US Dividends Aristocrats thread
- Thread starter Mr. Wood
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Mr. Wood
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Mr. Wood
Banned
- Joined
- Oct 4, 2013
- Messages
- 27,015
- Reaction score
- 5,132
Mr. Wood
Banned
- Joined
- Oct 4, 2013
- Messages
- 27,015
- Reaction score
- 5,132
Mr. Wood
Banned
- Joined
- Oct 4, 2013
- Messages
- 27,015
- Reaction score
- 5,132
[quote from sure dividend newsletter]
Investing can be unnecessarily complicated. There's an incredible amount of highly intelligent and educated people who make a living in the investing industry.
With all that intellectual horsepower applied to investing over the last 100+ years, a thick haze of terms and acronyms surround the industry.
No, you don't need to know how to calculate the Omega Ratio or what exactly EBITDARM stands for to be a successful investor.
Instead of playing the complexity game, you can focus on what you actually need from your investments. Namely, reliable and rising income.
At the end of the day, that's why the vast majority of people invest. We want to make enough money from our assets to provide a reliable income stream throughout the remainder of our lives. And hopefully that income stream continues for our descendants after we are gone.
When you think about investing this way, it is clear that dividend income deserves our attention, not esoteric investing terms and ratios.
This takes us back to one of the fathers of intrinsic value and what I would call rational investing - John Burr Williams.
Williams believed that the value of a stock (or any investment) was ultimately the amount of money you could get out of it over time, discounted at an appropriate interest rate. In other words, dividend income and capital gains are where returns come from.
And sense market prices are largely determined by sentiment in the short-term, dividend income is where investors have the most control over their returns.
He saw through the 'mirage' of earnings for publicly traded companies. Note that if you 100% own a company, you can distribute earnings to yourself. But if you don't (as in investing in the stock market), then you don't actually get earnings - you only get what the company decides to distribute.
Buying stocks in hopes that they will appreciate in the future is like buying bees for their buzz. It's little more than speculation in many cases.
At Sure Dividend, we recommend investing in:
[end quote]
Investing can be unnecessarily complicated. There's an incredible amount of highly intelligent and educated people who make a living in the investing industry.
With all that intellectual horsepower applied to investing over the last 100+ years, a thick haze of terms and acronyms surround the industry.
No, you don't need to know how to calculate the Omega Ratio or what exactly EBITDARM stands for to be a successful investor.
Instead of playing the complexity game, you can focus on what you actually need from your investments. Namely, reliable and rising income.
At the end of the day, that's why the vast majority of people invest. We want to make enough money from our assets to provide a reliable income stream throughout the remainder of our lives. And hopefully that income stream continues for our descendants after we are gone.
When you think about investing this way, it is clear that dividend income deserves our attention, not esoteric investing terms and ratios.
This takes us back to one of the fathers of intrinsic value and what I would call rational investing - John Burr Williams.
Williams believed that the value of a stock (or any investment) was ultimately the amount of money you could get out of it over time, discounted at an appropriate interest rate. In other words, dividend income and capital gains are where returns come from.
And sense market prices are largely determined by sentiment in the short-term, dividend income is where investors have the most control over their returns.
He saw through the 'mirage' of earnings for publicly traded companies. Note that if you 100% own a company, you can distribute earnings to yourself. But if you don't (as in investing in the stock market), then you don't actually get earnings - you only get what the company decides to distribute.
"Earnings are a means to an end and the means should not be mistaken for the ends. In short, a stock is worth only what you can get out of it."
- John Burr Williams
The following poem by John Burr Williams eloquently sums up the common-sense idea of focusing on dividend income while investing:- John Burr Williams
"Even so, the old farmer said to his son:
A cow for her milk, A hen for her eggs,
And a stock, by heck, for its dividends.
An orchard for fruit, Bees for their honey,
And stocks, besides, for their dividends.
The old man knew where milk and honey came from, but he made no such mistake as to tell his son to buy a cow for her cud or bees for their buzz.” A cow for her milk, A hen for her eggs,
And a stock, by heck, for its dividends.
An orchard for fruit, Bees for their honey,
And stocks, besides, for their dividends.
Buying stocks in hopes that they will appreciate in the future is like buying bees for their buzz. It's little more than speculation in many cases.
At Sure Dividend, we recommend investing in:
- High quality dividend growth stocks
- Trading at fair or better prices
- With strong expected total returns
- For the long run
[end quote]
Mr. Wood
Banned
- Joined
- Oct 4, 2013
- Messages
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[quote from sure dividend newsletter]
The goal of retirement investing is to replace your working income with a sustainable passive income stream.
And the reality of our monetary system means that income stream can't just be static, it must grow by at least the rate of inflation.
To build a growing retirement income stream that lasts, you must invest in a reasonably diversified basket of income securities that have the following characteristics:
Said another way, suitable retirement investments are safe, growing income securities trading at or below fair value.
At this point you may be nodding your head about what makes a suitable income security, but be wondering just what 'reasonably diversified' means.
By reasonable diversification, we mean a portfolio of 20 to 30 securities. Common sense should be used to spread these securities across different sectors as well.
Interestingly, the benefits of diversification decline significantly after just 12 to 18 holdings. Additionally, there are actually disadvantages to being extremely diversified. When over diversified, you have more money in your 50th or 100th or 200th best idea instead of investing that money into your current best idea.
[end quote]
The goal of retirement investing is to replace your working income with a sustainable passive income stream.
And the reality of our monetary system means that income stream can't just be static, it must grow by at least the rate of inflation.
To build a growing retirement income stream that lasts, you must invest in a reasonably diversified basket of income securities that have the following characteristics:
- Pay dividends (create income), the higher the yield the better
- Are likely to grow their payments, the faster the better
- Are priced at or below fair value, to protect your principle
- Have safe dividends, so you are likely to see stable or better income during a recession
Said another way, suitable retirement investments are safe, growing income securities trading at or below fair value.
At this point you may be nodding your head about what makes a suitable income security, but be wondering just what 'reasonably diversified' means.
By reasonable diversification, we mean a portfolio of 20 to 30 securities. Common sense should be used to spread these securities across different sectors as well.
Interestingly, the benefits of diversification decline significantly after just 12 to 18 holdings. Additionally, there are actually disadvantages to being extremely diversified. When over diversified, you have more money in your 50th or 100th or 200th best idea instead of investing that money into your current best idea.
“Diversification is a protection against ignorance. It makes very little
sense for those who know what they’re doing.”
- Warren Buffett
What will determine your success in building a retirement portfolio of for rising income is the actual securities you decide to invest in.sense for those who know what they’re doing.”
- Warren Buffett
[end quote]
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