Dividend ideas?

[wabmester]

OK, I took your best-case return differences (5 year) and compared VBIAX (60/40 balanced) with Wellington (also about 60/40), and this is what I got:

 

[unclemick]

Let's be blunt - Wellington and Wellesley have been chasing the 'value premium' combined with the balanced stock/bond approach for a long time - AND doing a reasonably good job executing same. I offen look at their top ten stock holdings for ideas.

A very good way to go - if it suits your style.

Bogle Financial Markets Research website used to have a decade by decade, blow by blow, 75 yr history of Wellington.

Interestingly - they suffered a brief(heh, heh male hormone attack) during/after the go-go era before they recovered and got back on track.

Gotta watch those hormones - even in dividend/value stocks.

 

[cute fuzzy bunny]

You picked the wrong symbol. Wellington is VWELX, not VWENX.

Heres the 5 year chart.

 

[cute fuzzy bunny]

And the ten year...

 

[wabmester]

You picked the wrong symbol.  Wellington is VWELX, not VWENX.

I was comparing admiral shares.    Wee, this is fun.   Here's a comparison of investor shares:

 

[cute fuzzy bunny]

Now you're comparing share prices without reinvesting dividends?

And a 5 year comparison of vbinx with the admiral wellington and wellesley isnt going to work out very well since neither the wellington or wellesley admiral shares have been around for 5 years.

See what this super high speed ability to post incorrect information buys you?

Better mark down that hedonic adjustment for the computer a little bit...

 

[laurence]

I was just about to ask where the dividends played into this, and as I was about to post a red warning came up on the page saying a new post was added, did I still want to continue? Ends up your post answered my question. This new board rules!

Now I need to figure out how my 401(k) DRIPs my Wellington holdings.

 

[wabmester]

Eh, it's all historical data anyway.   What we need is good quality future data.   And it's way too hard to find good historical data on various asset classes, but the bottom line is that if you believe the guys who have looked at the data, it's the asset classes that matter and few stock/bond pickers have done better than equivalent asset class indices over the long-term.    I'm sure that includes the Vanguard dudes too.     However, I'll concede your implied point that you can probably do better than *broad* market indices by going with a value and small tilt (at least by historic metrics).

 

[cute fuzzy bunny]

Something is amiss either with vanguard or yahoos charting tool...there arent many options in the yahoo tool for reinvestments or anything so I'm not sure whats going on there. Microsofts moneycentral produces the same graphs as vanguard does, so its something wrong with the yahoo tool.

For the same 10 year comparo with Wellesley vs VBINX, see below. Wellesley comes out on top and look at that nice smooth linear line showing low volatility. That a 35/65 fund is whomping a 60/40 really says something...

 

[wabmester]

That a 35/65 fund is whomping a 60/40 really says something...

Yeah, you're right. It says that stocks have sucked for the last 5 years.

 

[wildcat]

Whoa this thread is picking up!! I gotta ask TH...what the hell is that picture next to your name?

 

[cute fuzzy bunny]

Thats the french guy in monty pythons 'holy grail' movie taunting the english. Do a google for "I fart in your general direction"...

 

[laurence]

Now go avay or I will taunt you a second time-a!

 

[cute fuzzy bunny]

Your mother was a hampster and your father smelled of elderberries!

I don't wanna talk to you no more, you empty headed animal food trough wiper!

 

[wildcat]

Oh I thought it was some kind of rapper throwing out some wicked beats

 

[cute fuzzy bunny]

Hey! This one is for your mother!

I think its time to build a wooden badger...

 

[laurence]

No wildcat, he is French, how do you think he got this aughtrageous accent-a!

Monty Python's Holy Grail, what a great movie. Now if I could only get my hands on a holy hand grenade!

 

[greenhm]

Wow... leave to go work for abit and when you come back, the whole post has gone crazy

youbet said:
"
Are you building in annual increases in dividend income to account for inflation? If not, you'll soon stumble onto the falicy of "living off the interest/dividends and not touching the principal."
"

To answer the inflation problem, I plan to increase payment with less then the annual dividend increases.

So, the dividend payout INCREASE yearly is 10% (historically), and you take only say 3% annually extra, then your ahead, right?

The capital is always fluctuating with market price, but i would never sell it.

Calgarygirl said
"
read Derek Foster's book? He's 36 and retired at 35
"

Thanks Calgarygirl... Yes I did read his book and thought his gutsy move at 18k / yr is just great!

We are blessed up in Canada to not have to deal with the health care issue that plagues <some> citizens from the south, yet we do deal with our own 'cold' issues. This helps in getting-out abit sooner... eh?

Please accept my appology for poor forum edicate and not using reply captions... I'll spend some time soon to get those down, as it were..


greeny

 

[cute fuzzy bunny]

If you have dividend paying stocks running in the 10% range, not selling wouldnt be your biggest problem...

