Philosophy of dividend investing?

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
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scomac
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Re: Philosophy of dividend investing?

Post by scomac » 01 Sep 2016 19:03

BRIAN5000 wrote: I'm for meaningful disclosure, if not a lot of this repetition is meaningless. The one that irks me is to buy only 12 Canadian stocks but not willing to disclose which 12 so we could maybe have a meaningful discussion around those choices, idiotic to keep repeating this.
What makes you think that there is a specific twelve stocks you need to own? It doesn't matter if it's twelve, twenty-four or thirty-six; the point is not the specifics of the name, but the process by which to pick stocks. If you haven't "learned" that by now, then you have failed to glean the wheat from the chaff in this on-going discussion. Rather than your poker analogy, the more appropriate analogy is: Give a man a fish; feed him for a day. Teach him how to fish; feed him for life.
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Re: Philosophy of dividend investing?

Post by hboy43 » 01 Sep 2016 19:30

like_to_retire wrote: Brian5000, you must realize that revealing all your stock picks in your portfolio is considered somewhat personal, and not something many want to reveal. Most will discuss any individual stock at length, but ask for their entire stable is like asking a poker player to reveal their hand. It ain't gonna happen.

ltr
I don't think I have ever revealed my entire portfolio, so strictly your comment holds. I however do from time to time get quite revealing, most recently on the other site circa February and March this year. At the time, it was a huge anti brag (that is revealing huge losses) but then and now perhaps instructive for some in the ways the market can kick you in the ass short term, yet be very kind eventually, if only one can hold and play the long game. Interestingly not a single individual commented on it, a real live investor doing real investing. Makes me think of the old Nicholson quote "You want the truth? You can't handle the truth."

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Re: Philosophy of dividend investing?

Post by deaddog » 01 Sep 2016 19:49

BRIAN5000 wrote:
I'm for meaningful disclosure, if not a lot of this repetition is meaningless. The one that irks me is to buy only 12 Canadian stocks but not willing to disclose which 12 so we could maybe have a meaningful discussion around those choices, idiotic to keep repeating this.
Why is it important to disclose the stocks in your portfolio?
If you would like I can give you a 12 stock dividend portfolio that I manage for a non profit organization that earns in excess of 5% yield and has managed to grow.
What discussion do you see coming out of this disclosure?
Most of our so-called reasoning consists of finding arguments for going on believing as we already do.( J.H. Robinson)

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Re: Philosophy of dividend investing?

Post by deaddog » 01 Sep 2016 20:11

like_to_retire wrote: Brian5000, you must realize that revealing all your stock picks in your portfolio is considered somewhat personal, and not something many want to reveal. Most will discuss any individual stock at length, but ask for their entire stable is like asking a poker player to reveal their hand. It ain't gonna happen.

ltr
I can see where revealing the value of a portfolio or even the percentage breakdown might be personal but fail to see how revealing your holdings would create a problem.

Could it be that one might be embarrassed because of the stocks one holds or is it that by disclosing the portfolio holdings one would contradict what one had posted earlier?

What would be the downside of revealing what stocks you hold in your portfolio?
Most of our so-called reasoning consists of finding arguments for going on believing as we already do.( J.H. Robinson)

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Re: Philosophy of dividend investing?

Post by like_to_retire » 01 Sep 2016 20:21

deaddog wrote:What would be the downside of revealing what stocks you hold in your portfolio?
There wouldn't be enough time in the day to explain why you have the positions you have. Why listen to discussion and comment on something when the reasoning hasn't been laid out in full. It makes no sense to me - there's nothing for anyone to gain from it.

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Re: Philosophy of dividend investing?

