Building a dividend portfolio

[ForeignExchange]

Originally Posted by webbach

Has anyone here taken a good look at Wisdom Tree ETFs? They are not yet widely traded, so there may be exaggerated bid/ask spreads for now, but the yields are high. The expense ratios are not bad, either. Any ideas?

Webby

I own DTH in a Canadian tax shelter. In my mind, you have to be a true value investor at heart. This means when value goes out of season, you have to have the mental strength to hang on.

Graham
Chiang Mai, Thailand

[maddythebeagle]

Originally Posted by DangerMouse

I built my dividend portfolio using DRIPS. In the past I went through Transfer Agents, but now that WellsTrade is allowing 100 free trades a year, I use them as my Transfer Agent.

Ditto....and still use some of my drips.....there so hard to kill....OP, lots of advice here......PFE can be investing in directly with a 500 min....some of the others listed above like MMM and JNJ require 1 share and no fees for additional investments....I have actually done some trading of shares in a group so ended up with a portfolio with much less fees than even an index fund....

[Olav23]

There are also 2 ETFs to consider if you are just searching for yield, but I would bet they are not tax-efficient.

Advent Claymore Convertible Bond Fund - AVK - ER 1.12% (ouch!) Yield: 7.42%
PowerShares Financial Preferred - PGF - owns preferred stocks of investment-grade financial companies - ER .75% Yield - Can't seem to find it, but around 6.2% I believe.

[tricky88]

Originally Posted by jIMOh

Has anyone here built a dividend portfolio in a taxable account?

If so, how have you done it? Individual stocks? ETFs? MF?

If you had to give advice to someone which has a 401/Roth and has a moderate amount to invest, and wants a reasonable income stream from dividends, what would you suggest?

Details- age 34, have 140k saved already in tax advantaged accounts. Most indications are that the 140k currently saved will be enough around age 65.

I'm 36 and started building a dividend portfolio in '98. I started with about 30 shares of JNJ. Then some BAC, MO, MRK. I still DRiP into JNJ and BAC, now 8 years later, and the dividend stream from them is impressive, with all divs. reinvested of course.

I've come to the conclusion though that the easiest thing to do - for me - is to buy a chunk of DVY every couple of months. At $1200/yr, your comm. costs would be too high to do that, but consider it as you have more to invest.

I've completely outperformed my goal of growing div. income at 25% per year over the past couple of years. In another 8 years I'm hoping to have about $20k per year in dividend income.

The fact that the low 15% tax rate for dividends might sunset in a couple of years does worry me slightly, but I don't think that's one of the big ones for the chopping block. My guess is that there are other parts of the Bush tax cuts that favor a much smaller part of the population (that is, much wealthier) that the Democartic party will have an easier time taking away than this one. My tax burden for my divs. will continue to go up no matter what though, and i take as much advantage as I can from IRAs, 401ks, and Flexible spending accounts. Not to mention harvesting losses in stocks, even if i buy them back 31 days later.

So my advice is keep at it. I wish I'd started earlier. Even with the big capital gains I've seen in my holdings over the past few months, I'm more pleased watching my dividend chart shoot up on a yearly basis. The stock prices can rise and fall, but the divs. are much less likely to go shrink or away (though by no means impossible).

[flipstress]

Over the past few years, I have been trying to build a dividend portfolio of individual stocks, too, and I am also concerned about the qualified-dividends low tax rate disappearing after 2010. I'll just have to watch what happens with the tax rates.

I have 3 DRIPs but will sell one soon and stop the other two as soon as they get to my targeted investment amounts. About half a dozen other stocks are in Izone, but I am transferring them over to Wellstrade which provides 100 free trades per year.

I have little money to invest in these after-tax stocks after maxing my tax-deferred accounts. I aim for this to be about 10% - 15% of my investments. It’s going really slowly.

Here are the resources I know of—lists and rankings:
- Mergent's Handbook of Dividend Achievers - heard about this from poster unclemick here but I have not actually read an issue
- PEY holdings – wildcat suggested just looking at the constituents of this ETF, which seeks to replicate the Mergent Dividend Achievers’ 50 Index
- S & P 500 Yields - ranking of S & P stock yields

Edited to fix links

[jIMOh]

I haven't seen anyone suggest they "day traded" a dividend portfolio, or did frequent selling... it is becoming apparent to me I could take my $1200-4200/year, invest it in a single stock once per year, then let it ride. The next year purchase a different security, and continue in that fashion.

I saw some references to Wellstrade (never heard of them)- anyone care to explain (I will look up after this post).

I have used DRIPs through sharebuilder before. Any care to explain how they set up DRIPs directly?

[unclemick]

Fifteen year overnight success - Moneypaper for the first share starting around ?1989? with some electric utilities, water utilities, banks peaked at about 44 different companies. Subscribed to Moneypaper - bought the first share for $15 or $20 commision and then wrote and enrolled - note that each plan is different - some are pretty stiff on fees - others have direct enrollmeent for free.

I note that half my holdings are not the same company - my Mobil is now Exxon mobile and a lot get bought out in the stretch - just got a check for New Plan Excell(a REIT) - some Aussies bought them.

Now in my old age (63) slowing and closing them out and transferring to my Vanguard Broker - taxes and time permitting.

I pretty much stuck with Moneypaper and Mergent's Handbook(was Moody's at first) during my active period.

Worked well for me in the 90's - dividends are more popular again so the going may be a little more chewy this decade.

heh heh heh

[maddythebeagle]

Originally Posted by jIMOh

I have used DRIPs through sharebuilder before. Any care to explain how they set up DRIPs directly?

http://www.dripinvesting.org/Firstshare/Firstshare.htm

some of this is outdated but agree with UM...moneypaper might be the way to go....they have x2 monthly stock specials that you can get the 1st share for 15 bucks....JNJ, MMM, and several others come up. Also, M. Siebert doesnt charge for issuing stock certs in your name...just would cost the 10-15 buck commission....once you have that you can send the cert into the transfer agent and enroll in the drip......If you go the investor relations section of a company that you are interested in, you can see what the requirements are....some can be purchased directly....

[clifp]

Originally Posted by jIMOh

I haven't seen anyone suggest they "day traded" a dividend portfolio, or did frequent selling... it is becoming apparent to me I could take my $1200-4200/year, invest it in a single stock once per year, then let it ride. The next year purchase a different security, and continue in that fashion.

I saw some references to Wellstrade (never heard of them)- anyone care to explain (I will look up after this post).

I have used DRIPs through sharebuilder before. Any care to explain how they set up DRIPs directly?

As I said in an earlier post, I think buying a stock or two (if you have 4K to invest) a year is fine strategy.

If your broker offers Dividend re-investment plans I think you are better off using them to reinvest dividends, than opening a direct DRIPs, because there are a lot of small fees associated with DRIP plans.
You can check out CompuShare https://www-us.computershare.com/inv...la=0&stype=ocp who is one of the largest provider of direct DRIP plans, to get an idea of fees.

Although there are some companies that actually provide a small 2-5% discount on the share price of shares purchased through dividend reinvestment, in those rare cases in may make sense to set up a direct account. Generally the company will give you information on how to do it.
For example here is one for Capital Source http://investor.capitalsource.com/ph...43&p=irol-drip