Income Portfolio

[rayvt]

Yoc IS.IS.IS a metric for some stocks. What is untrue about the math, the metric?

It has already been said upthread. When it comes to dividends, your stock does not know what you paid for it.

You cannot compute with dollars at two different points in time. It is not meaningful to divide today's dividend by the 10 years ago price.

If the stock pays $1 dividends and Sam bought 100 shares at 20 last week whereas Fred bought 100 shares at 10 five years ago---the stock still pays $1 dividend.

YOC doesn't matter because stocks do not pay yield, they pay a dividend. One share pays the same $1 regardless of the price you bought it for. Or regardless of how many years ago you bought it.

All YOC is, is a meaningless number to make you feel good.

 

[tulak]

Yes, but the title of that article is "20 Dividend Stocks to Fund 20 Years of Retirement". And that is what pb4uski's chart showed - buy & hold.

And you are right, if their picks from 20 years ago did well, it could be due to chance. I'd like to see 20 years of 20 year picks.

I know there are a number of people on this forum - ones that wisely avoid threads like this - that are 100% equities and have done well. I don't think any of them are strictly buy/hold. That would be silly. Have they done better than total return? Maybe, maybe not. I'm sure they're happy with their results though, otherwise they'd do something different.

The problem for me: it's a lot more work. In order to do this myself, I would have to spend time working (researching) companies that I believe have solid balance sheets and better than average long-term prospects. And then I might not have a knack for it. That's where investing for total return is easier. It's mechanical and requires little thought once established. I do believe they have one advantage: they are willing to go to 100% equities, which is harder to do when you invest for total return.

 

[ERD50]

Originally Posted by ERD50 View Post
Yes, but the title of that article is "20 Dividend Stocks to Fund 20 Years of Retirement". And that is what pb4uski's chart showed - buy & hold.

And you are right, if their picks from 20 years ago did well, it could be due to chance. I'd like to see 20 years of 20 year picks.

I know there are a number of people on this forum - ones that wisely avoid threads like this - that are 100% equities and have done well. I don't think any of them are strictly buy/hold. ...

I think you are missing my point, sorry if I wasn't clear. In that comment, I'm not advocating for or against buy and hold. All I'm saying is that the stunning performance that was shown in the graphs was based on buy and hold.

So, for that performance to have been realized, someone would have had to known in 1998 to buy those stocks and hold them until 2021. But in that article, Kiplinger's is recommending them in 2021, for the next 20 years. So we won't know for 20 years if those were good picks.

So I'm curious if they routinely make these suggestions, and what their record is. I'm guessing no better than the funds that try to do this?

-ERD50

 

[rayvt]

Actually, I have a perfect example in my own portfolio.
I bought NYMTO, a preferred stock, two different times at two different prices. NYMTO pays $0.4921875 querterly dividend.
My YOC on one lot is 8.0% and my YOC on the other lot is 24%.

Yet each share pays $0.4921875. What information does this YOC provide me?

I can change the YOC of the 2nd lot to 7.97% right now by selling it and immediately buying it back.
I could have changed the YOC of the first lot if I had sold it and immediately bought it back when I bought the second lot.

If I decide to sell half my holdings, how do I decide what my resultant YOC is? A share does not know what price I paid for it. If I mentally decide that I am selling the 1st lot, then my resultant YOC is 24%. If I mentally decide that I am selling the 1st lot, then my resultant YOC 8%.

This illustrates how YOC is meaningless. I can change the number just by the way I think of it.

 

[ERD50]

But your data is (intentionally I suspect) neither accurate or meaningful ERD50.

And what is inaccurate or not meaningful? And why would you suspect it to be intentionally so?

That's a rather unkind accusation, I'd expect some examples to help make the point, if there is one.

-ERD50

 

[tulak]

I think you are missing my point, sorry if I wasn't clear. In that comment, I'm not advocating for or against buy and hold. All I'm saying is that the stunning performance that was shown in the graphs was based on buy and hold.



So, for that performance to have been realized, someone would have had to known in 1998 to buy those stocks and hold them until 2021. But in that article, Kiplinger's is recommending them in 2021, for the next 20 years. So we won't know for 20 years if those were good picks.



So I'm curious if they routinely make these suggestions, and what their record is. I'm guessing no better than the funds that try to do this?



-ERD50

I get it, but I don’t think it’s that interesting. Sorry!

I will say why though: there’s plenty of evidence that these recommendations are trash. Even if they’re right sometimes, it’s not reliable. If you’re going to buy individual stocks - specifically for dividends - then you should do your own research. In that case, you might do well, possibly better than total return, but odds are that won’t matter as long as your portfolio gives you what you want (enough cash in dividends for your WR).

It’s quite possible that total return will do better - as you’ve shown, the data indicates that this is true - but most people aren’t going for the largest balance. Behavioral finance is interesting.

 

[someday soon]

I'm a bit late to this party, but just wanted to add that it's not impossible to swap in 7 other dividend-focused funds in this thread's PortfolioVisualizer exercise ( see #57 & #66 ) and beat VTI over time.
Granted, it's a bit of a rear view mirror exercise for sure, but try these out:
HQH
UTG
PTY
RQI
JPS
ETO
RNP
Like ERD50's original selection of 7 funds, the time frame of the resulting PV analysis is limited by the start of the 'youngest' fund, which in this case is 2004.
I'm certainly not saying that I could have picked all those in '04 (!!), or that those picks would fit everyone's investment profile before or after retirement.
It's merely an example set of dividend/income funds that demonstrably beat the odds ...at least one possible set, anyway.

 

[target2019]

I can honestly say I have treated other posters the same or better than they have treated me/others.

How about you?

I agree with you. You've been triggered several times and that is just what some do on forums. In the old days we were instructed "Do not feed the trolls." It really is the best advice. The arguments about dividends are plentiful. Nothing gets resolved. I use elements from both strategies to suit our needs.

I always learn one new thing from a dividend thread, at least in the early stages. So I thank you for mentioning your strategy and picks.

 

[braumeister]

Thanks for the interesting discussion.