Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 01-25-2018, 03:07 PM   #161
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 23,593
Quote:
Originally Posted by redduck View Post
^^^ ^^^ ^^^


It was a circuitous journey to get back to this place. Didn't even need no stinkin' spreadsheet (though it was helpful).
Sorry, but I still don't think the ends of the circle connect. The spreadsheet just demonstrated a principle, it doesn't say anything about actual performance of any group of stocks.

I just don't see the evidence that (compared to the Total Market), "You can count on them to be fairly predictable, yet less profitable for most dividend investors".

I know that paper seems to say that, but I'd be more convinced if they actually just showed the performance returns plotted against the Total Market. Instead, they are plotting stats, going back to 1964 I think. OK, long term performance is important, but we also have to consider that things might have changed with the wide-spread availability of broad-based funds in the past few decades. Could those numbers count on 60's-70's-80's era performance? An actual performance chart would let us see that - why didn't they include it?
And if div-payers are "comforting", why doesn't that show itself in my charts over the past 10 years, which do include a huge drop and huge recovery? The div payers didn't exhibit much, if any 'comfort' that I can see.

-ERD50
ERD50 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-25-2018, 04:05 PM   #162
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 959
Quote:
Originally Posted by ERD50 View Post
YOC is another non-useful measurement. Money is fungible. The current value could be moved to another investment. The future outlook of a stock is not changed because one person bought it @ $10, and another bought it @ $50.
YOC is not only non-useful, it is meaningless. You divide the dividend at one point in time by the price at another arbitraty point in time. Meaningless.

Quote:
Were these stocks picked in 2001 (as far back as the analysis went), or are they current picks based on current results (survivor bias)?
The latter.

I used to debate/discuss with DGI folks that loved Fish's data. I pointed out that something like half of the stocks on the oldest list were not on the most recent list. Almost half of them had dropped off (some due to mergers & buyouts) Nobody wanted to answer my question of how you pick the stocks to buy today that will still be on the list in 10 years.

Everybody wanted to just assume that they would only pick winners.

It's all emotional and feel-goodism. Dividends feel like free money -- and that's that.
rayvt is offline   Reply With Quote
Old 01-25-2018, 04:31 PM   #163
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 959
Quote:
Originally Posted by ERD50 View Post
What we really need (and it seems it should be available, somewhere?) is what I mentioned earlier - the list of recommendations made back at the time -
Historical Dividend Champions spreadsheets:

David Fish's lists of Dividend Champions, Contenders, and Challengers

The oldest one is Dec 2007. http://www.tessellation.com/david_fish/071231.xls

I downloaded them all a few years ago when I was seriously investigating DGI. Note to myself in 2016: "Note: 2016 CCC summary tab shows 133 Champs on Dec 2007, and 36 of them have dropped off the list. This is 27%."

This was symbol comparisons only, so it overstates the number that dropped off. For example, Walgreens symbol went from WAG to WBA. By that point, I had seen enough to be reject DGI as a good investment idea so I didn't look closer to clean it up.
rayvt is offline   Reply With Quote
Old 01-25-2018, 04:46 PM   #164
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 23,593
Quote:
Originally Posted by rayvt View Post
Historical Dividend Champions spreadsheets:

David Fish's lists of Dividend Champions, Contenders, and Challengers

The oldest one is Dec 2007. http://www.tessellation.com/david_fish/071231.xls

I downloaded them all a few years ago when I was seriously investigating DGI. Note to myself in 2016: "Note: 2016 CCC summary tab shows 133 Champs on Dec 2007, and 36 of them have dropped off the list. This is 27%."

This was symbol comparisons only, so it overstates the number that dropped off. For example, Walgreens symbol went from WAG to WBA. By that point, I had seen enough to be reject DGI as a good investment idea so I didn't look closer to clean it up.
It pays to be skeptical.

When I looked at that site, I saw lots of "how to select", "how to buy", "how to track", etc. What I didn't see was how the old picks performed going forward. Now if that was something to brag about, why not show it? Occam's Razor suggests the answer, that there is nothing worth showing (to their intended audience).

