Power of Dividend Growth 2011 (and beyond)
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Re: Power of Dividend Growth 2011 (and beyond)
another reflection:
Dividend Growth investing is not a get-rich quick scheme. The single most important variable here is time, not as in years or cycles but as in decades. It is a life-long project. Start early, be patient, die rich.
Dividend Growth investing is not a get-rich quick scheme. The single most important variable here is time, not as in years or cycles but as in decades. It is a life-long project. Start early, be patient, die rich.
Re: Power of Dividend Growth 2011 (and beyond)
I'd want to see a trend line of EPS over that period of time, plotted against share price and dividend as the more accurate correlation of shareholder value appreciation. Plotting share price and/or dividend is only a proxy for value since shareholders can bid up prices as the corporation raises its dividend (like companies like ENB have been doing without necessarily adding commensurate shareholder value). Because fixed income returns have been so pathetic the past 8 years, corporations have used investor hunger for dividends as a tool to bid up their share prices.JaydoubleU wrote: ↑15 Dec 2017 10:39 Or take a long term chart of RY. The graph shows a classic pattern of long term compound investing. Meanwhile, dividends have risen from 0.135 per quarter to 0.91 per quarter from 2000 to present, (which is as far back as I can find on the RBC website, but I'm sure others can show us the data going back decades earlier.) I am confident a growth of dividends chart would closely mirror growth of EPS and stock price. In other words, the dividend growth formula is just another way of evaluating a stock: yield + annual growth rate of dividends = annual rate of return. Buying in periods of weakness will enhance returns, and buying near tops will reduce them.
Some will argue Cash flow/share is more important than EPS but I will never be convinced because conniving managements can bury their mistakes emphasizing cash flow. Earnings (or ROCE) are the real measure of how management have used their capital effectively (or not) because ultimately the skeletons have to be written off.
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Re: Power of Dividend Growth 2011 (and beyond)
For sure EPS growth is the best metric.
OTOH many of us (as in me!) are uncomfortable with financial statements. I am mainly uncomfortable because they can be so complicated (I am sure SQRT would agree with this with respect to banks even though he has an important bank background...). IMHO it is so easy to be mislead by the financials and there are very many ways that they can be played around with by management.
However, it must be very hard to sustain dividend growth over the longterm (as in 10 years or more) and have a poor financial situation (even if the financial statements appear to be saying otherwise...) That is why I feel that sustained dividend growth is an excellent common sense sort of proxy for defining a healthy company.
Admittedly I am being simplistic but it has/is worked/working for me. Non-registered dividend income was 20K$ in 2011 and will be about 30K$ in 2018. No new money, no stretching for yield. All of it is being spent on ongoing living expenses.
OTOH many of us (as in me!) are uncomfortable with financial statements. I am mainly uncomfortable because they can be so complicated (I am sure SQRT would agree with this with respect to banks even though he has an important bank background...). IMHO it is so easy to be mislead by the financials and there are very many ways that they can be played around with by management.
However, it must be very hard to sustain dividend growth over the longterm (as in 10 years or more) and have a poor financial situation (even if the financial statements appear to be saying otherwise...) That is why I feel that sustained dividend growth is an excellent common sense sort of proxy for defining a healthy company.
Admittedly I am being simplistic but it has/is worked/working for me. Non-registered dividend income was 20K$ in 2011 and will be about 30K$ in 2018. No new money, no stretching for yield. All of it is being spent on ongoing living expenses.
"The term is over: the holidays have begun. The dream is ended: this is the morning."-C.S.Lewis, The Last Battle
Re: Power of Dividend Growth 2011 (and beyond)
Div growth for the banks should be very close to cash EPS growth except they all raised their payout ratio range from 35%-45% to 40%-50% a few years ago. If I recall the ratio was 30-40% back even further. They adjust these ratios to reflect the need for capital reinvestment. Generally bank payout ratios are quite low compared to other income related div payers like telcos, utilities, and especially pipes.
