• The one thing I am learning this year is quite simple. It stands alone in a single word. Everybody knows what it means; we use it all the time. At work, at school, in marriage; this is often the magical word associated to those who succeed. It’s a word that I’m learning to love and hate at the same time. Because this year, I’m truly getting the meaning of it. I’m taking a break from my 6 days to dividend growth investing series to talk to you about my personal quest to perseverance.

     

    Perseverance in my life in general

    At the beginning of the year, once again I decided to lose weight and get back in shape. This is a super cliché and am sick and tired of seeing myself attempting (and failing) this objective year after year. After a strong start, I usually take a pause of working out around spring, beginning of summer. Then comes the wine and evening long feasts with friends and the belly slowly takes back the place it had lost a short few months ago.

    I decided to do something different this year; I dont allow myself to cheat. Instead of having a somewhat strict diet and workout routine where I can cheat once in a while, I’ve completely stopped eating poorly or larger portions. Once a week, I reward my discipline and it doesn’t become more than that, never. And this is the true meaning of perseverance for me. I run a never ending struggle against my desire to eat. I’m constantly hungry, but I keep going forward, grasping hope in every single pound I lose, in every half inch I lose around my waist.

    I also apply this strict rule to my workout schedule. I train four times per week, without exception whatsoever. I even did my workout right before going on vacation two weeks ago and I brought my weights with us to the vacation property we rented for spring break. Perseverance was the key to successfully change my lifestyle habits. I now feel a lot better and I’m getting into seriously great shape! This is the first time I have ever felt this way.

     

    Perseverance with my RV project

    Life is busy enough just like that. I have a full time demanding job, I’m married with three kids, coach soccer and involved in other community volunteer projects. I’m not saying my life is busier than yours, I bet you have a busy schedule too. The thing is that we all have a very busy schedule. It is filled with excuses for not doing what really matters. This is what I have found out in my case anyways.

    I couldn’t work more on my websites; my day job was already enough. I couldn’t paint my bedroom; weekends were filled with activities already, etc. As of January 2015, we have put our excuses in the trash and now work evenings and weekends when necessary.

    In order to go on our RV trip next year, we have to sell our house. That’s the one thing we don’t have much control over; when and who will buy our house? This is why we are currently fixing all the little things in the house, we have painted to freshen it up and we have minimized each room to make it look better. We don’t have more time to do this than we used to, we now just take the time. It requires lots of perseverance to stay up at night to paint or to cancel our afternoon break to clean a room. But we do it, each week, with no exception.

    We will soon be ready to put the house up for sale. Then, we have several other things on our to do list to achieve this project; learn Spanish, develop our itinerary across North and Central America and finally, to prepare a school program for a 9 and 11 year old.

     

    Perseverance toward financial freedom

    My RV project comes in hand with my financial freedom objective. I want to quit my day job and become my own boss. In order to be able to do this, I intend to live from my websites, mainly this blog and Dividend Stocks Rock, my paid membership site. While DSR is already a success to some extent (it is profitable and growing which is already a big achievement), I get just as excited when I make another sale (which happen every second day) as I am disappointed when I get a cancellation (which happens only 2-3 times per month). In the web industry, paid member lifetime expectancy with one product is usually around 6 months. This is only normal to have a cancellation each month as we grow by 15-20 new members per month right now. Still, each time I receive a cancellation request, it’s a bummer. It makes me forget about all the sales, all the great comments and all members I help on a daily basis by answering their questions by mail.

    I work two evening plus one full day per week to grow this site and make my blog better. While I can already see the impact of my additional work after only two full months on my new schedule, I need to kick myself around from time to time to get me onto the computer and keep kranking as Robert, The Dividend Dreamer, would say.

     

    Perseverance as a new moto

    I’ll share with you my little secret. The reason why I can achieve what I do now when I couldn’t do that last year. I’m not a different person, I’m not better than anybody else. In fact, I have discovered that everybody can do anything they want in life. Possibilities are limitless, the only reason we don’t go to the end of things is because we restrain ourselves. Yeah… I know, you have read that a thousand times. And this is not my secret.