If the returns were lower, but with less volatility, that might fit some people's needs, but we don't even see that. And how would that compare with a selected AA?

-ERD50
ERD50 is offline   Reply With Quote
Old 01-25-2018, 05:47 PM   #165
Thinks s/he gets paid by the post
 
Join Date: Jun 2017
Location: Western NC
Posts: 2,885
Quote:
Originally Posted by rayvt View Post
Historical Dividend Champions spreadsheets:

David Fish's lists of Dividend Champions, Contenders, and Challengers

The oldest one is Dec 2007. http://www.tessellation.com/david_fish/071231.xls

I downloaded them all a few years ago when I was seriously investigating DGI. Note to myself in 2016: "Note: 2016 CCC summary tab shows 133 Champs on Dec 2007, and 36 of them have dropped off the list. This is 27%."

This was symbol comparisons only, so it overstates the number that dropped off. For example, Walgreens symbol went from WAG to WBA. By that point, I had seen enough to be reject DGI as a good investment idea so I didn't look closer to clean it up.
"Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it.

If it don't go up, don't buy it."

- Will Rogers
ncbill is offline   Reply With Quote
Old 01-25-2018, 09:08 PM   #166
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 959
Quote:
Originally Posted by ERD50 View Post
What I didn't see was how the old picks performed going forward. Now if that was something to brag about, why not show it? Occam's Razor suggests the answer, that there is nothing worth showing (to their intended audience).
-ERD50
It's not that they found that there is nothing worth showing. It's that they are assuming that DGI stocks are superior and therefore there is no need to look at any actual data.

Just like we see here in this thread. Declaring that dividend stocks are simply better and thus there is no need to even consider what stupid spreadsheets might say.

You can't get them to pay any attention to your "48+2 == 50" statement. They don't even bother to refute it, they just ignore it completely.

For the record, I originally thought all those things about DG stocks that they are touting, but changed my mind when I ran some backtests.

They really and truly believe in their heart of hearts that dividends are free money. Because the only way that what they believe could be true is if dividends were free money. It's a psychological and mental/emotional thing.

I once reasoned that it could not be correct that dividend-paying stocks had better return than the equivalent non-dividend-paying stocks. The stock market is chock full of very smart, very talented, very hungry people who claw for every little advantage they can find. What is the chance that these people would be ignoring a bit of superior risk-free money which they and all their super-computers somehow can't see but which is obvious to small part-time pajama-clad investors?

It's not like David Fish's DGI spreadsheet is hidden from the attention of Goldman Sachs and Blackstone. So why haven't they set up a mutual fund or hedge fund that buys these stocks and achieves the (presumed) superior performance?
rayvt is offline   Reply With Quote
Old 01-26-2018, 04:49 AM   #167
Dryer sheet aficionado
 
Join Date: Aug 2017
Posts: 39
Quote:
Originally Posted by marko View Post
My sentiments exactly!


+1
imokurok is offline   Reply With Quote
Old 01-26-2018, 09:44 AM   #168
Thinks s/he gets paid by the post
redduck's Avatar
 
Join Date: Mar 2005
Location: yonder
Posts: 2,851
Quote:
Originally Posted by rayvt View Post
What is the chance that these people would be ignoring a bit of superior risk-free money which they and all their super-computers somehow can't see but which is obvious to small part-time pajama-clad investors?
Uh, oh, it sounds like you've started peeping through bedroom windows again.
__________________
When the people shall have nothing more to eat, they will eat the rich--philosopher Jean-Jacques Rousseau
redduck is offline   Reply With Quote
Old 01-26-2018, 11:15 AM   #169
Recycles dryer sheets
 
Join Date: Jan 2006
Posts: 324
This thread hit home to me as I was always a DGI investor. I am in Canada and many of our stalwart stocks pay great dividends. Banks, telcos, pipelines and utilities are heavily sprinkle into my portfolio. I always thought how can i go wrong with this stock paying 4% with 2-3% upside I did read about Total Returns being more important but like others ignored it as I thought hey I could live on those dividends down the road.

