How A Two-Sided Dividend Portfolio Can Achieve Both Dividend Income And Growth

Special note by Dividend Mantra: This is a guest post by Mike, aka The Dividend Guy. He’s authored The Dividend Guy Blog since 2010 and manages portfolios at Dividend Stocks Rock. He is a passionate investor.

I’ve been a long time reader of Dividend Mantra since the very beginning (2011!) because we both share a passion for dividend investing. When I started blogging about dividend stocks back in 2010 (when I bought The Dividend Guy Blog), there weren’t that many investors blogging about this type of investing. Now that bonds and CDs are paying yield less than the rate of inflation, dividends has been the buzz word over the past three years. Most retirees (read pension funds!) looked at how they could generate a steady income stream without jeopardizing their nest egg. This is why a regular dividend paying stock like Procter & Gamble (PG) saw its P/E ratio going from 14-15 back in 2010 to over 20 in 2014:

dividendmantra01

Dividend stocks rose from 2009 to 2014 for two reasons: the economy was slowly coming back bringing higher sales and revenues but the appetite for steady income such as dividends grew so much that we are currently willing to pay a premium for a rock solid dividend stock. Some even talk about a dividend bubble…

But now that the easy money is gone, it has become more difficult to find great dividend growth stocks at a reasonable price.

 

What I Look for as a Dividend Growth Investor

Investing in the stock market has never been an easy task. It seems easy when you are in a bull market like right now, but it gets a lot tougher than when you go through one of those “2008 market mayhem” conditions. This is why investing new money in the market right now is hard: you want to make sure you buy companies that will successfully endure a recession and keep paying their dividends. This is the main reason why I’ve built my own strategy with a two sided dividend portfolio.

Call it “philosophy”, “strategy” or “process”, I call it my dividend growth model. What I’m after is: a long term portfolio showing strong dividend growth. Prior to 2010, I was an “aggressive” trader with a great appetite for risk. After actively trading from 2003 to 2006, I sold my portfolio and bought my first house with $50K in trading profit. Oh… I started in 2003 with $0 in my brokerage account and a line of credit of $20,000. I “converted” to dividend investing because I wanted to have something more stable… and because I had lost 50% on a penny stock trade! I like the stability that dividend paying companies bring to a portfolio but I was still hungry for high returns. This is why I focus as much on dividends as I do on growth.

For example, I selected Disney (DIS) for my own portfolio paying a small dividend yield of 1% but it surged by 207% from 2009 to 2014. During the same period, DIS dividend payouts grew by 145%. This is what I call growth.

dividendmantra02

Enter the Two-Sided Dividend Portfolio

In order to satisfy both my appetite for higher returns and stability, I’ve decided to divide my dividend portfolio into two kinds of investments: One side with higher capital gain potential and one side with the classic buy-and-hold-forever blue chip dividend stock. Therefore, while I build a solid core portfolio with stable companies, I also add some spice to my holdings with stocks I can buy and sell within a 12 to 24 months period.

Here are a few examples of stocks I bought and sold for a healthy profit: Seagate Technology (STX), Intel (INTC), Husky (TSE:HSE). More recently, I bought shares Apple (AAPL) and Gluskin & Sheff (TSE:GS) based on the same principle: there are stocks providing both dividend growth and stock appreciation over a short period of time. If I had to design my dividend growth model on a piece of paper, it would look like the following:

dividendmantra03

The Core Portfolio Model

I built my core portfolio based on a very strict set of investing rules. I’ve been building this “investing code” over the past four years and had modified it slightly to reflect the current market. In order to select stocks that will be part of my core portfolio, I use a similar filter as the one creating the DSR Premium Stock list:

Dividend yield over 2.50%

Dividend payout ratio under 80%

3yr/5yr Dividend growth positive

3yr/5yr EPS growth positive

3yr/5yr Sales growth positive

P/E ratio under 20

 

When I first started investing in dividend stocks, I was looking for a higher dividend yield (3%+) and lower P/E ratio (under 17-18). But now that the market has surged for almost five years now, I have no other choice to become less picky with dividend yield and more lenient with P/E ratio. After all, who would not pick Johnson & Johnson (JNJ) right now even if the dividend yield is 2.73% and the P/E ratio is close to 19? This company has great years to come and I want to be on that boat!

