• We have already arrived at Day #6 of our 6 Days to Dividend Growth Investing Series. For the final day, I would like to suggest a few tips for when you will have more than a few stocks to manage. These are among the best tricks I’ve learned over my 10 years + in the investing world.

     

    #1 Don’t fall for high yield stocks – Go for strong dividend growth

    High dividend yield stocks are usually paying great distributions for a reason; because the market fears they will stop. At best, the company will continue paying its dividend but you won’t see any growth from neither the payout nor the stock value. Go for companies that will supply you with both types of growth instead.

    Don’t limit your thinking to today’s dividend yield and think about the future as well. I’ve made several plays so far with low dividend yield stocks that have paid lots more than any 7-8% dividend yield stocks (APPL, DIS, GS.TO for example).

    If you are not convinced, you can always check my case against high dividend yield stocks.

     

    #2 Don’t fall in love with a stock – Fall in love with your investing strategy

    There are few companies that you will hold during your investing life that are just flawless. You will love their products, love their growth and love their dividend. However, at one point, it’s important to write down the reasons why you bought them and make sure they keep in step with them.

    Falling in love with a stock will blind you from poor results; you may excuse missed earnings projections and forget about a bad year while the market is up. These events should actually become a good reason to go back to the company’s fundamentals and focus on the real reasons why you bought it.

     

    #3 Don’t sell because you made profit – Sell because you have a reason to

    I’m sure you have heard about investors who have a “special rule” for selling. If the stock makes +15, +20 or +25%, they sell. If you talk with these investors, they will tell you they most likely make up their rules very often and sell the stock, rinse & repeat. If you keep talking with them, you will also realize they have left tons of money on the table.

    There are no esoteric rules in the investing universe that will bring a stock down after going up by X%. Therefore, you are simply hurting your portfolio if you sell a winner while it continues to go up. I never look at how much a stock makes in my portfolio to determine if I should sell it or not.

    Sometimes, I sell stocks and they are up by 40%, sometimes I sell them when they show a loss and sometimes, I keep them even if they are +100%. The secret is to have solid investing rules you can rely on and use them to sell your stocks.

     

    #4 Don’t think you can beat the house – Invest wisely

    I’ve seen many investors throughout years think they could (read should!) make up for their past losses with their next play. Investing is not a casino where you can play until you win. There are no “win or lose” scenarios and this is not a game. Investing is a process where you can put the money to work for you. A casino doesn’t work that way. This is why you play at a casino and you invest on the stock market. Never gamble your money, you will lose it.

     

    #5 Diversify

    During your life as an investor, you will see that, sometimes, a specific sector seems unbeatable. The economic environment sets the base for high growth for a small group of companies. It doesn’t mean you should buy all of them. In the early 2000s, Canadian banks and oil sand companies were in two highly promising sectors. We saw the same phenomenon with techno stocks right before Y2K. Investing in too many stocks within the same sector can result in fabulous returns if you are right but will eventually finish with brutal drops once the party is over.

    This has happened in every successful sector at one point or another.

     

    #6 Learn to let go

    For the same reason you should learn to keep a winner, you should also learn to sell a loser. While I’m very proud of my investing returns so far, it doesn’t mean I never lost money on a trade. In fact, I’ve suffered from several stocks losing 50% (RIM, VNP, PDN just to name a few). But I had to let them go and concentrate on the winning plays.

    A bad investment is a bad investment. Then again, there are no esoteric rules guaranteeing that a losing stock will come back from the dead and in order to sell it once it got its value back. This is not going to happen in most cases. If a stock keeps going down, there must be several reasons. Once you find them, you can determine if it is worth keeping it or not. But the historical stock price is not a valid reason.

     

    #7 Never overestimate your results

    I think this advice is probably the most important right now. If you are a young investor who started his portfolio over the past couple of years, you will definitely think it’s easy to invest. I started my investing journey in 2003 and made the same mistake. During my first three years of trading, all I was doing was making more money trade after trade. What I didn’t know is that a monkey would have done the same thing!

    My mistake was to start thinking I couldn’t be wrong. This is when I deviated from my investing process and eventually experienced my first loss on the market.

     

    I hope this series helped you improve your investing skills or to start out on the right foot. If you have any questions, please comment below!