That was the wrong thought process as a 30 something and it has literally cost me hundreds of thousands of dollars. I have slowly been trying to eliminate my home bias in Canada and buying the world indices which by default moves me from a DGI investor to a Total Return guy. I do not believe a DGI heavy portfolio would soften the blow on any correction - perhaps in the utilities sector it would but that's about it.

The 48+2 poster has it right.
accountingsucks is offline   Reply With Quote
Old 01-26-2018, 12:04 PM   #170
gone traveling
 
Join Date: Dec 2016
Posts: 733
I'm not convinced we have . I've been running several random scenarios with various portfolios against VTI. Some general observations:
1) The heavily concentrated dividend portfolios are producing slightly better results then the VTI. 8.47% Vs 8.17% CAGR
2) The risk of the heavily concentrated dividend portfolios is actually less than VTI, according to the Sharpe & Sorintino ratios.
3) The max draw down is less with the dividend portfolios. 14.73% Vs 36.98%

It would be interesting if we could find the VTI stocks that paid a dividend at the inception of the portfolio and back test an equal weighted portfolio of only those stocks that had the middle of the road dividend payers as mentioned in the paper referenced earlier.

Playing around with this tool. Thank you ERD50! I've been able to get some nice results for lower risk portfolios.

https://www.portfoliovisualizer.com/...nalysisResults
Luck_Club is offline   Reply With Quote
Old 01-26-2018, 12:30 PM   #171
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 23,593
Quote:
Originally Posted by Luck_Club View Post
I'm not convinced we have . I've been running several random scenarios with various portfolios against VTI. Some general observations:
1) The heavily concentrated dividend portfolios are producing slightly better results then the VTI. 8.47% Vs 8.17% CAGR
2) The risk of the heavily concentrated dividend portfolios is actually less than VTI, according to the Sharpe & Sorintino ratios.
3) The max draw down is less with the dividend portfolios. 14.73% Vs 36.98%

It would be interesting if we could find the VTI stocks that paid a dividend at the inception of the portfolio and back test an equal weighted portfolio of only those stocks that had the middle of the road dividend payers as mentioned in the paper referenced earlier.

Playing around with this tool. Thank you ERD50! I've been able to get some nice results for lower risk portfolios.

https://www.portfoliovisualizer.com/...nalysisResults
Did you mean to include your comparisons in that link? What you posted is just a blank starting point. To post your selections, make all your entries, hit the "Analyze" button, and then you need to hit the "link" button that will show up under that.

What methodology did you use to select your div-payers? Hopefully they were selected based on that at the start of your study, not another backwards-looking pick of current 'winners'.

And even at that, a sector may or may not outperform the 'market' over any given time frame. The key for me is, can I easily replicate it, and is it reasonable to expect it to outperform over the long term?

-ERD50
ERD50 is offline   Reply With Quote
Old 01-26-2018, 01:34 PM   #172
Recycles dryer sheets
Snidely Whiplash's Avatar
 
Join Date: Apr 2009
Posts: 204
Warren Buffet makes the an argument against dividends in his 2012 Berkshire Hathaway annual shareholder letter starting on page #19.
http://www.berkshirehathaway.com/letters/2012ltr.pdf

Quote:
Originally Posted by marko View Post
I think where people get stuck is this:
If you own a TR that were to pay no dividends, every time you need cash you must sell from your total fixed set of shares. In theory you could eventually sell down and end up with 1 share. That share may eventually grow to $50K but if you need $50K, then what?
I admit I have a hard time getting my head around this too. I guess its a lack of math skills on my part but how does one refrain from eventually selling the hypothetical total return fund down to a single share? With VFIAX partial shares can be sold to equal a non-share specific amount so I guess its not so much an issue unless you are talking about an ETF or non-dividend paying stock.