I agree that bank financial statements are complicated and for the lay investor not very useful. However, banking is the most regulated business in Canada with a lot of people looking at the F/S. I would be very surprised if systematic “manipulation” ever occurred. My personal experience is that generally, Canadian banks are run very conservatively and by extremely competent people. Still they are leveraged businesses and things can certainly go wrong. Most analysts think their divs are as safe as any can be.
I agree that bank financial statements are complicated and for the lay investor not very useful. However, banking is the most regulated business in Canada with a lot of people looking at the F/S. I would be very surprised if systematic “manipulation” ever occurred. My personal experience is that generally, Canadian banks are run very conservatively and by extremely competent people. Still they are leveraged businesses and things can certainly go wrong. Most analysts think their divs are as safe as any can be.
Re: Power of Dividend Growth 2011 (and beyond)
Hopefully not too rich when you die. Ie spend some of it along the way.JaydoubleU wrote: ↑15 Dec 2017 10:58 another reflection:
Dividend Growth investing is not a get-rich quick scheme. The single most important variable here is time, not as in years or cycles but as in decades. It is a life-long project. Start early, be patient, die rich.
Re: Power of Dividend Growth 2011 (and beyond)
It would be a shame not to use at least some of that appreciating capital while one can. It is very easy to get caught up watching growth in one's portfolio and wanting that to continue for personal satisfaction or bragging rights. But the big question is why?SQRT wrote: ↑15 Dec 2017 13:13Hopefully not too rich when you die. Ie spend some of it along the way.JaydoubleU wrote: ↑15 Dec 2017 10:58 another reflection:
Dividend Growth investing is not a get-rich quick scheme. The single most important variable here is time, not as in years or cycles but as in decades. It is a life-long project. Start early, be patient, die rich.
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Re: Power of Dividend Growth 2011 (and beyond)
Yes. It’s nice to see the balances go up but what is the point other than to spend or give more later? I’ve been selling down/gifting a fair bit recently but portfolio is still near all time high. This can’t last forever.AltaRed wrote: ↑15 Dec 2017 13:45It would be a shame not to use at least some of that appreciating capital while one can. It is very easy to get caught up watching growth in one's portfolio and wanting that to continue for personal satisfaction or bragging rights. But the big question is why?SQRT wrote: ↑15 Dec 2017 13:13Hopefully not too rich when you die. Ie spend some of it along the way.JaydoubleU wrote: ↑15 Dec 2017 10:58 another reflection:
Dividend Growth investing is not a get-rich quick scheme. The single most important variable here is time, not as in years or cycles but as in decades. It is a life-long project. Start early, be patient, die rich.
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Re: Power of Dividend Growth 2011 (and beyond)
Bah, humbug!AltaRed wrote: ↑Fri Dec 15, 2017 2:45 pm
SQRT wrote: ↑Fri Dec 15, 2017 2:13 pm
JaydoubleU wrote: ↑Fri Dec 15, 2017 11:58 am
another reflection:
Dividend Growth investing is not a get-rich quick scheme. The single most important variable here is time, not as in years or cycles but as in decades. It is a life-long project. Start early, be patient, die rich.
Hopefully not too rich when you die. Ie spend some of it along the way.
It would be a shame not to use at least some of that appreciating capital while one can. It is very easy to get caught up watching growth in one's portfolio and wanting that to continue for personal satisfaction or bragging rights. But the big question is why?
Yes. It’s nice to see the balances go up but what is the point other than to spend or give more later? I’ve been selling down/gifting a fair bit recently but portfolio is still near all time high. This can’t last forever.
C'mon guys, have a sense of humor. Of course we spend like drunken sailors at Christmas
Re: Power of Dividend Growth 2011 (and beyond)
Just got back from Christmas shopping up on Bloor Street. Compared to my gains this year the amount I spent isJaydoubleU wrote: ↑15 Dec 2017 15:30Bah, humbug!AltaRed wrote: ↑Fri Dec 15, 2017 2:45 pm
SQRT wrote: ↑Fri Dec 15, 2017 2:13 pm
JaydoubleU wrote: ↑Fri Dec 15, 2017 11:58 am
another reflection:
Dividend Growth investing is not a get-rich quick scheme. The single most important variable here is time, not as in years or cycles but as in decades. It is a life-long project. Start early, be patient, die rich.