Post by kcowan » 01 Sep 2016 20:52

like_to_retire wrote:There wouldn't be enough time in the day to explain why you have the positions you have. Why listen to discussion and comment on something when the reasoning hasn't been laid out in full. It makes no sense to me - there's nothing for anyone to gain from it.
Yes there is history (unless it is all ETFs) and that history (ACB) can count a lot to the rationale for the holding. Since no one else can buy at that price, what good is it? I grant some slack to a dividend payer (not increasing) if my ACB is low enough.
For the fun of it...Keith

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Re: Philosophy of dividend investing?

Post by gobsmack » 01 Sep 2016 20:55

AltaRed wrote:For example, my 'musings' about what to do with PWF. Share price has gone nowehere and I am not sure their ongoing attempted re-invention of themselves into more fintech and millenial wealth management will offset their flatlined primary businesses.
I was thinking about that the other day. POW is now the top financial stock in the TSX60 when sorting by dividend yield. Someone following the Dogs of the TSX strategy would end up having it as his first pick. It always puzzled me why this strategy asks to pick the highest div yield stock. Those stocks may very well be at the top of the list because they are lemons.

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Re: Philosophy of dividend investing?

Post by deaddog » 01 Sep 2016 21:08

like_to_retire wrote:
There wouldn't be enough time in the day to explain why you have the positions you have. Why listen to discussion and comment on something when the reasoning hasn't been laid out in full. It makes no sense to me - there's nothing for anyone to gain from it.

ltr
The only way for someone to gain is if there is a meaningful discussion. Why on an investing forum wouldn't you be willing to take the time to explain why you have the positions you have.

This is a very respectful and well moderated forum where for the most part ideas are shared and questions are answered. I would hope that members would be willing to make the time to discuss their investing rational and answer any reasonable questions.
Most of our so-called reasoning consists of finding arguments for going on believing as we already do.( J.H. Robinson)

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Re: Philosophy of dividend investing?

Post by ghariton » 01 Sep 2016 23:03

deaddog wrote:The only way for someone to gain is if there is a meaningful discussion. Why on an investing forum wouldn't you be willing to take the time to explain why you have the positions you have.
I can do this because my approach to investing is very simple indeed.

I have roughly one third fixed income (RRBs) and two thirds equities. The rationale is that this produces a level of risk that I am comfortable with. In particular, the fixed income is there to stabilize the portfolio when things go badly. While it does throw off some income, that is secondary, and quite frankly a bit of an annoyance because I have to reinvest it.

The core of my equity holding is made up of VTI, VEA and VWO, with proportions more or less in line with world public equity market capitalizations. This reflects my belief in very broad diversification, but within limits. In particular, if the expenses for acquiring or holding certain asset classes, such as private equity, are too high relative to the diversification benefits, I pass.

At one time I also held REITs, but I own my home and a condo, and I think that is enough in real estate.

I hold legacy positions in SPY, MDY, IWM, and QQQ. These were acquired before I "discovered" VTI, and strictly speaking I should sell them and buy VTI instead. But the tax consequences are too great -- they have all more than doubled -- and I see no great harm in holding on as a substitute for more VTI. The one exception in the list is QQQ, which doesn't fit with my investing approach. But it has tripled and selling it hurts. Nevertheless, I am selling it in dribs and drabs when I need money for a new car, kitchen renovations, etc.

Finally, I hold a small fraction of my portfolio in PSCT. This is my "play money". There is no profound analysis here, apart from my reading too many articles on how automation will take over the economy.

Feel free to tell me why I am wrong.

George
The plural of anecdote is NOT data.

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Re: Philosophy of dividend investing?

Post by SQRT » 02 Sep 2016 07:50

Disappointing turn of discussion. I participate in these forums mostly for their entertainment value with a little education thrown in. My situation is unusual and has resulted in an investment approach that I probably wouldn't recommend to strangers. Accordingly I generally don't give investing advice here, I do have some relevant experience though (Finance MBA, CPA, CFA). Not to mention a career as a very senior finance exec. (I hope you don't consider this bragging, Red) I understand finance theory and why dividends shouldn't matter. I also had responsibility for the dividend policy at a very large company so I know that in real life they certainly do matter, at least for the company.