     

    Cheers,

     

    Mike

     

    Related articles:

    Day #1 What is your purpose to invest

    Day #2 Why dividend growth investing

    Day #3 What is the Best Dividend Growth Stock?

    Day #4 How to Proceed with Your First Trades

    Day #5 Tools of the Trades – Dividend Investing Resources

    Day#6 Portfolio Management Tips

     

    Disclaimer; I hold shares of AAPL, DIS and GS.TO

    5 Comments   |   Read more >
  • Today’s article is part 5 of my 6 Days to Dividend Growth Investing series. I have concentrated all investing websites on this page. I have done this in the past, but this is the most up-to-date list. I read/use each investing resource listed below. Please make sure to add yours in the comment section!

     

    Top 10 Dividend Blogs

    I love reading investing blogs because they feed me on a daily basis with high quality information on stocks, the market or even about a great way of living. I’m lucky enough to have found like-minded individuals who share my passion for investing. Here is my favorite dividend investing blogs:

     

    #1 Dividend Growth Investor

    One of the first dividend blogs I started reading and probably among the oldest dividend blogs (besides this one! Hahaha). What I really like about DGI is that he has a very solid investing philosophy and doesn’t trade lightly. His decisions are based on sound reasoning.

    #2 Sure Dividend

    Ben and I share several things in common starting with our investing style and dividend growth investing process. This is probably the blogger that has the most investing similarities with me. I like his clean design and also appreciate that he is offering a paid service like me as a sideline ;-).

    #3 Dividend Diplomats

    These two kids (Lanny & Bert) are amazing. What surprises me the most is how much they sacrifice to save and invest their money to reach financial independence. I’ll never reach their level of savings and they are a source of inspiration.

    #4 Dividend Mantra

    Jason is probably the most dedicated dividend blogger around. Just a quick look at the number of comments (and replies by him) on this blog, it will convince you. Jason also shows a very impressive saving ability. He completely transformed his life over the past few years and will definitely reach financial independence before 40.

    #5 Dividend Monk

    Matt used to be the author of the Dividend Monk; a very serious analytical dividend blog. His readers appreciate his well-detailed analysis. I must tell you; I bought the Dividend Monk last month. But I intend to keep-up with his writing style. Therefore, there is a big difference between this blog and mine even though it’s now the same author. The more analytical investor will appreciate this special touch. More on that later as we are still in the process of transferring!

    #6 DivHut

    He might not even know it, but Keith and I share lots of things in common too. His interest for travelling made him visit 34 different countries so far. My list is limited to 12, but I’ll add 8 more in 2016-2017. He is also an internet entrepreneur (and I’m an internet entrepreneur wannabe!).

    #7 My Dividend Growth

    I appreciate Ryan’s writing style and uncommon path in life. He dropped out of college, moved to Los Angeles and finally got into the TV show production world at the age of 28. His saving rate is amazing (is it just me who’s not saving 50% of his income?) and I also like his writing style.

    #8 Dividend Engineering *Canadian*

    Did you know that many DIY investors are engineers ? This probably comes from their passion for details and mathematical mindset. Frank bring rigor with a strong background and analyses several dividend stocks both US and Canadian.

    #9 Dividend Earner *Canadian*

    Eric is another engineer who’s passionate for dividend stocks. He’s one of the strongest Canadian dividend investors I know. His secret? Like myself, he follows a strong investing process to manage his portfolio. I like the fact he publishes lots of Canadian content and his has a very good free newsletter too.

    #10 Div Grow

    I’m not sure if he’s Canadian or not. His domain name leads me to think so, but his dividend holdings are all US. What I like about FerdiS is the fact that he is not only publishing his holdings but also his returns. It is one thing to invest, but it’s another to post your results!

     

    Top 8 Free Investing Sites

    Investing blogs are fun to read and follow, but serious investors must also find more “serious” information from other sources. This is why I use the following free sites for my stock research. I don’t use more than 8 sites, that’s enough for me!

    #1 Seeking Alpha

    Seeking Alpha is definitely my first stop for reading articles in the morning. Each time I want to learn more about a company, I hit SA and look for the ticker. Since SA publishes articles across the web, verifying the source is very important. However, it is pretty rare they post a poor article!