     

    Here’s what made a difference for me; I make it happen. I don’t allow myself to doubt, to find excuses, to second guess my decision. I focus like a train going forward. I don’t stop, I don’t take a break, I don’t say “I’ll do it tomorrow”. I just make it happen. Many times, my brain sends me incentives to grab a piece of cake, to sit down and play on my brand new PS4 or simply relax by reading. I shut it off and keep going with what is planned. I write what I have to do and since then, I just make it happen.

    I recently learned that once you understand what perseverance is, there is a new word coming. This is a word even more powerful than the previous one. And this is what I’m looking to achieve by the end of this year. This word is… resilience.

     

    I know this piece was quite personal, and I am committed to sharing more of my personal story on this blog this year. This is part of my process to open up and share my whole experience. I hope you have enjoyed it. Thank you for reading.

    Cheers,

    Mike

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  • We are now at our Day#3 of the 6 Days to Dividend Growth Investing series. I previously discussed how to find your purpose to invest and why I choose dividend growth investing to manage my portfolio. But knowing why you put money aside and that dividend investing is a sound way to make it grow doesn’t tell you which stock to buy. It doesn’t tell you how to manage your portfolio as a whole either. This article may become your best friend for the years to come when you will have a stock purchase to make. I’m not going to give you a list of stocks to buy nor a model portfolio. You are smart enough to make your own decisions. However, you might want a few tips on where to start your stock research. This is what this article is about.

     

    If there is one metric, it’s dividend growth

    I’m always looking for the perfect dividend growth stock. And if there is only one metric I must look at, it is the dividend growth! You can pretty much take 10 or even 20 metrics to include in your stock filter to narrow your research as much as possible. I’ve found that I can save lots of time by using this simple metric; how much does the dividend payout grows year after year. There is a complete rationale behind this statement.

    If a company is able to sustain a year-after-year dividend growth policy, this automatically implies it has more profits to share. If profits grow on a consistent basis, chances are that sales are following the same trend. It is possible to increase profit for a short period of time without increasing sales. For example, a company that cuts its costs, improves its productivity or sells assets will automatically realize greater earnings than the year before. However, the company likely won’t cut its costs 5 years in a row either as there is a limit to productivity increases or assets sales that boost earnings. At one point or another, sales will have to rise to follow the parade. Then, if sales increase, this means the company is sitting on a strong business model. This model will help management cruise through a recession and enable the company to evolve to the next level. Finally, if the company is able to evolve and keep its dividend growth rate stable over time, your payout will not only increase, but the stock value will soar as well.

    This rationale all makes sense, but there is nothing like a graph showing empirical evidence that dividend growth is the most important metric of all:

     

    5 yr us returns growth

     

    As you can see from the data compiled by Bloomberg, the biggest dividend growers show the highest rate of returns among US stocks. Therefore, there is a direct correlation between your portfolio return and your dividend growth rate.

     

    Dividend growth data is not that easy to find

    Unless you have all the time in the world to find the hidden gem in the market, it’s almost impossible to get dividend growth metrics for several companies. The problem is the following; most stock filters don’t compile historical dividend growth over 3, 5, 10 years and more. Therefore, if you are looking for this metric, you will have to manually calculate it from the investor relations section of each company’s website. This is monk work and nobody likes to compile data. I know I don’t anyway! This is why I provide 5 year dividend growth data to my DSR members ;-). I’m able to do that because we pay for a professional package at Ycharts costing $300 per month!

    But you don’t have to become a DSR member or register with Ycharts to find strong dividend growth stocks. All you need is to combine more metrics in your filters. Before using Ycharts, I used FinViz which is a free stock filter website. With FinViz, you can search for a combination of 1 year and 5 year growth for earnings and revenues. If you have find companies showing growth for both earnings and revenues while keeping a reasonable payout ratio, you already have a good starting point.

    Another place you can find dividend growth payers are among the dividend lists. The most common are the Dividend Aristocrats (companies with 25 years of consecutive dividend increases), the Dividend Champions and the Dividend Achievers (a list of 238 companies that increased their dividend for at least 10 consecutive years).