Hopefully not too rich when you die. Ie spend some of it along the way.
It would be a shame not to use at least some of that appreciating capital while one can. It is very easy to get caught up watching growth in one's portfolio and wanting that to continue for personal satisfaction or bragging rights. But the big question is why?
Yes. It’s nice to see the balances go up but what is the point other than to spend or give more later? I’ve been selling down/gifting a fair bit recently but portfolio is still near all time high. This can’t last forever.
C'mon guys, have a sense of humor. Of course we spend like drunken sailors at Christmas
“ chump change”. Merry Christmas.
Re: Power of Dividend Growth 2011 (and beyond)
You didn't shop at the right places on Bloor street, let me tell ya
"A dividend is a dictate of management. A capital gain is a whim of the market."
Re: Power of Dividend Growth 2011 (and beyond)
Yes, I did. But didn’t really “blow the dough”. Well into 6 figures though.
Re: Power of Dividend Growth 2011 (and beyond)
I tip my hat off to you. 6 figures is still not chump change to me and Tiffany's and Louis Vuitton take a big bite.
"A dividend is a dictate of management. A capital gain is a whim of the market."
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Re: Power of Dividend Growth 2011 (and beyond)
Care to disclose which retailers? I might do some holiday investing next week!Yes, I did. But didn’t really “blow the dough”. Well into 6 figures though.
Re: Power of Dividend Growth 2011 (and beyond)
Is everyone in this thread who is retired using VPW? This assures the growth of spending in good years. But at what stage do we start melting down the portfolio. Do we wait for Mr Market to do it for us? I probably have 10 maybe 20 years to go. I am thinking of giving stock donations to my favoured charities but I can't seem to pull the pin! I love to watch the portfolio grow. But I am feeling like Scrooge right now because while the portfolio is growing, I am happy!
I suppose I could adjust my will so that certain charities will get the benefit but then I am letting the government have more than it deserves.
For the fun of it...Keith
Re: Power of Dividend Growth 2011 (and beyond)
Right on Brian. I'd completely forgotten the special dividends from Gluskin Sheff and they do seem to give those annually. The only other Canadian companies that I can think of that also give special dividends, but only once every few years, are Corby Spirit & Wine and Leons Furniture. I own shares in both these companies as well.
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Re: Power of Dividend Growth 2011 (and beyond)
What's VPW?Is everyone in this thread who is retired using VPW? This assures the growth of spending in good years. But at what stage do we start melting down the portfolio. Do we wait for Mr Market to do it for us? I probably have 10 maybe 20 years to go. I am thinking of giving stock donations to my favoured charities but I can't seem to pull the pin! I love to watch the portfolio grow. But I am feeling like Scrooge right now because while the portfolio is growing, I am happy!
I suppose I could adjust my will so that certain charities will get the benefit but then I am letting the government have more than it deserves.
For the fun of it...Keith
I certainly can empathize with the desire NOT to cash out. As I mentioned elsewhere, I am hoping that when I am older and closer to the end that I'll have to will power to cash out and give it away. I think it makes a lot of sense to start serious gift-giving while alive rather than leave a huge legacy. You get to give where it's really deserved and needed, and to see the happiness in other people's faces. (Now where's the Santa smiley?
Re: Power of Dividend Growth 2011 (and beyond)
I could let longinvest answer this as I believe he had a role in developing it."JaydoubleU" wrote:What's VPW?
You can read all about it in finiki.