The first three criteria help me understand where the dividend is going with this company. At best, I will pick a company with a 50%-60% payout ratio but I will consider a company up to 80%. In both cases, there are still room for payout increases in the future. Then, I combine the 3 and 5 year dividend growth, EPS and sales on the same graph. I look to find similar trends between the three metrics:

dividendmantra04

This is Telus (TU on the NYSE or T.TO on the TSE) chart. All three metrics are following pretty much the same trend.

Overall, my core holdings are meant to follow the traditional dividend investing approach which is buying at a reasonable price, holding for several years and cashing an ever growing dividend payout. However, I keep running my rules against my current holdings to make sure they meet my minimum requirements. If a company starts to lag with its financial results, the stock is put on the watch list for a sell. I try to identify the reason for the slowdown and will sell eventually if I lose faith in management.

The Dividend Growth Stock Additions

As I mentioned previously, because I find buy-and-hold boring, I also decided to pick a few stocks that do not meet my set of rules. This is what I call the “dividend growth stock additions”. They are being added to my portfolio as a “second” side to my dividend growth holdings. These stocks must pay a dividend and follow most of my investing rules. But they are allowed to skip a few requirements in exchange for a bigger growth potential.

You can take Seagate Technology (STX) as a great example. After an important flood in Taiwan, the stock sank and was trading at a ridiculous P/E ratio (as low as 3!). There wasn’t a great future ahead and most investors got off the boat early. I waited a few months and started looking into the company when it was back in production. I decided to take the bet and bought it in 2012:

dividendmantra05

Which Trigger I use to Sell in my Portfolio

I find selling stocks in my core portfolio easy. If a company doesn’t follow my set of rules year after year, I put it on a watch list and am pretty fast to pull the trigger to buy a more compelling company. For example, I sold Chevron (CVX) in July 2014 to buy more Apple (AAPL) and Johnson & Johnson (JNJ). While both AAPL and JNJ show strong sales and profit for the future, Chevron is stagnating on the sidelines.

But selling a winning pick such as STX is not an easy task. I remember at the time I sold; Seagate was up by more than 60% in my portfolio and paying close to 7% dividend yield based on my cost of purchase. Why did I pull the trigger then? The growth potential started to fade with a stock at $40. Once the stock reached $40 in 2013, the company was posting negative growth for sales and earnings:

dividendmantra06

Since I was making a healthy profit, I put a stop sell at $40 when the stock was at $42. STX hit $40 not so long after and the cash was deposited in my account; ready to be used for the next stock on my watch list to buy.

The stop sell is my best selling tool. It protects my return and makes the decision to sell without involving my emotions on that day. Most of the time, I realize the stop sell went through the day after the sale. By putting the order through my broker account, I avoid the risk of “giving a second chance” to a stock on a losing trend. The stop sell is triggered upon the fact that I don’t see the potential growth I saw when I first buy the stock.

For example, I saw a buying opportunity in Apple (AAPL) when the stock was trading around $450 (now the equivalent of $64 with the 1:7 split). I bought the stock at that time and I keep riding the wave right now because I can still see the potential as sales are rising again. At one point, if the company fails during the innovation process to bring more growth to the table, a stop sell will be put in place close out the trading price. If I’m wrong, the stock will continue to go up and I won’t have to worry. If I’m right, my profit will be protected.

Number of Transactions per Year

My dividend growth model doesn’t imply many transactions per month. In fact, I usually make about 5 to 8 transactions per year as I’m still building my own portfolio. My DSR portfolios will likely include less transactions than that. I don’t believe in actively trading dividend stocks as you pass by their most attractive asset: dividend payout growth! However, a great company today doesn’t mean it will continue to be a great company forever. It is also true as many companies become great buying opportunities over time.

Final Thoughts on my Dividend Growth Model

As you can see, I didn’t reinvent the wheel with my investing approach. The point of having two sided portfolios enables me to generate higher growth than the market along with a more than reasonable dividend payout. I hope to retire young with my dividend holdings as a key point in my financial plan. This is how I built and manage twelve portfolios based on your country (6 US and 6 Canadian) and the amount you have to invest (going from starter to 500K+). The 12 DSR portfolios are managed based on my experience and inspired by my own dividend growth model; a simple but effective strategy.

Looking for Help with Your Portfolio?

You can be a newbie or an experienced investor, sometimes, a little bit of help is a good thing. The point is to know where to get high quality info that will allow you to save time and make the right investment decision.

