Back in July 2018, I launched the Dividend Growth Investor Newsletter. I am truly honored that I am able to provide value to readers through my writing. In my newsletter, I discuss ten dividend growth ideas that I invest in every single month, and show readers how I build a portfolio from scratch.
After launching the service last year, I received a lot of great questions from readers. I decided to go ahead and compile a short list for now. It is not exhaustive by any chance.
When will the next newsletter come out?
I post a new edition of the newsletter on the last Sunday of the month. The stock selections included in the newsletter will be used to make investments on the last Monday of each month. I plan to have the next newsletter out by end of day on January 27, 2019. My goal is to invest another $1,000 on Monday, January 28 in the companies that I will feature in the newsletter.
Once we start generating enough dividend income, we will start making off-cycle purchases that will be communicated in advance to subscribers. Subscribers will also be notified after the investment has been done.
What is your process for adding positions to an existing portfolio
When I built my portfolio, and I came up with ten ideas to invest in every month I usually focused on the companies where I had no exposure first. However, if I had exposure to all companies, I would try to add to the position where I have the lowest exposure first.
I view this question as a tradeoff between value and diversification. If the largest holding I own is greatly undervalued relative to a new potential acquisition which is available at higher valuation, I would most probably add to the new position. I would do this because I believe in diversification. If I add to the largest position, I may do very well if I am right. However, if it turns out I was wrong, and the position turns out to be a value trap, I would have at least protected by nest egg by investing my money elsewhere, and not just putting it in a sinking ship.
But really, it depends on the individual’s situation, circumstances, goals etc. It is not a one size fits all approach
How do you rank the ten companies?
This is a tough question to answer, because I am selecting these companies with the intent to build a portfolio to stand on its own. I am not sure which ones should be overweight/underweight for your portfolio.
I am striving for equal weights, but due to low dollars, those will vary. For all purposes however, I like all of those companies equally.
Each company has a purpose – for example a company like Verizon will not deliver the best results in the long term, but the high dividend will be heaven when next recession hits.
A company like Visa does not yield much today, but it could provide great growth and strong total returns. However, there may be trying periods where share prices decline by a lot during the next bear market.
But that overall purpose is realized by all of those companies working together in synchrony to lift the portfolio and its income. The portfolio is like a symphony - all musicians play a role in the overall performance.
If I owned a position in some of the companies however already, I may consider those where I had no exposure first. In addition, if I had exposure to all companies, I would consider adding to the position or positions where I had the lowest exposure first.
How readers use the Dividend Growth Investor Newsletter
After launching the newsletter, I received a lot of feedback and great questions from readers. Based on my understanding of their questions, different readers are using the ideas in their own ways.
One group of readers is considering all of these companies for their research. They look at each ten with the same level of detail as the newsletter, but also adding their own unique way of evaluating businesses.
Another group of readers is only considering some of the companies in their research. This could be because they already may have a position in the rest of the list, or they may not find all stocks suitable for their investment portfolios.
A third group of investors focus on the companies where they have the least amount of exposure in.
When to sell a dividend growth stock
I am mostly a buyer of dividend paying stocks. I buy those companies with the intention of never selling. I want stable and growing dividend income to live off in retirement. I do not trade in and out of stocks actively – instead my goal is to buy a group of stocks to hold on for decades. I have found that my money is made by holding on to my dividend stocks through thick or thin, and let the power of compounding do the heavy lifting for me.
However, there are some situations where I will most likely consider selling.
The first scenario that would cause me to sell involves dividend cuts. I purchase dividend paying stocks with the intention of receiving a growing stream of dividend income annually. If this is no longer the case, I will consider selling, and reinvesting the proceeds elsewhere. If a company cuts dividends, there is a high chance that I will be selling. If a company simply stops raising its dividend, but at least maintains it, there is a high chance that I will continue holding on to the position, but I will not add to it and will not be reinvesting my dividends there either.
The second scenario that would force me to sell involves acquisitions. If a company I own is acquired for cash, I will have to sell my stock. However, if we get a combination of cash and stock in the acquirer or we have a stock for stock exchange, I will most likely keep the stock of the acquirer after some consideration. If the acquirer does not fit with my overall portfolio strategy however, I will sell.
I still reserve the right to sell a company if I believe that selling is warranted. In my experience over the past decade however, selling is usually a mistake. This is because a company’s prospects usually look bleakest at the exact time things are about to turn around, and the stock price is undervalued.
How much does it cost?
I believe that the newsletter is a bargain at only $65/year. I show you how I build a portfolio from scratch, and provide insight into diversification, security selection and decision making behind each investment. I have kept the price at its introductory rate for several months now. You can lock in the special price by the end of the month. After February 1, I plan to increase the price to $76/year for new subscribers only. The cost to existing subscribers will never increase.
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Thank you for your interest!
Thank you for your interest!