The link is here. http://www.finiki.org/wiki/Variable_per ... withdrawal
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Re: Power of Dividend Growth 2011 (and beyond)
Yes, agree. I figure if you don’t want to spend or give more while alive, you probably shouldn’t have much of an equity AA. Ie if you can’t use the upside why take the risk? Some people may be working towards a very large legacy, but I doubt there are many who would acknowledge that here.JaydoubleU wrote: ↑16 Dec 2017 13:30
I certainly can empathize with the desire NOT to cash out. As I mentioned elsewhere, I am hoping that when I am older and closer to the end that I'll have to will power to cash out and give it away. I think it makes a lot of sense to start serious gift-giving while alive rather than leave a huge legacy. You get to give where it's really deserved and needed, and to see the happiness in other people's faces. (Now where's the Santa smiley?
Re: Power of Dividend Growth 2011 (and beyond)
I think in my case it's just going to happen that way. She will at least get the house at the moment it's worth a million, what's large? I don't think I can spend down principle but sometimes I think I'd like to try.Some people may be working towards a very large legacy, but I doubt there are many who would acknowledge that here.
Wife wants a new mixer for Christmas that will put a dent in the legacy for sure, got a basic model on hold at Best Buy for $250.
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Re: Power of Dividend Growth 2011 (and beyond)
I have no problem giving to family and will continue to do so. I have increased the give by 30%. But in giving to charity, I am thinking that they will not get as much as I will if I hold off on making an equity donation. Plus there is the little lingering appreciation aspect.JaydoubleU wrote: ↑16 Dec 2017 13:30What's VPW?
I certainly can empathize with the desire NOT to cash out. As I mentioned elsewhere, I am hoping that when I am older and closer to the end that I'll have to will power to cash out and give it away. I think it makes a lot of sense to start serious gift-giving while alive rather than leave a huge legacy. You get to give where it's really deserved and needed, and to see the happiness in other people's faces. (Now where's the Santa smiley?)
For the fun of it...Keith
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Re: Power of Dividend Growth 2011 (and beyond)
A WHAT?? Dude, you are headed to the DOGHOUSEWife wants a new mixer for Christmas that will put a dent in the legacy for sure, got a basic model on hold at Best Buy for $250.
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Re: Power of Dividend Growth 2011 (and beyond)
I don’t know. I thought the same thing, but I got my wife one last xmas and she’s used it more than any other kitchen appliance this last year. We’ve eaten so many pancakes... The kids also love it and are learning to bake using it.JaydoubleU wrote: ↑16 Dec 2017 18:22A WHAT?? Dude, you are headed to the DOGHOUSEWife wants a new mixer for Christmas that will put a dent in the legacy for sure, got a basic model on hold at Best Buy for $250.
Last edited by skinnyinvestor on 18 Dec 2017 12:19, edited 2 times in total.
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Re: Power of Dividend Growth 2011 (and beyond)
I hear ya. I think our portfolio will continue to grow as well, even with some sell downs. We also have a fair bit of real estate but will likely downsize before the “end”. About half of our spending is supported by my pension, so that will not be part of the legacy. It just seems less than optimal to leave a very large legacy (say for example 8 figures) and not be very generous while alive when it could really help.BRIAN5000 wrote: ↑16 Dec 2017 16:22I think in my case it's just going to happen that way. She will at least get the house at the moment it's worth a million, what's large? I don't think I can spend down principle but sometimes I think I'd like to try.Some people may be working towards a very large legacy, but I doubt there are many who would acknowledge that here.
Re: Power of Dividend Growth 2011 (and beyond)
There are few gifts nicer than a KitchenAid Mixer. But for God's sake, don't get a cheap one! The one you need to buy costs about $550.skinnyinvestor wrote: ↑16 Dec 2017 20:15I don’t know. Thank thought the same thing, but I got my wife one last xmas and she’s used it more than any other kitchen appliance this last year. We’ve eaten some many pancakes... The kids also love it and are learning to bake using it.JaydoubleU wrote: ↑16 Dec 2017 18:22A WHAT?? Dude, you are headed to the DOGHOUSEWife wants a new mixer for Christmas that will put a dent in the legacy for sure, got a basic model on hold at Best Buy for $250.
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