Running stock screeners and making a list of interesting stocks is easy. But then, you have to dive into the financial statements and look for details in order to pick the best stock from your list. This is usually the boring part for most people who don’t like investing that much. This is why I’ve created rock solid portfolio models, investors can follow in real time on my investing platform; Dividend Stocks Rock. Ten out of twelve portfolios were created on October 1st 2013 and I have seven beating their benchmarks.

Along with the portfolio example, I even give away my pre-screen lists of dividend stocks along with a bi-weekly newsletter, 100% about dividend stocks.

If you have any questions in regards to my dividend growth model, please leave a comment below and I’ll be more than happy to answer back!

Cheers,

Mike

The Dividend Guy

Note: Includes affiliate links.  

Comments

  1. says

    Thanks for the write up Mike. Your post reminds me of Warran Buffett’s assertion that “growth and value are joined at the hip”. Your Interesting screen, too.
    -Bryan

    • says

      Hey Bryan,
      Thx for your comparison with Buffett :-) I think too many investors focus either on dividend yield or pure growth. I believe a mix of both can generate a very interesting return. So far, it has worked for me anyway :-)

  2. Dave says

    I use the 3 legged approach, that I have mentioned before.

    1/3rd low dividend, high dividend growth, low payout ratio (stocks like CB, GD)
    1/3rd mid dividend, mid dividend growth, mid payout ratio (stocks like CLX, PG)
    1/3rd high dividend, low dividend growth, mid-high dividend payout ratio (stocks like T, VZ)

    • says

      Hello Dave,
      I’m curious to know which part of your portfolio is the best performer? Have you been investing like this for a while? Besides yield, what are you other buying criterion?

      • Dave says

        The first tier has been performing the best. I have been investing since 2008 with this method. Other is did not cut or freeze dividend during the last recession. 2nd tier is ok – 3rd tier is kind of flat.

  3. says

    This is a really great article detailing how you analyze and decide to buy and sell stocks. I like that you are willing to take risks on growth stocks and also put in stop losses to keep those profits on the riskier stocks.

    • says

      With a solid core portfolio, it’s easier to take risk with a few numbers of stocks for additional growth. So far, I’ve been lucky as I didn’t lose money on my riskier positions. I’m well aware this may happen when the market goes bearish… but I don’t think it will happen anytime soon (even considering July-August that are not very good so far).

  4. says

    A good solid article with sensible concepts. I do especially like the ‘Dividend Growth Stock Additions’ though which allows for some small rule-breaking additions that have the potential to be huge. Balanced against a strong core holding, this gamble can be well worth the risk.

    Personally I’m currently in the very firm buy-and-hold camp at the moment due to only just starting my funds, however once the base holdings are a bit higher I might consider some riskier additions.

    • says

      I’ve started with my set of rules but find it boring (just buy, hold and wait) so I had to find a way to keep me motivated to manage my portfolio :-) hahaha!

      The best investment are usually the one who doesn’t fit perfectly in a conservative investing model (as most people will buy stocks who show only good metrics). However, the risk is higher with this part of my portfolio. I also see those stocks going up and down big time while others are more stable.

    • took2summit says

      You know I couldn’t agree more. I am pretty disappointed to see a post like this on dividend mantra. It advocates swing trading, trying to outsmart the market, and overall has nothing to do with what we are trying to accomplish. On top of that the STX example is just a laugh all together.

      Just my 2 cents.

      • says

        Hey guys,
        swing trading/cherry picking stocks? seriously? I don’t mean to plug an article I wrote in the past, but you can read that I truly bought STX in July 2012 based on my investing model; you can see the proof here:
        http://www.thedividendguyblog.com/2012/07/23/seagate-technology-stx-dividend-stock-analysis/

        The biggest part of my portfolio is based on a solid core model but adding a few riskier picks allowed me to generate additional growth and beat my benchmark for the past three years. I’m sorry you see this as an advertisement as there is more to get from this article.

        • took2summit says

          I’m not trying to start an argument. I bought BAC at $4…I would NEVER use that as an example to educate a community about passive investing and growing income through rising dividend streams. Even though I actually did buy it and I am not just making something up..it just serves as a very poor example of what we are trying to achieve..

