goatfarmer

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  • When the Economy Hands You Lemons, Consider Dividend ETFs
    On the subject of dividend ETFs, it may be worth noting that an ETF will often pay less dividends than would a holding of the top 10 stocks in the ETF. The value of the ETF is in diversification. But one wonders whether the additional marginal diversification in holding the ETF over, say, the top ten holdings, is worth the diminution of dividends.
    Apr 08 01:44 am |Rating: 0 0 |Link to Comment |View article
  • When the Economy Hands You Lemons, Consider Dividend ETFs
    Marol, I'll have a crack at explaining why I am now interested in dividends, since it's a good question and the answer is not obvious.

    First, I am retired and want an income stream. If I can get an average 2.5% dividend income on my portfolio, I can live reasonably on that. So, provided that the dividends don't all go down together, I'll be able to live of the divs and not touch the stocks, with the hope that eventually the stocks will provide capital growth.

    Secondly, I have now been 'in the markets' for about 13 years. I can look back and see what would have happened if I had invested in stable dividend-growing companies, such as KO and GE and JNJ, a little over ten years ago. I'd now be getting a yield of around 10% on my initial investment while still having the option of capital growth. The magic of compounding is a good reason to buy and hold strong dividend-growing companies

    Of course the counter argument is that money is money, whether dividends or capital appreciation. I could simply declare a 2.5% dividend from portfolio every year and live off that. Why sacrafice growth to dividends? True. But in this wild and wonderful world, where markets are volatile, the prospect of a modest, reasonably secure, yield is attractive. And many of the dividend companies that I am following have a good growth record, albeit not stellar. I'll be happy with modest stable growth.

    Also, if all other things are equal, why not invest in the companies that pay dividends? I am persuaded by the argument that what matters in a balanced portfolio is asset allocation among sectors rather than stock picking. If I can stock my sector shelves with dividend goodies, why not get the extra returns?

    I used to be a trader speculating wildly. I used to poo poo dividends as being for grannies. After reviewing my performance over ten years, I realized that I fell into the 'normal' category for traders who haven't been wiped out: average 3% per annum. I have since refocussed my attention on more modest goals, with the hope of greater returns. The modest return of a dividend portfolio fits the bill - or part of it.
    Apr 07 09:11 am |Rating: 0 0 |Link to Comment |View article
  • 10 Important Facts on the Current State of the Market
    2. 'Technical analysis' is a misnomer, covering a wide spectrum of quantitive speculation from fanciful to the fundamental. Ultimately, there are only those who believe they can predict the future and those humble bogles who think that the index is king.
    4. Other european indices are up. IEV, which tracks the SnP Europe 350 Index, is up around 13%.
    5. A case for diversification via ETFs.
    6. Japan is in a 17 year down trend. If it breaks that trend, I think it will be the rage. Every man and his dog will want to own Japan. There won't be a mother's son who won't own Japan. Japan will be THE core of everyone's portfolios for years to come. But only tea leaves and crystal balls will tell you when that year will be.
    9. Check out some other indices, rather than the DJ variety.
    10. Ditto.


    Dec 01 08:01 am |Rating: 0 0 |Link to Comment |View article

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