    #2 Ycharts

    I actually use a paid membership at Ycharts, but they offer a free service as well (with less data). I take all my data from this site and use their graphs as they are clean and easy to understand.

    #3 Motley Fool

    Similar to Seeking Alpha, I like reading their articles before I dig deeper into a particular stock. They are sometimes a bit salesy but everybody has to make a living (I do the same thing too from time to time anyways).

    #4 DRIP investing

    Not the best looking site, but probably the most amazing dividend website as a source of information. Everything is there from stock lists to excel spreadsheets to help you calculate.

    #5 Fin Viz

    If you are unwilling to pay for complete data from a website such as Ycharts, FinViz is probably your best bet to use a good and FREE stock screener. I started my investing research with this screener a while ago before moving to paid services.

    #6 Google Finance

    I’ve built my portfolio in Google Finance to get the results and rapid return at the glance of an eye. It’s a great source of info when you are looking for news on a specific stock.

    #7 Bloomberg

    As a complement to Google Finance, I use the Bloomberg App on my phone and iPad.

    #8 Reuters

    I like Reuters for company descriptions and the fact that they post news and results compared to analysts’ estimates. Their information is easy to find and use.

     

    Top 5 Paid Resources

    Ahhhh.. paid resources. Why would you pay when there is so much free information on the internet? Right? Well, I’m the first guy to pay in order to save time and gain productivity. This is why I paid, and I think this is why people should pay too!

    #1 Ycharts

    I use the professional plan. I need it to manage my portfolio, write on my dividend sites AND run my paid service. This is my favorite source of data.

    #2 Dividend Stocks Rock

    This is my own investing service. I provide a bi-weekly investing newsletter, 14 real-time managed portfolios, 8 weekly updated stock lists and news alerts.

    #3 Dividend Monk Dividend Investing Toolkit

    If you are a more analytical investor, you will truly enjoy the Dividend Monk Toolkit. That’s a 200+ page to guide you through dividend investing with excel spreadsheets to support your own stock analysis.

    #4 Sure Dividend Newsletter

    Ben’s investing newsletter is just great work. Very similar to what I offer, but the point of this article is to promote investing resources, not just mine! Hahaha!

     

    As you can see, this is not an exhaustive list, I’m pretty sure you have your own resources. Now I think it’s your time to share with me! I’m looking forward to discover your favorite investing sites!

     

    Related articles:

    Day#1 What is your purpose to invest

    Day#2 Why dividend growth investing

    Day#3 What is the Best Dividend Growth Stock?

    Day#4 How to Proceed with Your First Trades

    Day #5 Tools of the Trades – Dividend Investing Resources

    Day#6 Portfolio Management Tips

    13 Comments   |   Read more >
  • During his/her accumulating phase of investing; the dividend growth investor focuses on building a strong money making machine. Each month, dividend payouts are deposited into his investment account and combine this money with his current savings to enable him to buy more shares. At this point, the only question that matters is: which is the best stock for my new investment money? Should he buy more shares of an existing holding or perhaps add another company to his portfolio? In both cases; his main decision criterion will be based on his investment philosophy and the search for the best possible investment.

    What is so different when the dividend growth investor becomes a retiree? In an ideal world, the new retiree should only have to change the dividend payout to be deposited into his bank account and live off its distribution. Unfortunately, life is not that simple.

     

    A Major Problems for Retirees & Other Income-Seeking Investors

    Do you know what Kimberly Clark (KMB), Wal-Mart (WMT), BlackRock (BLK), PepsiCo (PEP), Baxter International (BAX), Analog Devices (ADI), Xcel Energy (XEL), General Electric (GE) and Genuine Parts (GPC)have in common? Yes, they are solid dividend growth stocks. But they share something else in common; they all pay their dividend during the same quarters. Therefore, imagine a retiree with a strong position in these companies. He would receive the bulk of his dividend income in March, June, September and December and almost nothing the rest of the year.

    If you plan on living off your dividends at retirement, you will have to follow a tight budget and hold on to your quarterly dividend payment to pass through the meager dividend months. The first problem for an income investor is that most companies don’t pay their dividends monthly, they pay them quarterly.