          • says

            I don’t want to start an argument either, I just wanted to clarify that I wasn’t cherry picking nor buying/selling actively either.
            This is why I clearly mention I’ve built my core portfolio based on the traditional buy&hold dividend investing approach. Plus, buying a stock, putting a stop loss and selling after a period of 12-24 months is not really swing trading in my opinion.
            It may happen that I would sell a stock after 2 years even thought I thought I would keep it forever. Right now, I hold MCD for example, but what if it keeps losing market shares and show inability to renew with growth over the next 2 years? chances are I would be better off selling MCD than keeping a losing stock forever in my portfolio.

        • says

          I’m not saying you didn’t make the purchase of STX but of course it’s cherry picking. This was probably your best, or one of your best, stock picks and you used this purchase as an “example” (your words) in your article and made it appear as though it’s representative of your stock picking ability. Anyone can pick a bunch of stocks and have a few that do great. What you did was take your outlier and passed it off as what a subscriber to your services can potentially expect to gain by paying you for a subscription, aka cherry picking. What wouldn’t be cherry picking is if you disclosed what your portfolios returned as a whole. That would be a whole lot more transparent and useful, but it surely wouldn’t be as impressive as your 60% 1-year return on STX, which is why you went with the STX example instead.

          • says

            This article kind of rubs me the wrong way and feels out of place for this blog. One of the most appealing features of dividend investing is it’s simplicity. Purchase your income. Keep an eye on the companies, and don’t sell unless there’s some kind of major problems. Enjoy your freedom. Period. Congratulations, you’ve found the goose that lays the golden eggs. Don’t sell the goose. This post takes a hard right from this simple and effective philosophy that is usually preached here. Nothing against the poster, there’s some good info in the post, but not something I’m going to try.

          • says

            Randall,

            all my picks are available on my blog. I thought that posting my 25%+ return on all stocks I’ve sold so far using this strategy would just seems like overselling. Last year, my picks for 2014 beat VIG by 11% and I’ve been beating my benchmark since I started dividend investing, I don’t think it’s relevant to list all my trade in a guest post. Some already saw it as an advertisement and didn’t look into the strategy that was offered in the post. listing all my trades would have just be overselling then.

            Cheers,

      • says

        took2summit,

        Sorry to disappoint. I obviously take the content here very seriously. People probably aren’t aware of this, but I get multiple offers for guest posts and paid sponsored posts just about every single day. And you can see there is a dearth of such posts here because I’m highly picky about the guest posting I allow because I want the content to be of high quality.

        I allowed Mike to post because he’s a fellow dividend investing blogger, has been doing it a while, and has always been kind and generous to me. He proposed a different take on things, and I think it’s cool to mix things up every once in a while. Sorry this wasn’t your cup of tea.

        Cheers!

        • says

          Agree with the above posters. Getting “bored” with any type of investment is an easy way to break rules and make stupid decisions. The stop loss sale of seagate at 40 had no rationale whatsoever other than to lock in profits. Why 40 and not just 41.99? That cherry picked example didn’t mention the fact that seagate is at 56 now on the back of continued earnings growth, extremely prudent buy backs, and a strongly growing yield.

          I stopped reading mikes blog when I made a comment about him intermixing words such as yield with regards to capital appreciation and dividend yield and there being no proper differentiation. These are non trivial items for people trying to learn. Especially since it’s obvious that he’s most likely 50% an investor and 50% a trader, and following his advice will get folks in trouble.

          You can do better, and you almost always do Jason!

          • says

            Sydog,

            Appreciate the feedback very much!

            Mike definitely has a different approach. It’s not one I use, but from the comments it looks like some do.

            I don’t personally use a stop loss in my portfolio. I look at those like a stop gain. If the fundamentals are sound I’m much more likely to buy than sell, but I can see how Mike’s strategy has merits as well.

            Cheers!

          • says

            Sydog,

            I explain the reason why I sold STX in this article; both revenues (-4.36%) and earnings (-6.03%) are going down since 2012 and I don’t see STX going in the right direction for the future. The stock kept rising, I give you that, but it’s based on speculation and the fact that we are in the middle of a bull market.

            the reason why I put a stop sell at $40 when the stock was slightly higher was simply to protect my profit after a point that I would sell the stock since STX wasn’t showing growth potential anymore. I use a stop sell instead of selling the stock right away in case I’m wrong and the stock keeps going higher. In this case, STX dropped too fast and triggered the sell. This is what happened.

            But would not buy STX at the moment, would you?