I also think that a large portfolio shouldn't disqualify you from participating here. In fact I would think that someone with a larger portfolio might be particularly welcome?

As far as personal investment approach goes, there are many ways to succeed, both in the accumulation phase and draw down phase. Let's have a little more respect for the opinions of others. Oh, if any body asks I would be happy to disclose my portfolio names, but doubt it would be of any use to others.

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Re: Philosophy of dividend investing?

Post by 2 yen » 02 Sep 2016 08:17

Full equity portfolio. Also have 2 bond funds (XSB and XBB) in an RRSP that represent about 20% of holdings. We do not draw that income at this time. Live off the dividends only. Largest holding in the equity portion of the portfolio is Emera at 4.7% of the total. A couple of holdings at 3+% and the rest from 1% to 2+%. The equity portfolio is quite balanced among sectors with utilities the largest. That's it. This works for us, but as others have pointed out upthread, accumulating enough to do this is simply not possible for many. I hope this post is not perceived as bragging, but rather to illustrate one approach that can work if discipline is applied to saving throughout one's working years. I personally believe a young person starting now in their 20's can do this, too.

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Re: Philosophy of dividend investing?

Post by gobsmack » 02 Sep 2016 09:26

ghariton wrote:I have roughly one third fixed income (RRBs) and two thirds equities... The core of my equity holding is made up of VTI, VEA and VWO, with proportions more or less in line with world public equity market capitalizations...
You just described what I consider to be the ideal portfolio with maybe some additional level of exposure to CAD equity. The only difference in my case is that I would have picked a bond fund for FI and VXUS as opposed to VEA+VWO.

In the case of VTI/VEA/VWO, were you ever concerned about foreign withholding taxes leakage? Ideally, you would keep them all in an RRSP thus avoiding the foreign withholding taxes. In practice though, it may be difficult to make it all fit in an RRSP. In retirement, if income is low (e.g., no DB pension), it may be difficult to recover the FWT of these holdings outside of an RRSP/RRIF. Have you ever considered this to be an issue?

I have been thinking about this myself and it is one point that ends up shifting my attention towards more exposure to CAD equities. Maybe I am over-thinking this though. Once OAS and CPP kicks in, there will be a minimum income floor and, in all likelihood, the retiree will be paying some level of income taxes, which should allow him to recover at least some of the FWT.
Last edited by gobsmack on 02 Sep 2016 10:04, edited 1 time in total.

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Re: Philosophy of dividend investing?

Post by gobsmack » 02 Sep 2016 10:03

SQRT wrote:As far as personal investment approach goes, there are many ways to succeed, both in the accumulation phase and draw down phase. Let's have a little more respect for the opinions of others. Oh, if any body asks I would be happy to disclose my portfolio names, but doubt it would be of any use to others.
I think you may have taken his comment the wrong way. I have no formal training in finances and I come to this forum, in part, because I am trying to learn from what others are doing. I think he was simply pointing out that it may be difficult to understand certain positions/opinions/ideas without full context.

If a comment catches my attention, I often find myself searching through the previous posts of the author in order to get some context. Is the person retired? Does he have a large portfolio? How much FI is he holding? etc. This allows me to capture some context in order to better understand the original comment and whether it applies to my case.

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Re: Philosophy of dividend investing?

Post by SQRT » 02 Sep 2016 10:19

gobsmack wrote:
SQRT wrote:As far as personal investment approach goes, there are many ways to succeed, both in the accumulation phase and draw down phase. Let's have a little more respect for the opinions of others. Oh, if any body asks I would be happy to disclose my portfolio names, but doubt it would be of any use to others.
I think you may have taken his comment the wrong way. I have no formal training in finances and I come to this forum, in part, because I am trying to learn from what others are doing. I think he was simply pointing out that it may be difficult to understand certain positions/opinions/ideas without full context.

