How i built a dividend growth investment portfolio gas 1940


70% of our stock market investments are in various Vanguard funds. The balance is in individual dividend producing stocks. The Vanguard funds also produce dividends, since many stocks in the stock market produce dividends, but I don’t consider those funds part of the “dividend” section of our portfolio. The Vanguard 500 Index Fund Shares has a decent 1.74% yield, so it’s not inconsequential!

• I have time on my side – I view our assets as a series of buckets. Near-term (needed within the next 5 years), middle term (5-10 years), and long-term (10+). All of this money was long-term money so I could electricity transformer near house put it in individual companies, with greater volatility, because I could wait out the volatility. Every stock I’ve owned for more than 3 years is positive (not positive in “real” terms, like vs. inflation or the SP or any other benchmark, but they’re green).

The next filter is financial and the big number I want to look at has to do with dividend coverage. Dividend coverage is the company’s earnings per share divided by the dividend per share. I want earnings to be at least twice that of the dividend, or a dividend cover of 2 times. I also look at some of the other metrics many gas monkey monster truck body use to analyze a company (increases in earnings per share, equity per share growth percentage, etc.). The basic idea here is that I want to make sure they can continue paying the dividend (coverage) and that they can continue to grow the dividend (increasing EPS).

Next, I start doing some searches about these companies on other financial websites I trust. Dividend Growth Investor is a blog I’ve been following for years, he does a good job of analyzing a lot of companies. His commenters are also really good too and I’ve discovered folks like Passive Income Pursuit through him. I also like Crossing Wall Street, though it doesn’t have a dividend angle, it’s well informed and the Friday market reviews are a must-read.

Lastly, know when to fold em. I sell when the conditions change. You always need to know when you electricity song 2015 plan to exit, or you run the risk of making decisions based on emotion. Just recently, ConocoPhillips announced they were slashing their dividend. I sold it because its purpose was to be a dividend stock (and at a certain yield)… and they cut their dividend from $2.96 a share to $1 a share. It’s still a dividend stock, just a lower yield one, but it stopped doing the job I needed.

You can also achieve this by automatic reinvestment of dividends because this will grow your stake in the company. This is useful if you’re don’t actually need the income. I don gas 89’t reinvest dividends because keeping track of those separate purchases can be a bit of a pain. I’d rather just buy more when favorable conditions present themselves.

Looking only at individual dividend stocks, my 2014 yield was 5.623%. If you were to buy the exact same basket of stocks today, the yield would only be 3.707%. (don’t try z gas tecate telefono to do the math using the $55k dividend income above to reverse engineer our portfolio size, the income number included index funds which aren’t included in this 2014 yield calculation)

OK, part of the difference has been the run-up (and slight correction) in the stock market but the rest has to do with how much you benefit from investing in companies that increase dividends every year. When you find companies that consistently increase their dividend and do so at a rate greater than inflation, your yield is sure to improve.

Great read Jim. I’m 52 and just announced my retirement for this year (Sept.) I’ve been trading and investing these markets since 89 or so and am looking to my next phase and have been slowly rebalancing … but it’s painful to take capital gains just to rebalance for more safety. Like you I have a few different accounts. A One Year Account which is all gas number cash, a 2-7 year account which is 40/60 equity to fixed income and an 8+ which will be 60/40 or 65/35. The interesting thing about my situation is that my pre-retirement accounts are twice the balance of my retirement (IRA/401k) accounts. These three accounts I call my “Bridge Fund” to bridge my income for about 18 years (or longer) I’m a little more gas in michigan aggressive on the near side and a little more conservative on the longer end as I don’t expect to touch any of my retirement accounts until I need to do RMDs at 70.5. But even on the 2-7 account, my holdings are very dividend oriented and low risk.

In any event, I’m trying to do another round of rebalancing on my 8+ account to bring down the stock exposure but waffling on whether to just go low growth div stocks or keep building up my fixed income (VCSH, AGG, etc.). I’m about 10% overweight in equities right now in that account and having a hard time being okay with just more fixed income for an 8+ year account.