I havent seen anything north of 7% that didnt have a pretty good chance of default.

10% of zero is zero.

While the accommodating monetary policy of late has made a lot of people want to chase yield and has made for a very low default rate, I wouldnt expect that to be the case once things tighten up a little bit more...

 

[greenhm]

sorry... that meant 10% increase in dividend payment NOT 10% dividend payment


made the change to the original post

greeny

 

[ESRBob]

Green,

I don't know the exact details of the securities you are buying, so pls correct this analysis if it is wrong. A lot depends on the trend or expected return in the underlying security you own. I am going to assume that it goes up and down, but maintains its same price over time. This assumption must preface the following comments to your last post:

a dividend that grows at a 10% rate means, for example, a 3% yield growing to a 3.3% yield (if the principal stayed the same) . Taking 3% of that growth in yield would _not_ protect you for inflation. You need to take (imho) 3% of the total yield and set that aside for inflation-adjustment of your initial capital. Then you can spend what is left.

So if you have an 8% yield, sock away the first 3% of it, leaving you 5% to play with.

Maybe that is what you are doing, but I just wanted to be clear.

If your undrerlying security price stays stable, though, the real value of your capital is eroding at the rate of inflation without this sort of adjustment.

So putting the first 3% of annual return or yield aside into more of the asset or other assets is the only way to protect the real value of your asset base. Play with the numbers -- there is a big difference between 3% of the portfolio value set aside, and 3% of the annual dividend increase set aside.

 

[markplus4]

I love to get paid and I like having my downside risk truncated a bit by relatively safe dividends. Some of my favs in my portfolio for possible further investigation:
--CVX- Yields 3.4% and off it's 52 week high. EPS 6.20 & Div/Sh = 1.80. 8.5 PE.
--NLY- Mortgate REIT that yields 9.5%. Market discounting a possible divvy cut, but these people know how to manage the curve.
--PCU-Southern Peru Copper. Not for faint of heart...levered to copper prices. Just paid a quarterly of 2.38/sh which annualized is 18%. Low debt...more of a pure value play with capital appreciation potential. Very under followed in U.S. A steal on a pullback to upper 40's.
--CARS-Automotive REIT with increasing revs, great mgmt, and good business model with modest competition. Yields 5.2%.
--SO-Southeast super regional utility with 2-4% organic growth due to region demographics, & conservative mgmt. Yields 4.5%.
Happy hunting....

 

[wildcat]

Not bad Mark...a lot of our returns going forward could come from good old dividends. Quick question on the idea of REIT dividends, how are they treated in tax deferred accounts? I assume they are protected but I could be wrong.

 

[greenhm]

Thanks for all your comments...
Here are the numbers... hope it makes sense...

Year 1
bought $100000 phone-company stock for 25$ per share
I now own 4000 shares
The bank pays $1 for each share this year as a dividend
I will now get $4000 in dividends this year
That equates to 4% annual yield or 4% return on investment.

Year2
I still own 4000 shares
The phone-company pays $1.10 for each share this year as a dividend (10% div increase)
I will now get $4400 in dividends this year
That equates to 4.4% annual yield or 4.4% return on investment.
3% inflation this year means I need 4120 [4000 + 3%]
I received $4400. An increase of $380.

Year3
I still own 4000 shares
The phone-company pays $1.21 for each share this year as a dividend (10% div increase)
I will now get $4840 in dividends this year
That equates to 4.84% annual yield or 4.84% return on investment.
3% inflation this year means I need 4243.6 [4120 + 3%]
I received $4840. An increase of $596.40

... and so on

I care only for the dividends the co pays. The actual share price is of no value.
Does this make sense?

 

[Mr._johngalt]

Thanks for all your comments...
Here are the numbers... hope it makes sense...

Year 1
bought $100000 phone-company stock for 25$ per share
I now own 4000 shares
The bank pays $1 for each share this year as a dividend
I will now get $4000 in dividends this year
That equates to 4% annual yield or 4% return on investment.

Year2
I still own 4000 shares
The phone-company pays $1.10 for each share this year as a dividend (10% div increase)
I will now get $4400 in dividends this year
That equates to 4.4% annual yield or 4.4% return on investment.
3% inflation this year means I need 4120 [4000 + 3%]
I received $4400. An increase of $380.

Year3
I still own 4000 shares
The phone-company pays $1.21 for each share this year as a dividend (10% div increase)
I will now get $4840 in dividends this year
That equates to 4.84% annual yield or 4.84% return on investment.
3% inflation this year means I need 4243.6 [4120 + 3%]
I received $4840. An increase of $596.40

... and so on

I care only for the dividends the co pays. The actual share price is of no value.
Does this make sense?

Makes sense to me.

JG