If a comment catches my attention, I often find myself searching through the previous posts of the author in order to get some context. Is the person retired? Does he have a large portfolio? How much FI is he holding? etc. This allows me to capture some context in order to better understand the original comment and whether it applies to my case.
Perhaps. But the term "junkies" has a fairly clear connotation. Agree that context is important. But sometimes providing context is viewed as "bragging". Anyway, despite my experience, I have learned a fair bit here. It is usually quite a respectful place and those comments did seem out of character.

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Re: Philosophy of dividend investing?

Post by FinEcon » 02 Sep 2016 12:01

SQRT wrote:Disappointing turn of discussion. I participate in these forums mostly for their entertainment value with a little education thrown in. My situation is unusual and has resulted in an investment approach that I probably wouldn't recommend to strangers. Accordingly I generally don't give investing advice here, I do have some relevant experience though (Finance MBA, CPA, CFA). Not to mention a career as a very senior finance exec. (I hope you don't consider this bragging, Red) I understand finance theory and why dividends shouldn't matter. I also had responsibility for the dividend policy at a very large company so I know that in real life they certainly do matter, at least for the company.

I also think that a large portfolio shouldn't disqualify you from participating here. In fact I would think that someone with a larger portfolio might be particularly welcome?

As far as personal investment approach goes, there are many ways to succeed, both in the accumulation phase and draw down phase. Let's have a little more respect for the opinions of others. Oh, if any body asks I would be happy to disclose my portfolio names, but doubt it would be of any use to others.
Your posts and perspectives are extremely valuable. IMO, they would be equally valuable if your portfolio were half or double the size it is. I like the fact that you eat your own cooking in that you hold very meaningful concentrated positions in your former employers stock.

Personally, I wish the discussions on this forum tended more towards the trends or inner workings of the industries or businesses themselves as opposed to the same old rehashed debates about various personal finance subjects (efficient markets, indexing, dividends, etc).

For your portfolio, do you hold any meaningful positions in sub 1B market cap companies? If not, why not. If so, care to disclose which ones?
What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact

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Re: Philosophy of dividend investing?

Post by AltaRed » 02 Sep 2016 12:26

SQRT wrote:I also think that a large portfolio shouldn't disqualify you from participating here. In fact I would think that someone with a larger portfolio might be particularly welcome?

As far as personal investment approach goes, there are many ways to succeed, both in the accumulation phase and draw down phase. Let's have a little more respect for the opinions of others. Oh, if any body asks I would be happy to disclose my portfolio names, but doubt it would be of any use to others.
I was not referring to you either when I made my comments. I've always had respect for your posts. Good context, inside knowledge, etc, etc.

That said, I've let the posts of a few select members in particular get under my skin and result in a bit of what appears to be a 'broad brush' tsunami and thread distraction. For that, I sincerely apologize. If I have something to say to a particular individual, I will do it privately.
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Re: Philosophy of dividend investing?

Post by ghariton » 02 Sep 2016 13:56

gobsmack wrote:In the case of VTI/VEA/VWO, were you ever concerned about foreign withholding taxes leakage? Ideally, you would keep them all in an RRSP thus avoiding the foreign withholding taxes. In practice though, it may be difficult to make it all fit in an RRSP. In retirement, if income is low (e.g., no DB pension), it may be difficult to recover the FWT of these holdings outside of an RRSP/RRIF. Have you ever considered this to be an issue?
I give priority in my RRSPs to my RRBs. I really would not want to hold them in a non-registered account. The other problem is that the SPY, MDY, IWM, QQQ are "trapped" in non-registered accounts because of the capital gains on disposition. New injections of VTI, VEA, VWO go into RRSPs if there is room; otherwise, into non-registered accounts.

I have had no problem finding enough income to use up the foreign withholding tax. I'm still earning enough to cover our day-to-day living expenses. Next year I have to convert to a RRIF, so there really is no gap in taxable income.

George
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Re: Philosophy of dividend investing?

