The Dividend Guy Investment Process Part 1: Introduction and The Dividend Guy Code

Written by The Dividend Guy on January 12, 2008

dollars_big.gif

In early December of 2007, I wrote a post about how I would invest if I were just starting out. In that post I provided my thoughts on how any beginner investor should start building a portolfio of stocks. I then realized that although I talk about my approach to investing on this blog, I have never have provided a linear and complete view of my overall process. Thus, I am kicking that off today. Today begins a series of posts that will build into complete insight into The Dividend Guy Investment Process.

By the end of the series, you should have a very clear picture of how I manage my investment portfolio. This is not to suggest that this is the right way to build a portfolio, but rather so you can provide me with your feedback and to let me know if there is anything you do differently. I do not pretend to know everything about investing by any means, and part of my purpose for running this blog is to continually learn.

To get things going, I want to list whart I am calling The Dividend Guy Investing Code. This is a code of conduct, or prinicples so to speak, that I use to guide my overall potfolio decisions. It is useful because they are based off of researched and proven investing best practices. Any time I am making a decision for my portfolio I consider these and make sure that decision is in line. Here they are:

1. Pick an appropriate and well diversified asset allocation and stick with it through thick and thin
2. Hold at least 15 stocks in each of the CDN and US portions of the portfolio
3. For other asset classes (i.e. international equity, REIT), use index funds unless index funds are not available through my pension fund
4. Hold dividend growth stocks that consisitently raise dividends to my core portfolio
5. Maximize my employer contributions to both my pension plan and my employee savings plan
6. Only invest in companies I understand
7. Buy only companies that are selling at a discount
8. Only invest in companies that are dominant in their industry
9. Only invest in companies that have strong fundamentals (EPS, Revenue, ROE, etc.)
10. No individual stock holding to make up more than 10% of overall portfolio
11. Never sell*

* Never is a long time - there may be circumstances where selling is the best course of action such as fraud, cessation of dividend payments or other factors.

In Part 2, I am going to talk about My Risk Profile.


Recommended: ING DIRECT makes $aving money simple! Open your account online today and start earning 3.00% variable APY. No Fees and No Minimums!

del.icio.us| Digg| Furl| Reddit| Google| StumbleUpon| Technorati| Help|

9 Comments so far

  1. Dividends4Life January 12, 2008 9:28 am

    I look forward to seeing you develop your process.

    Best Wishes,
    D4L

  2. moneygardener January 12, 2008 10:39 am

    Looking forward to it as well!

  3. Jimbo January 14, 2008 3:00 pm

    What do you think of having your dividends paid to the cash portion of your brokerage account instead of reinvesting in the individual stocks. That way you always have a cash supply to buy other companies or reinvest in some of your holdings on the cheap as they drop in price for temporary reasons from time to time. with trading fees so low in on line accounts you can cherry pick the stocks you want to reinvest in instead of just reinvesting small amounts in each stock.

  4. JLP’s Weekly Roundup (Week of January 14, 2008)—AllFinancialMatters January 24, 2008 12:47 pm

    […] Check out The Dividend Guy’s Investment Process, Part 1. […]

  5. Weekly Dividend Investing Roundup - January 25, 2008 » The Dividend Guy Blog January 25, 2008 8:57 am

    […] The Carnival of Personal Finance included one of the posts in my series of posts that describes my investing process. […]

  6. The BMW Method of Picking Undervalued Stocks » The Dividend Guy Blog January 31, 2008 8:40 am

    […] stocks for people to simply buy with no further analysis. If I were to use it, I would assure that dividends have gone up for at least 10 years. It does however seem to provide investors with a list of stocks that can then be further evaluated […]

  7. Sold Some Stock and Buying Fixed Income To Meet My Target Asset Allocation » The Dividend Guy Blog February 4, 2008 9:06 am

    […] issues. I am very confident in the future prospects of my company but need to adhere to the portfolio principles (see #10) I have set out. The second is that I am heavy on my Canadian asset allocation and need to divert […]

  8. The Dividend Guy’s February Dividend Portfolio Review » The Dividend Guy Blog February 25, 2008 7:52 am

    […] that is out of whack. Notice I did not mention the sell word as one of my investment codes is to never sell. I am not looking to sell […]

  9. The Vanguard Principles - An Excellent Investor’s Resource » The Dividend Guy Blog May 2, 2008 5:32 am

    […] Having a core investment philosophy is the cornerstone to successful portfolio performance. Think of it this way - the core investment philosophy is the “rules” or the “laws” that an investor will use to successfully manage their portfolio. Obviously it is important that these laws be based on certain investing best practices, but they also must be tailored to each individual investor given such things as time, knowledge, and desire. I have put a great deal of work into this over the years, and have provided what that looks like in a series of posts that you can see in the sidebar (to the right) under the heading The Dividend Guy’s Investment Process. […]

POST A COMMENT

If you would like to make a comment, please fill out the form below.

Name - (Required)

Email - (Required but not published)

Website - (Optional)

ENTER YOUR COMMENTS BELOW






Student Loan

www.financialwebring.com