 2009 11:00:33 +0000

Welcome to the June 20, 2009 edition of The Dividend Guy’s weekly roundup of posts and articles about investing, dividend and non-dividend related.

If you know of other blogs that are covering the topic of investing and dividends, please feel free to let us all know using the comment section below.

The DIV-Net

Total dividend income

Indicators of our economic future

Why dividend cuts happen

Medtronic increases dividend

Dividend Portfolios – concentrate or diversify?

Intel dividend stock analysis

Five dividend stocks increasing their dividends

Natural gas ETF

Mastech Holdings research

Boring company with solid profits

Oil Bears