Money and Finance
1. Income investing is a separate and distinct strategy
It's not growth, it's not value -- income comes first. (See: The Income Investor's Manifesto)
2. Discipline and patience are behavioral prerequisites
Great dividend-producing portfolios are built over decades, not weeks and months. It's critical to keep short-term market moves in perspective. (See: Making Each Investment Count)
3. Insist on owning dividend-paying companies with economic moats
You'll save yourself a lot of trouble if you own firms with durable competitive advantages. Read this book to learn how to recognize an economic moat.
4. Keep transaction costs to a minimum
Ideally below 1% per year. Remember: you can only compound what you keep.
5. Beware of unrealistic yields
If a yield seems too good to be true, it probably is. There might be something wrong with a stock that carries a yield more than twice the index average. (See: Ultra High Yield = Ultra High Risk)
6. Don't be afraid to sell, but do so for the right reasons
Trading and income investing don't mix. Take an investor's perspective and aim to hold for at least three years. (See: A Simple Guide for Selling Stocks)
7. Have a dividend reinvestment strategy
How you manage the regular cash flows from your dividend portfolio can have a tremendous impact on your long-term returns. (See: 5 Keys for Reinvesting Dividends)
8. Think globally, but be mindful of extra costs
There are great dividend opportunities in foreign markets, but be aware of possible withholding taxes in the company's home country.
9. Stay away from companies drowning in debt
Companies with too much debt become beholden to creditors and the dividend can come under pressure if the creditors aren't satisfied.
10. Take a portfolio perspective
A dividend strategy isn't comprised of one or two stocks, but rather a group of stocks assembled to achieve specific objectives and goals. (See: 5 Rules for Building a Dividend-Focused Portfolio)
What do you think? Any points to add? Please let me know in the comments section below.
Best,
Todd
@toddwenning on Twitter
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Money and Finance
The Ten Points of Income Investing
1. Income investing is a separate and distinct strategy
It's not growth, it's not value -- income comes first. (See: The Income Investor's Manifesto)
2. Discipline and patience are behavioral prerequisites
Great dividend-producing portfolios are built over decades, not weeks and months. It's critical to keep short-term market moves in perspective. (See: Making Each Investment Count)
3. Insist on owning dividend-paying companies with economic moats
You'll save yourself a lot of trouble if you own firms with durable competitive advantages. Read this book to learn how to recognize an economic moat.
4. Keep transaction costs to a minimum
Ideally below 1% per year. Remember: you can only compound what you keep.
5. Beware of unrealistic yields
If a yield seems too good to be true, it probably is. There might be something wrong with a stock that carries a yield more than twice the index average. (See: Ultra High Yield = Ultra High Risk)
6. Don't be afraid to sell, but do so for the right reasons
Trading and income investing don't mix. Take an investor's perspective and aim to hold for at least three years. (See: A Simple Guide for Selling Stocks)
7. Have a dividend reinvestment strategy
How you manage the regular cash flows from your dividend portfolio can have a tremendous impact on your long-term returns. (See: 5 Keys for Reinvesting Dividends)
8. Think globally, but be mindful of extra costs
There are great dividend opportunities in foreign markets, but be aware of possible withholding taxes in the company's home country.
9. Stay away from companies drowning in debt
Companies with too much debt become beholden to creditors and the dividend can come under pressure if the creditors aren't satisfied.
10. Take a portfolio perspective
A dividend strategy isn't comprised of one or two stocks, but rather a group of stocks assembled to achieve specific objectives and goals. (See: 5 Rules for Building a Dividend-Focused Portfolio)
What do you think? Any points to add? Please let me know in the comments section below.
Best,
Todd
@toddwenning on Twitter
- The Evidence For Dividend Growth Investing
This following post is written by Ben Reynolds, who runs the Sure Dividend site. Sure Dividend focuses on high quality dividend growth stocks suitable for long-term investing. Dividend growth stocks are an excellent vehicle to build passive income over...
- 5 Keys To Reinvesting Dividends
Once you've decided to build a dividend-based portfolio, it's essential to know what you're going to do with the income generated by your investments. There are three basic options -- spend the dividend, save it, or reinvest it. Sounds...
- 5 Rules For Building A Dividend-focused Portfolio
So you want to build a dividend-focused portfolio... To borrow a phrase from Dickens, it may be the best of times and the worst of times to do so. You can still build a dividend portfolio with a respectable average yield today, but strong market performance...
- Wmd Portfolio
For tracking purposes, I am launching the WMD Portfolio - a journey in search of Wide Moat Dividends. This is an idea tracking portfolio, rather than just tracking ideas as tickers its more interesting to simulate the process to see weight and growth...
- Captain's Picks
Captain's Picks is a collection of various articles that have caught my eye recently. I think you may find them interesting. Here's this weeks crop .... Intel - Why It's Poised For Rebound, And Why You Should Be There When It Does...