(On a personal level, I don't know which of the 2 strategies argued here will do best over the next 30 years, so my personal portfolio has a nice blend of both dividend blue-chip stocks and the S&P 500 index fund)
__________________
"So we will spend 7 trillion on the military over the next decade, assuming we don't start any wars. I for one am very tired of paying for a bunch of overgrown boys to play soldier and then be told there is no money left for stuff that matters."

- brewer12345 on 5 October 2014

.
Snidely Whiplash is offline   Reply With Quote
Old 01-26-2018, 01:48 PM   #173
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 23,593
Quote:
Originally Posted by Snidely Whiplash View Post
Warren Buffet makes the an argument against dividends in his 2012 Berkshire Hathaway annual shareholder letter starting on page #19.
http://www.berkshirehathaway.com/letters/2012ltr.pdf



I admit I have a hard time getting my head around this too. I guess its a lack of math skills on my part but how does one refrain from eventually selling the hypothetical total return fund down to a single share? With VFIAX partial shares can be sold to equal a non-share specific amount so I guess its not so much an issue unless you are talking about an ETF or non-dividend paying stock. ...
I covered this in post #150. Yes, a $1M portfolio of 10,000 shares goes down to 1 share after around 235 years, but that 1 share is worth $1M.

Here's the spreadsheet, scroll down to year 235...

-ERD50
Attached Files
File Type: xls draw down div no div.xls (60.5 KB, 10 views)
ERD50 is offline   Reply With Quote
Old 01-26-2018, 03:10 PM   #174
Moderator
sengsational's Avatar
 
Join Date: Oct 2010
Posts: 8,520
The two stocks in portfolio 1 were actually held during this span of time. Portfolio 2 is total market. One might say I "cherry picked" the specific 6 year span, but it's really the only span I ran. That's the first time I've been to that site. Nice! I really don't know how it would look on other spans. I certainly picked the span with the 2000 bear market in mind because, for my mom and her utility stocks, we don't want to have to wait too many years for the total market to recover.
Attached Images
File Type: jpg myUtilityStocks.JPG (94.2 KB, 30 views)
File Type: jpg myUtilityStocks2.JPG (35.6 KB, 25 views)
sengsational is offline   Reply With Quote
Old 01-26-2018, 03:25 PM   #175
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 23,593
Quote:
Originally Posted by sengsational View Post
The two stocks in portfolio 1 were actually held during this span of time. Portfolio 2 is total market. One might say I "cherry picked" the specific 6 year span, but it's really the only span I ran. That's the first time I've been to that site. Nice! I really don't know how it would look on other spans. I certainly picked the span with the 2000 bear market in mind because, for my mom and her utility stocks, we don't want to have to wait too many years for the total market to recover.
You aren't seriously trying to make a point with a portfolio of two stocks, are you? I'll accept that you actually held those in that time frame, but how does that help anyone else?

I can do that too (no cherry-picking on my part, I just like stocks that start with "A") :

Code:
Portfolio Analysis Results (Jan 1998 - Dec 2017)
Portfolio Returns

#    Initial Balance    Final Balance    CAGR    
1    $1,000,000      $4,181,343          7.42%     VTSMX
2    $1,000,000      $6,165,966          9.52%     DUK,SO
3    $1,000,000    $317,843,833         33.39%     AAPL,AMZN
-ERD50
ERD50 is offline   Reply With Quote
Old 01-26-2018, 03:27 PM   #176
Thinks s/he gets paid by the post
 
Join Date: Mar 2009
Posts: 2,517
[QUOTE=Snidely Whiplash;2003232]Warren Buffet makes the an argument against dividends in his 2012 Berkshire Hathaway annual shareholder letter starting on page #19.