  5. says

    I assume you are watching TGT these days. Do you have a point at which you believe Mr. Market has made it attractive enough for you to put extra capital into that business?

    • says

      Hello Chris,
      I like TGT dividend profile (good yield, dividend payout increasing while payout ratio is very reasonable) but I’m a little concerned about their sales and profit. Revenues are only up by 11% over the past 5 years (total increase, not annualized) and EPS dropped like a rock over the past 12 months (-6.97% compared to 5 years ago). With a PE ratio near 20, it seems the stock has been put to a more reasonable price (it was definitely overpriced).

      Before entering TGT, I would wait to see signs that sales and EPS will go up. They are also struggling with their Canadian division, it seems to be a big hole in their pocket right now… I think the key here is to see when the company will show growth in sales and EPS. Then, I would buy.

      I hope this helps!

      • Brian says

        Agreed about the struggling with the Canadian division part. I keep hearing about the empty shelves in their stores in Canada and how they don’t understand the difference between the Canadian & American consumer. I went into a Target Friday to buy men’s slippers & Scotts Turfbuilder, and was told by staff they had neither, so I went down the street to Walmart and bought both, with plenty of stock on hand. I don’t care what side of the border you live on, these are pretty basic items to carry. As Warren Buffett always says, I only buy stock in a company where I understand their business model. I guess I like to look around at a business & say to myself, is this a good business & are the customers enjoying the experience of dealing with this business. My answer is no for Target, and for me, I can see why their stock price has faltered. Their business model has faltered.

  6. says

    Thanks for the insight Mike! I’m still working to build my core DG portfolio up but once I get the core fairly settled then the plan is to start adding a bit more growth. I’ve already started doing that some with V and SBUX but there’s still room for more growth parts. Although we’ll see how that plays out because I love buying dividend growth stocks!

  7. says

    Nice article Mike. This is similar what I have been doing with my portfolio. I hold stocks that pay 0 to very low dividends, but have higher growth potential for capital gains (CMG, GOOG, AAPL – I purchased them before they were paying dividends etc). And I also hold solid dividend companies that are buy that fall in buy and hold category (PG, GE, MCD etc).
    I believe this works great especially if you are in it for the long-term.

    DGJ

    • says

      Hello DGJ!
      I didn’t know about your blog, I’ll add it to my reader! It seems there are tons of new dividend blogs around, it’s good to see this investing strategy is getting more attention!

  8. Zol says

    It’s funny. Having learned how to properly value a company and analyze it fundamentally it’s a lot easier to see where i went wrong early in my investing career by analyzing my past mistakes. Ultimate plan is to build 70% DGI 30% growth portfolio and i’ve been dipping my toe in the latter to learn the ropes. Great article and i like the guest posts idea, spices things up :)

  9. says

    Thanks for sharing this article. Very good ideas about 2 sided dividend portfolio. I’m certainly doing something similar but may incorporate your strategy.

  10. says

    Mike,

    Thanks for the very informative article. Most of the companies I buy are DJIA components. This may be off topic, but have you ever looked into the Dogs of the Dow strategy? I picked up the 5 small dogs (INTC, CSCO, T, PFE, GE) this year (lowest price of the 10 highest yielders). I know this is a niche type investment strategy but it has been a pretty good way of picking up undervalued stocks with strong yields. I actually just sold off my Intel shares because of continuous dividend freezes, but it is actually the best performing Dow compononent. Now if only I get GE and PFE out the cellar. :-)

    MDP

    • says

      Hey MDP,

      I’ve looked into it and it seems to work somehow. However, I don’t feel comfortable using this strategy as it seems “too simple” to trade and sometimes, there is a reason why the stock underperform and it might now come back!

      But it’s probably a good entry point when you look to buy one of these companies for other reasons!

  11. Monty says

    I honestly am not a fan of this strategy. Just buy the S&P500 and be done with it. I can see some logical points to DGI investing over indexing, but this makes little sense imo. The main thing is you are saving money and enjoying the process, but indexing would definately be a better option than what you are preposing. Thanks for the article either way and best of luck.

  12. Tee says

    Interesting post and strategy. I get the same itch you do with the buy and hold strategy. I enjoy dividend investing, but occasionally sell calls and puts to make extra premiums and spice things up a bit. Admittedly, it’s not always the safest approach nor does it always pay off.