    Since I want to make sure you have a good starting point, I’ve compiled the three lists on this site and added some metrics to help you out. Click here to download the excel spreadsheet for:

    Dividend Aristocrats

    Dividend Champions

    Dividend Achievers

     

    The next Day will be about starting the real game; investing in your first dividend stock!

     

    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

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  • Following up on my series of 6 Days to Dividend Growth Investing, I continue today with Day#2: Why choose dividend growth investing? Once you know why you invest, the next step is to build a solid investing strategy. Many investors think all is required is money and the ability to read a few financial newsletters to trade. Then, they get more experience and believe they can successfully invest by reading and analyzing financial reports. That’s definitely a start, but you won’t go far if you only go from one trade to another without considering your portfolio as a whole. This is why building an investment strategy is so important. Most importantly, your investment strategy will help you avoid investing pitfalls and lose money. Today, I’ll share with you why I decided dividend growth investing was the best strategy for me.

     

    What is dividend growth investing?

    A dividend portfolio is more often seen as being managed with a value approach. A value approach is comforting for all investors as it seems to come directly from good sense; look for solid companies with a sound business model that will survive over time. Value stocks are known to be blue chips that don’t grow very fast. However, it doesn’t mean you can’t generate growth at all with a value portfolio. When considering dividend stocks, do we talk about dividend growth or capital growth? What about looking for both kinds of growth? When I discuss the topic of a dividend growth portfolio; I’m looking to buy companies that will both contribute to increasing my payouts but also boost the value of my holdings. Therefore, a dividend growth portfolio includes companies that have great potential to grow in value as well as keeping dividend payouts increases at the center of their priorities.

    These companies exist but the criteria to find them has become elitist. Only the best businesses will meet both high sales growth and high dividend payout growth. I decided to go towards dividend growth investing because I was looking for a way to invest and make important returns without having my nose on my stock screens all day long. I’ve read many stories about day traders, penny stock hunters and option trading professionals. They all made lots of money, but they all work long hours on their trades. After all, money doesn’t come easy for anybody.

    Instead, I decided to find a way to spend lots of time to analyze a company but once bought, I could sleep on those shares for a while. This is what dividend growth investing brings me at the moment. It is very hard to find a good company to buy, but I only have to follow them quarterly once purchased. This is the perfect balance between investing returns and time spent managing my portfolio.

     

    Why dividend investing strategy is among the best ever?

    I don’t think you should believe me more than any other blogger, friend or family member when it comes down to choosing your investing strategy. After all, we all are going to tell you that we know THE investing strategy that works. I didn’t pick my friend’s brain when it was time for me to build my investing strategy. I looked for something that has solid ground, I looked for rational arguments. This is how I found the Ned Davis Research Group (NDR). NDR is an investing research firm that goes through all economic layers to find data that matters to investors. Founded in 1980, NDR now employs over 125 people in Florida, Boston, Atlanta, San Francisco and even London. They conducted research on stock returns since 1972 to see which kind of companies offered the best returns. Here’s the result:

    return of sp500

    As you can see, dividend growers & initiators are the beating the S&P 500 by 2.5% annually since 1972. In other words, investing in dividend growth stocks provides you with the highest chance of reaching financial independence or retiring without any worries. If you are interested in this research, I suggest you read this article I wrote about 7 proven investing rules to succeed.

    I made the decision to switch over dividend investing in 2012, two years after buying this blog. I then cleared all my non dividend paying stocks and replaced them with solid companies. I made this decision for the following reasons:

    • I wanted to invest for the long term
    • I wanted to grow dividend payments
    • I wanted to keep my investment process simple and effective

     

    Three years later, I can tell you it works. My investment return is relatively good (17.1% annualized over from 2012 to 2015) and I don’t have to spend my evenings working on my portfolio.

    In my next edition of the 6 Days to Dividend Growth Investing Series, I’ll tell you how I pick my stocks.

    Related:

    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

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