Now that's just funny. Warren makes a ton of money off dividends and preferred shares that the rest of us have no opportunity to share.
__________________
Took SS at 62 and hope I live long enough to regret the decision.
foxfirev5 is offline   Reply With Quote
Old 01-26-2018, 03:47 PM   #177
Moderator
sengsational's Avatar
 
Join Date: Oct 2010
Posts: 8,520
Quote:
Originally Posted by ERD50 View Post
You aren't seriously trying to make a point with a portfolio of two stocks, are you? I'll accept that you actually held those in that time frame, but how does that help anyone else?
Probably doesn't really help anybody except for me and my mom. My dad was an "individual stocks" kind of guy and he left my mom with these utilities. I had them too, gifted to me. Now he's gone and mom has zero experience, so it fell to me to review her investments. I could have gone in and revamped the whole thing, or I could convince myself that maybe my Dad's picks will hold up ok in a down-turn and wouldn't be leaving too much on the table. With the lack of proof for dividend stocks that has been the major topic of this thread, I became concerned. But the analysis here seems to lump all "dividend stocks" into one bucket and that provides the "answer" that you've clearly identified: total return. But someone else might be helped knowing that certain subsets of dividend stocks might have a reasonable total return, lower beta, or some other measure that is sought.
sengsational is offline   Reply With Quote
Old 01-26-2018, 03:58 PM   #178
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 23,593
Quote:
Originally Posted by sengsational View Post
... But someone else might be helped knowing that certain subsets of dividend stocks might have a reasonable total return, lower beta, or some other measure that is sought.
Only if we have a time-tested proven method for picking those stocks in advance, and in all sorts of markets. I think that could be done if you are looking to give up one factor for another (like trade total return for stability - but maybe that's best done with bonds and AA?).

I keep asking for evidence of that, and I have not seen it.

Or to turn that around for illustration - does it help anyone to know they could have made a fortune in AAPL and AMZN? Not now.

-ERD50
ERD50 is offline   Reply With Quote
VTI compared to DIV Payers
Old 01-26-2018, 04:15 PM   #179
gone traveling
 
Join Date: Dec 2016
Posts: 733
VTI compared to DIV Payers

I can't do the cool graphics, but like Sengsational, I just grabbed a few bell weather stocks, and plugged them in.

My picks vs VTI

VZ, ED, PG


VTI came out in 2001, so what was the composition in 2001?
Luck_Club is offline   Reply With Quote
Future Portfolio Picks
Old 01-26-2018, 04:40 PM   #180
gone traveling
 
Join Date: Dec 2016
Posts: 733
Future Portfolio Picks

Quote:
Originally Posted by ERD50 View Post

I keep asking for evidence of that, and I have not seen it.

-ERD50
So over the past few weeks I have been trying to figure out how to redeploy some money. The money is divided about 50/50 in taxable and IRA accounts. This had me doing substantial back testing against VTI. Some of these holdings have been in my portfolio for some time, and some are recent picks.

Needless to say portfolio analyzer tool has helped tremendously in giving me the confidence to go this way. As mentioned earlier I did back testing against the VTI, along with some adviser based portfolio. The surprising thing is that the risk is lower and the returns higher with my picks vs the Adviser or VTI by itself. This took some massaging of the data because some of the picks are new funds like INDA & SCHD, but both fit with my thoughts on broad economic and global trends.

Taxable account
PYMDX 50%
FOHFX 25%
FTABX 25%

IRA Portfolio
SCHD 50%
FHMKCX 10%
INDA 10%
MAPIX 10%
ED 10%
VZ 10%
Luck_Club is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
When to sell dividend paying stocks tcaron20 Active Investing, Market Strategies & Alternative Assets 50 02-10-2017 10:01 AM
Help setting up a dividend paying portfolio calichica Young Dreamers 21 12-02-2013 04:26 PM
Dividend paying Stocks swodo FIRE and Money 117 08-26-2011 07:52 AM
Ultimate Dividend Playbook; Dividend Harvest Portfolio FUEGO FIRE and Money 22 08-12-2008 11:16 AM
Suggestions on Dividend Paying ETFs? camberiu FIRE and Money 5 01-15-2007 04:44 PM

» Quick Links

 
All times are GMT -6. The time now is 10:52 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.