     

    MLPs and other Monthly dividend stock Limited Diversification

    Sure, you can always look for a list of monthly dividend stocks. The most commons are MLPs (Master Limited Partnership). Since their purpose is to redistribute an important part of their profits, MLPs usually pay their dividend monthly. However, they are heavily concentrated in the basic materials and financial sectors. Holding shares of only these two sectors is quite risky and it’s even worse for a retiree.

    There are also other companies paying their dividends monthly. Once again, sector diversification may become an issue. But the fact that you have to ignore most dividend growth stocks and long-time dividend growth history payers such as the dividend aristocrats can hurt your portfolio like nothing else. You basically feed your portfolio with fast food when you could make a delicious salad with grilled chicken. This is why I’ve developed a strategy to build a solid dividend growth stock portfolio with relatively equal monthly dividend payments. I’ve done my research and built these portfolios to answer a question asked by some of my readers. I divided the process to building your monthly dividend portfolio into four segments:

     

    #1 Make a List of All-Star Dividend Stocks

    The first step is no different than any other dividend growth portfolio building method; you need a list of strong companies that will grow their dividend first. Each investor has their own “investing recipe”, mine is built on 7 investing principles I follow to succeed:

     

    Principle #1: High Dividend Yield Doesnt Equal High Returns

    Principle #2: If There is One Metric; Its Called Dividend Growth

    Principle #3: A Dividend Payment Today is Good, A Dividend Guaranteed For the Next 10 Years is Better

    Principle #4: The Foundation of Dividend Growth Stocks Lies in its Business Model

    Principle #5: Buy When You Have Money in Hand

    Principle #6: If You Know Why You Bought, You Will Know Why You Sell

    Principle #7: Think Core, Think Growth

     

    These principles are based on several research papers I’ve read and through my own experience. The key idea is to be able to make a strong list of stocks to start selecting them. But if you have your own stock picking methodology, that is just fine. The important part is that you have one before continuing any further.

     

    #2 Use a Dividend Calendar

    Then, the monk work begins! If you don’t benefit from a paid investing service, chances are you will have to check out each company and note when it pays its dividend. By using a simple Excel spreadsheet invest a few hours with a strong coffee, you can easily achieve this task. I suggest you add the current dividend yield into your spreadsheet for the next step.

    Basically, the idea is to be able to regroup companies by month. Start with quarterly paying dividend stocks as you can add a few monthly distributors at the end of the process. They won’t change much in your portfolio configuration as the quarterly payers are the ones showing a payment timing issue.

    Once you regroup all companies per quarter, it’s time to move to step #3.

     

    #3 Average Your Yield & Watch Out for Sector Concentration

    This step sounds quite simple, but it requires a good mental acuity. When I did this to build the “perfect” monthly dividend portfolio, I had to choose from roughly 10-15 great companies per quarter therefore among a total of 50-60 stocks.

    Then, I tried to make an average yield for a group of 4-5 stocks per quarter I could replicate in others to make sure to have an equal dividend payment. Then, once I selected my 15 companies, I had to make sure I wasn’t too concentrated in any one sector. To be honest, it was more challenging than I thought. I wanted to make sure that I didn’t prioritize the point of making a monthly dividend portfolio over the dividend growth investing philosophy. I ended-up with a portfolio of 15 stocks averaging 3.72% dividend yield and showing 8 different sectors. Most importantly, even though I’ve selected 3 consumer defensive and 3 consumer cyclical, they are not related to the same sub-industries.

    Each position of my portfolio is equally weighted among my portfolio and this requires active portfolio management.

     

    #4 Rebalance

    As I previously mentioned, active portfolio management is highly recommended if you build a monthly dividend portfolio. Each dividend increase and stock value fluctuation can affect your monthly budget. I intend to rebalance the portfolio on a quarterly basis with an option to add a few dividend ETFs to smooth out the payments over time.

     

    Here’s What it Looks Like

    Here’s the example of my portfolio showing both sectors and yield to give you an idea of how it is built. I’ve hidden the ticker for respect to the members of my paid investment platform; Dividend Stocks Rocks. Each member benefits from our 14 real time managed portfolio along with 10 stock lists and our bi-monthly investing newsletter.

     

    sector

    If you are curious about my investing services, you can check out my investment methodology, this will you explain how I build and manage my portfolios.

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