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Friday, October 4, 2013

Long Term Investing in dividend growth stocks

This article has nothing to do, or very little, with what you usually come to this blog for (my frustrations and successes in Options and Forex). But after a while, I decided that investing in dividend paying stocks with a history of increasing their dividend and decades of paying cash to their shareholders, makes a lot of sense. There are always these registered accounts anyways (TFSA, RRSP, IRA) where you are not allowed to do the fancy stuff anyways (shorting stocks/options, playing unlimited risk strategies etc). So, I figured it just makes sense to some how invest that money in something other than GICs.

Armed with some theory and history, plus months of following many inspiring and successful investors, I finally took all the money that I had invested in mutual funds (that were underperforming anyways and charging fees as usual) and I opened and account with Questrade for the purpose of long term investing.

There are four positions already in that portfolio:
Bank of Nov Scotia (BNS) 25 shares at an AverageCost of $58.99 (yields 4.21% per year in dividends)
Potash Corp of Saskatchewan (POT) 45 shares at an Average Cost of $33.65 (yields 4.29% per year in dividends)
RioCan REIT (REI.UN) 62 shares at an Average Cost of $23.95 (yields 5.88% per year in dividends)
Telus Corporation (T) 45 shares at an Average Cost of $33.60 (yields 4.04% per year in dividends)

All these companies are listed in the Toronto stock exchange and the dollar values represent Canadian dollars. I am interested in US companies as well of course. Right now my eyes are on MacDonalds (MCD), Coca Cola (KO), and AT&T (T). All 3 of them have an impressive history of paying dividends, and I think they won't go bankrupt any time soon :)

I am going to be fairly aggressive with these investments trying to enter positions when the companies are near the 52 week lows. And I will also favor high dividend paying stocks. Obviously, as usual, don't follow me blindly in this adventure as I am not an expert or anything like that. Plus my goals and risk appetite are certainly above average. The purpose of these new articles is just to track my progress and hopefully inspire/help others.

My main goal is to eventually have a sizable passive cash flow coming from the dividends, which are favorably taxed in respect with other income sources, and a cash flow for which I don't have to liquidate (close) my positions.

These are the guys that have inspired me and that I have been following for months already:
Dividend Mantra
Dividend Growth Stock Investing
Dividend Ninja
My Own Advisor
The Passive Income Earner
Dividend Growth Machine
Journey of an Income Investor

I think they have done a great job at explaining the reasons behind the strategy so I won't repeat any of those things here. 

I'll see how I organize all the mess in this blog going forward between Options, Forex and Investing because something needs to be done here to prevent chaos.

Related Articles:
Invest and Retire before you die
ETF Rotation Systems to beat the Market


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4 comments:

  1. This is really interesting. Investing is something I've struggled with finding a solution for even though it's conceptually similar to trading. I always think about investing in terms of longer term trend following, but you're right that getting something that provides regular income would be great. In the US we have some good ETF choices like HDV, but I don't know if those are available in the accounts you're describing. Interesting stuff though!

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  2. Yes, I found it interesting too. there are companies like Bank of Nova Scotia that has been paying a dividend for 179 years. That's impressive. Wars, crisis,every thing in the middle and yet there they were all the time, keeping their dividend payments. Those are the type of companies I want to invest int. We'll see where this goes. After a while , the trader in me just wants to sell the companies that have rallied over 10% since my purchase hehe.

    Thanks for commenting.
    LT

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  3. Thanks for sharing.

    What is your opinion of TAA portfolios such as ones proposed by Mebane Faber? I seem to employ a similar strategy where the bulk of my cash is in TAA then option spreads/condors on the side.

    ReplyDelete
    Replies
    1. Hey Anonymous,
      What does TAA stand for?
      LT

      Delete