24601NoMore
Thinks s/he gets paid by the post
- Joined
- Dec 8, 2015
- Messages
- 1,166
OP - I understand your strategy, but as someone who at one point in time made a lot of my decisions based on projected yield to cost would suggest some caution also..there have been plenty of examples (GE, CTL, Enron, KMI, the list goes on) of companies that paid high dividends for a very long time - and then either went splat (eg: Chp 11) completely or significantly cut their divvy (CTL).
CTL was the one that really hit me hard and cost me over $7K a year in expected RE income. And that's after management swore up one side and down the other that they were "comfortable with the dividend" going forward. Less than 60 days later, they cut from ~$2.16 a share divvy to $1 / share. Learned a hard lesson there, as it appeared based on past payment history for a very long time (decades) that the divvy was at no risk. Wrong!
Capping each investment at no more than 2% certainly reduces your risk, but I can't imagine what it must take to track and administrate a portfolio with that many moving pieces. I have < a dozen CDs and similar number of funds, and even that is one heck of a bear to manage, especially at tax time..
Good luck with the approach.
CTL was the one that really hit me hard and cost me over $7K a year in expected RE income. And that's after management swore up one side and down the other that they were "comfortable with the dividend" going forward. Less than 60 days later, they cut from ~$2.16 a share divvy to $1 / share. Learned a hard lesson there, as it appeared based on past payment history for a very long time (decades) that the divvy was at no risk. Wrong!
Capping each investment at no more than 2% certainly reduces your risk, but I can't imagine what it must take to track and administrate a portfolio with that many moving pieces. I have < a dozen CDs and similar number of funds, and even that is one heck of a bear to manage, especially at tax time..
Good luck with the approach.
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