    I’m curious, what stock screener or criteria do you use to select dividend growth stocks?

    • says

      Hello Tee,

      I use the following to start my research:
      • Dividend yield over 2.50%

      • Dividend payout ratio under 80%

      • 3yr/5yr Dividend growth positive

      • 3yr/5yr EPS growth positive

      • 3yr/5yr Sales growth positive

      • P/E ratio under 20

      then I dig into financial statements to read more about the “story” of the company.

  13. says

    Jason,
    Long-time fan/reader of your blog, as you know. Your blog is my absolute favorite. Personally, I did not find this post as interesting nor as informative as the ones you write yourself. I do think guest posts can sometimes be great/helpful, but would be more interested in a guest post from someone who is part of the community here (those that regularly comment who can tie back their guest post to the community on Dividend Mantra and the lessons that you personally share). Just my 2 cents. Overall, cannot thank you enough for your amazing writing and ongoing insights/motivation around dividend investing. Keep up the great work!
    Sincerely,
    Ian

    • says

      Ian,

      Thank you so much for the constructive feedback. As you know, I take all of it very seriously. :)

      I don’t allow a lot of guest posts on this blog, as you probably know. Mike thought he could bring something different to the table, and I figured everyone could use a break from me blabbing. But I understand how this isn’t everyone’s cup of tea. To be honest, it’s not mine either. But I also know there’s more than one way to make money in life. I figured this might provide value to some readers.

      I actually have another guest post coming up over the course of the next week, which is quite unusual for me. But I think you’ll like this next one a lot better.

      Thanks for stopping by. Really appreciate the critique.

      Best regards.

  14. says

    Mike,

    Great article! I also think one should look for value and manage take on some new ideas. Can minimize but not eliminate risk completely. I do not like selling my stocks much at all though. I am now a dividend investor and reinvesting the dividends. I have had quite a few stocks I bought deeply undervalued. For example, I sold what I bought of AAPL at $93.68 years before he split. I like to watch winners run. I just bought MPC last week and it ran up $8+, but I could not afford many shares. If I had more capital I would have caught more huge gains then I have now

    You can use options too for high risk/reward sometimes if you feel strongly one way and want to spend less to control more shares.

    I’ll have to start following your blog more

  15. says

    If that strategy works for you Mike more power to you. I think that its great you found a system you are committed too. Call me old fashion but I just buy, hold, and DRIP companies that I know will stand through the test of time disregard what Mr. Market says. I know there are different models out there that would completely ignore my strategy or even antagonize it. Truth be told, I have better things to worry about than if the Market is a raging bull waiting to go bear vice versa. I truly do believe there are many different investment strategies and most of them will work if they are followed consistently over a number of years and through different investment cycles. With all that being said, i appreciate the article it was a good read and nevertheless I learnt something new.

    Take Care
    Ace

  16. Spoonman says

    Thanks for the article, Mike! I love it. It’s sort of like Dividend Pr0n =).

    I’ve been hesistant about adopting a strategy such as this up to this point, but I may adopt it in the years to come. I love the diagram, it captures the essence of the strategy very nicely. The cool thing about this approach is that it relies on a reliable core that acts as a “low pass filter” (work jargon) and smoothens returns.

    I like the the idea of guest posts, it adds more spice to the DM experience!

  17. Mike H. says

    Nice article. Good on you for buying Seagate and enjoying the run up. A point of correction though, the floods were in Thailand and not Taiwan (check your geography!). I work for a supplier to Seagate and had to rebuild the factory following the floods :-)

    Also you should check out how the stock price of Western Digital has performed. They have been raking it in since the flood starting 2012 but it wasn’t until they started paying growing dividends that their share price took off, up 200% in the past 2 years!

    -Mike

  18. paperboy says

    I think we all agree on the benefits of dividend investing. Mike’s strategy reminds us that we should have entry and exit points for investments as needed. In addition, sometimes you have to explore different investing methods to refine your investing skills.

    • says

      Josh,

      Thanks for the kind words! Appreciate the support. :)

      Apologize if Mike’s post came across like that at the end. I didn’t catch it, and it wasn’t my intention to post a sales pitch.

      Cheers!

  19. says

    Mike,

    I like your idea of 2-sided portfolio, in fact, I’ve got 4 Portfolios on my blog that uses different strategies of dividends, that includes high-dividend as well and I can add some risks into the mix considering my time frame and overall portfolio. It serves as a crucible for me to determine which strategy performs better over a long-term and for every one to see in real life.

