Gyroscopic Investing

dualstow wrote:

Gosso wrote:

MediumTex wrote: Within that sector I really like Intel's dividend, which is currently at 3.2%, but is about 4.9% based upon the price I bought it at a couple of years ago.

But the Yield-On-Cost of 4.9% is a meaningless figure, since it ignores the price change of the stock.  If there was a similar stock with a current yield of 4.0%, it would make sense to sell the Intel shares and buy the stock yielding 4.0% (since Intel's current yield is 3.2%).  That 4.9% tells us nothing about how the stock is currently performing.

At the same time, we have to make sure the current yield is not merely the result of a recent drop in share price. Depending on the reason for the drop, it could portend a subsequent lowering of the dividend.

I think when I started buying Altria (Philip Morris), I cared more about the dividend than the share price, comparing it to a savings account that rewarded me with higher interest for staying with them year after year. In my mind, I called it the Bank of Marlboro.

It looks like Altria has significantly outperformed the S&P index in total returns over the past 10 years (chart).  The same can be said for McDonald's (chart).  But this cannot be said for Johnson and Johnson (chart), or Microsoft (chart).  Even though JNJ and MSFT have had a steady dividend growth over this period.

So the moral of this story is to invest in companies that are destorying the human body.   Oh wait, if we throw in a little Pfizer then everything is balanced out...the system works...what a beautiful thing.

Gosso wrote: So the moral of this story is to invest in companies that are destorying the human body.  

Dividends aside, the share prices of so-called sin stocks have done well.

I remember getting an unsteady but juicy dividend from Diageo.

dualstow wrote: I think 7% is still too high.

I just checked the dividend CAGR of two stocks that I've held for five years.
If I did my math right, McDonald's div has grown 13.3% annually, while that of Verizon has only a 4.3% CAGR over the same 5 years.
* That's only 5 years.
* I think that, on average, you're going to find more Verizon's than McD's.
* Even if you tried to put all your eggs in one basket, a company with promising dividend growth like McDonald's, that's an awful lot of capital to risk on one company- if you reinvest those dividends back into the same company.

I love rising dividends, but that website is giving us false hope.

I have ABT, AFL, APD, GD, WAG, etc. and most of them have dividend yield of over 3% and dividend 5 year growth rate of over 10%.

Odysseusa wrote: I have ABT, AFL, APD, GD, WAG, etc. and most of them have dividend yield of over 3% and dividend 5 year growth rate of over 10%.

Nice. I've got to check on ABT, WMT, CVX, PG, TROW, etc.

So, Odysseusa, what are your thoughts on the various arguments here that people overvalue dividends?
Do you also buy non-dividend payers?
I do. I buy Vanguard's small cap index fund, for instance, since my dividend payers tend to be large cap.

EDIT: added the missing word 'tend' in last sentence.

D.S.

Thanks for asking. The majority of my portfolio are in Permanent Portfolio while in my IRA account, I have mostly dividend stocks. I am still a young investor and have a few decades until retirement. I am still in the beginning of my dividend growth investing journey and I will try to let you and other PPers/VPers on here know how it turns out as the years progress.

Not very Brownean or Bogleheady, but this guy's on Bloomberg right now, Odysseusa.
http://www.amazon.com/Get-Rich-Dividend ... dends+mark
(Marc Lichtenfeld, dividend book)

Thanks, D.S.


Please see the dividend stocks below in bold. They are good to own and you may want to do more research on them.


I use www.FinViz.com and www.reuters.com to screen for the stocks below


Dividend Yield of over 3%
Payout Ratio of under 70%
5-Year Dividend Growth Rate of 10% or more




1 GE General Electric Company Industrial Goods Diversified Machinery

2 CVX Chevron Corporation Basic Materials Major Integrated Oil & Gas

3 JNJ Johnson & Johnson Healthcare Drug Manufacturers - Major

4 PG Procter & Gamble Co. Consumer Goods Personal Products

5 PM Philip Morris International, Inc. Consumer Goods Cigarettes

6 JPM JPMorgan Chase & Co. Financial Money Center Banks

7 INTC Intel Corporation Technology Semiconductor - Broad Line

8 MRK Merck & Co. Inc. Healthcare Drug Manufacturers - Major

9 PEP Pepsico, Inc. Consumer Goods Beverages - Soft Drinks

10 ABT Abbott Laboratories Healthcare Drug Manufacturers - Major

11 MCD McDonald's Corp. Services Restaurants

12 COP ConocoPhillips Basic Materials Major Integrated Oil & Gas

13 BMY Bristol-Myers Squibb Company Healthcare Drug Manufacturers - Major

14 LLY Eli Lilly & Co. Healthcare Drug Manufacturers - Major

15 DD E. I. du Pont de Nemours and Company Basic Materials Chemicals - Major Diversified

16 DOW The Dow Chemical Company Conglomerates Conglomerates

17 KMB Kimberly-Clark Corporation Consumer Goods Personal Products

18 EMR Emerson Electric Co. Industrial Goods Industrial Equipment & Components

19 FCX Freeport-McMoRan Copper & Gold Inc. Basic Materials Copper

20 BLK BlackRock, Inc. Financial Asset Management