Post by BRIAN5000 » 02 Sep 2016 14:50

by scomac » Thu Sep 01, 2016 What makes you think that there is a specific twelve stocks you need to own?
Not sure why you think I think this, it isn't me that keeps recommending this to newbies. That's why I started the thread "Which is better for a New Investor?"
deaddog » Thu Sep 01, 2016 Why is it important to disclose the stocks in your portfolio?
If your recommendation is some thin slice of a 4% global equity market, I'd like to at least look at your choices. It's like me saying to you I have a new Holy Grail but I'm not going to tell you what it is, for whatever reason. One of the given reasons is everyone knows the candidates, from the few portfolios posted it doesn't appear clear to me that's the case.

I'm not advocating everyone post their portfolios but I'm not opposed to it. Just if you make some claim that seems to me not optimal for a newbie.
I actually humbled myself sufficiently to disclose, on another thread, my Canadian dividend portfolio.
Try disclosing that you hold 70 equity positions
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Re: Philosophy of dividend investing?

Post by BRIAN5000 » 02 Sep 2016 15:00

I personally believe a young person starting now in their 20's can do this, too.
I believe they could too but IMHO there are better alternatives now available. Waste of time which I am coming to believe is one of our most valuable assets.
“Sometimes you are going to sell early and wish you would’ve held on, other times you will hold on a
little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

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Re: Philosophy of dividend investing?

Post by BRIAN5000 » 02 Sep 2016 15:14

Looks like I'm down to 68 positions at the moment whew, put a few colours in there to give a little info on what the heck is going on.
Sometimes posting something bad is just as good as posting something good, IMHO.
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Sept 2016 Port.png
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Re: Philosophy of dividend investing?

Post by ghariton » 19 Sep 2017 15:28

Larry Swedroe thinks dividends don't matter, except as part of total return:
Conclusion

Both theory and historical evidence demonstrate there isn’t anything unique about dividends. They are just another source of profit, along with capital gains. Yet many investors treat these two sources of profit very differently, with negative consequences in terms of lower returns, greater risks and less diversified portfolios.
George
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Re: Philosophy of dividend investing?

Post by NormR » 19 Sep 2017 15:52

Sticking to dividend payers on the TSX has been a good idea over the 17 years through to the end of 2016.

Total return CAGRs shown, annual rebalancing, equal-weight portfolios, selected from the top 300 stocks by market cap

Portfolio of dividend payers: 12.1%
Non-dividend payers: 4.1%
By way of comparison, S&P/TSX Composite: 6.1%

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Re: Philosophy of dividend investing?

Post by ghariton » 19 Sep 2017 18:01

Thank you, Norm. Very interesting.

My first reaction is that investing in Canadian dividend-payers is a very concentrated strategy. It achieved a high rate of return over the period you cover. But I would fear that the lack of diversification might make the strategy vulnerable in downturns.

Out of curiosity, how much of the out-performance is due to the inclusion of the banks? If I were making a concentrated bet in 2000, next to technology (which proved a disaster for me), I would have chosen the financial sector. I bet I would have done great.

George
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Re: Philosophy of dividend investing?

Post by DenisD » 19 Sep 2017 18:11

OTOH, I think Norm published an article recently showing that low PE was the best value factor in Canada over the past 15 years. Unfortunately, it's behind a pay wall. But ISTR reading the hard copy.

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Re: Philosophy of dividend investing?

Post by AltaRed » 19 Sep 2017 18:24

Think it would be better to look at a longer history, albeit 17 years covers 2 traumatic periods. I tend to agree with George that Canada's dividend payers are skewed to the financial sector, albeit I suspect Norm would argue a lot of energy/resource companies pay dividends (and included in the list) imploded a few times, including the past 2+ years. I suspect looking at the US market would be somewhat different.

P.S. I disproportionately hold dividend stocks despite my recognition of what Larry is saying. I like my regular heroin cash income fix especially in retirement.
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