There are many risks to investing. One of the major risks that could ruin a portfolio’s chances of generating adequate dividends are purely psychological. Investors who act/are overconfident in their abilities, tend to rush through, and make silly mistakes that could be disastrous. Being cocky might work in certain areas of life, but not in investing on the financial markets. One of the risks that overconfident investors take is when they create a concentrated dividend portfolio. These concentrated portfolios typically include no more than ten to fifteen individual securities. These cocky investors claim that they create these concentrated portfolios because they are only investing in their best ideas. According to these investors it is much easier to focus all your energy on ten individual stocks and research all there is to them, than to focus on thirty or more companies.
My strategy for financial independence is called dividend growth investing. I constantly monitor the group of dividend champions and dividend achievers for companies which are attractively priced. I then analyze them in detail, in order to determine if the business can continue earning more, in order to pay me rising dividend checks in the future. I have managed to build my dividend freedom portfolio one stock at a time over the past six years. I am incredibly patient, which is why I hold on to any quality company I bought, as long as the dividend is not cut or eliminated.
The stock market in general isn’t offering a lot of spectacular individual values out there, and why would it? There’s just not many other asset classes out there that are all that attractive right now. Bonds are offering historically low yields; you’d have to go back to 1952 to find 10-year Treasury notes with yields like you see today. So odds are not on your side as a long-term bond investor right now.
Should you save? Should you invest? If you invest, what should you invest in? Do you need a Registered Retirement Savings Plan (RRSP)? Do you need a Tax Free Savings Account? Do you need an emergency fund? What about your student loan? This list of questions for younger investors could go on and on and on…
The P/E (price to earnings) ratio is a measure of current value of a stock. The ratio is calculated by taking the price and dividing by earnings. This tells us how much you will be paying for each dollar of earnings the company has.
Investing in dividend growth stocks is a long-term proposition. One of the beauties of following a dividend growth strategy is that you don’t have to watch your portfolio or the market on a daily basis. For the most part, daily, monthly and yearly movements are just noise in the system.
I rarely do this, but I was checking my portfolio the other day and wanted to second guess a few of my recent trading decisions. This is how I went from one chart to another until I found this one: This is a stock I bought; I held on to it for a while and then, sold it at loss as the company was clearly going nowhere. The problem is that it had taken their biggest bite of a meat in their history and the piece was hard to swallow. Right after 5N Plus (VNP.TO) bought a company twice its size, their market (rare earth) crumbled and VNP was stuck with the huge debt.
On Monday, I discussed the major bubble crisis in China. I’ve mentioned the term Shadow Banking. This new banking term caught my attention – is shadow banking legal? What is Shadow Banking anyways? And most importantly, how can Shadow Banking affect your portfolio? With a name like this, it’s hard to think shadow banking is good for the economy. From my understanding, shadow banking is like steroids; it boosts your performance and exacts a toll to pay later at a critical price for your excesses.
IWhere To Invest have not inherited or won the lottery if you were curious. I am simply transferring my hard earned money to another account. I have decided to execute a transfer from my other RRSP account to bring it over to my Dividend Portfolio RRSP account. As it happens, most of my contributions go into my other RRSP account and I want more in my dividend portfolio so I have to execute transfers every now and again.
At some point in the future will we look back at our actions today and refer to them as our greatest missed opportunity? A successful dividend growth strategy takes time. Unfortunately, many income investors don’t have the luxury of time on their side and must focus on high-yield investments to meet current expenses. These high-yield investments are often accompanied by high-risk. For those with time, a solid long-term strategy focusing on quality stocks that grow their dividends will treat them well in their retirement years.