    Your strategy is working for you for a while, so, keep at it!

    PIM

  20. Dividend Diplomat says

    Dear Jason, I found this post at odds w DM philosophy. It could be quite confusing for a newbie. I like the idea of a guest column, but maybe someone like the dividend growth investor or MMM it Tim Mcaleen. I applaud you taking a risk. best, DD

    • says

      DD,

      Thanks for the feedback and constructive criticism. I’ll definitely keep it mind for future guest posts, which don’t occur often here. :)

      Appreciate the ongoing support very much!

      Best regards.

  21. says

    Hi Mike
    Thankyou for the overview of your approach.
    I have followed a similar approach over the last 7 years.
    It is not for everyone, but it works for me.
    The bulk of my portfolio is in Dividend growth stocks, consisting of a mix of lower yielding, high growth to higher Yield slower dividend growth.
    A smaller portion consists of funds invested opportunistically using a value and growth based approach.
    A portion of the gains are invested into the core dividend portfolio, and the DRIP adds as well to a growing income

  22. Lou says

    It’s funny how many experts are out there during the greastest bull market in memory.

    Stocks have risen for the last 4+ years, so now the poster will change his rules and severely relax his mathematical standards??

    Everyone talks of Buffet, but few understand him. Also, what about Charlie Munger?? … “you buy when the market irrationally gives you a sale or a great investment. But most of the time you do NOTHING!!” (ie. save up cash and wait patiently)

    Also funny how this poster gets a pass on his stategy by “the management”, but other posters get disagreed with immediately by the same. over and over, post after post.

    That’s what I have a problem with. This blog is a great one to read, but is getting more inconsistent. AND disrepects alot of really good ideas.(remember, noone knows everything and anyone can learn something from anyone.)

    Again, I love this blog or I wouldn’t even read it.

    • says

      Lou,

      I don’t know what you’re talking about.

      I think there are many ways to make money out there. I don’t personally use Mike’s strategy, but if others find value in it then that’s great.

      I believe we all have to find a strategy that works for us, and then stick with it. I’ve found mine. Others use a like strategy. Others do something totally different.

      Cheers!

  23. maurice says

    You know DM to satisfy the entire blog community would be impossible to say the least…..I read the dividends guy blog as well and he also has some good ideas on investing but again each to his own. Good idea guest blogging because it definitely keeps the dividend discussion spicy.Keep doing what you do best!

    • says

      maurice,

      Haha. Can’t please everyone, huh? :)

      I hear you. I thought Mike might be able to provide some value. And he’s been really supportive since I first started out. The feedback has been mixed, but it sounds like some readers enjoyed what he had to offer. I obviously don’t allow guest posts very often at all, and even less do they deviate from what I really endorse. But I thought it might be interesting to mix it up a bit.

      Anyway, it’ll be back on topic today.

      Appreciate the support!

      Best regards.

  24. says

    Hi Mike, Jason,

    Het guest post was a very interesting read. While not entirely in line with my philosophy I see how this could work for a lot of other investors. Furthermore it is nice to be forced to think about your one strategy once in a while.

    Thanks,

    DW

  25. Ravi says

    Interesting read. I think it’s a great idea to have a potential exit in mind for each holding. We pray and plan to hold forever, but that’s not always the best course.

    I think for each of my holdings I have a rough target in mind for share price and the dividend, yield, PE, etc. anything that goes way out of whack from historical norms always raises a red flag for me to investigate and make a decision.

    I know we all love PG, but if it ran up to $300 while the business hadn’t changed significantly, I think most would feel comfortable selling out or cutting their exposure. PG is a 2.5-3% yield! not a 0.5% yield. The idea is valuable because while starting at the dividend growth figures every day it is sometimes easy to forget the basics.

    You really can generate some alpha over many years by staying diligent and finding a strategy based on empirical evidence that is more than random luck (I.e. Some disciplined approach). The biggest mistake most of us make is allowing our emotions to get the best of us when we really need our thinking hats.

    Personally, I don’t think dividend investing over the next 25 years will be as rewarding as it was over the past 25 years, but I also don’t think the market overall will be either. Time will tell, but I’m betting this means MO, PG, XOM, and others will need to be earaches closely to make sure we don’t get caught in a hurricane unexpectedly.

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