What's the best dividend investment strategy?
What’s the best strategy?Not sure but I can tell you mine.It is a dividend growth investing strategy that boils down to 3 key components:Buy great companies.Who have room to grow their dividends.At prices which give you the best yield.It is simple but at any given point in time there will only be a handful of companies which meet all 3 of these criterion.Buying great companies.This one should go without saying, but too many investors overlook it. Any dividend growth investing strategy requires a long term commitment. For it to be worthwhile you need the companies to pay (and ideally grow) dividends for years if not decades to come.To do so the company will have to sustain and even increase revenues and net income over long periods of time.Don’t buy companies who are at a huge risk of no longer existing in the future.Companies which have room to grow their dividends.The beauty of dividend growth investing comes from the double compounding which occurs when you reinvest dividends and companies increase the payouts.You don’t want to invest in companies who have very little room to grow their dividends since minor economic downturns could make the dividend unsustainable. Dividend cuts nearly always lead to a decrease in the stock price.Buy companies at prices which give you the best yields.You want to look at a company’s historical dividend yield and buy at the top of that range.This article on sure dividend compares the tradeoff between yield and dividend growth.The bottom line is that in most cases, your better off buying stocks when their yield is higher than it historically has been.Consider This chart for Sonoco Products (SON):Source: uuptickWhile The dividends have grown over the last 5 years, the price has grown even faster. As a consequence it would have been more interesting to buy SON 5 years ago, and you might want to invest in other stocks which are priced more attractively.If you have any other questions, you can request me to answer them.Analyzing stocks takes time, which is why I created uuptick to help investors like you make better decisions.
Which option is better on a mutual fund: a growth option or a dividend reinvestment option?
When investing in a mutual fund (MF), we need to choose between the dividend and growth options.Under the dividend option, you have two choices—dividend payout and dividend reinvestment. Getting dividends in hand is fine, but what’s the purpose of having a dividend reinvestment option when you have a growth option already?As it turns out, both these options do the same thing, but one is more tax efficient than the other, depending on what you choose and how long you stay invested. Tax policy and tax policy alone should dictate the choice of Dividend Reinvestment option.There is simply no other criterion. For detail calculations and example, please watch the video. Please remember this (Source: freefincal: Prudent DIY Investing!)If you are unsure of when you will redeem, choose the growth and be done with it. If the sum you are going to invest is not too huge, choose the growth and be done with it.If you are planning a SIP, choose the growth and be done with it.If you still do not understand the difference, choose growth.Watch the following video to know further in detail :Thank you!!!
Is the "Dogs of the Dow" strategy the best way to invest in dividend stocks for novices to dividend investing?
It is a good way, but while they are ranked by dividend yield, the idea is that you are buying good value, the dividends are a bonus. It was possible, maybe still is, to buy an unmanaged trust that holds the 10 stocks. It came out each month, you held it 12 months then could roll into the next year utilizing the same criteria. It is a good, time tested way to invest in value stocks. Sometimes the market favors growth, sometimes value. It is currently a growth bias, but that will change. Since the Dow is only 30 companies, each one matters more. Since it is the Dow and companies are added and deleted from the Dow, the ideas remain current even though you hold the 10 for a year. In theory all the Dow stocks are good companies to start with, and the Dow tracks the S&P 500 closely some years better, other years it lags a bit, but these are 30 major companies. Then take the 10 with the highest yield, that directs you to the better values. Value can take patience. A year later about 1/2 would be replaced, 1/2 still had higher than average dividends. The 1/2 that needed to be replaced were sold because their price had gone up enough that the yield no longer was in the 10 highest.If I go beyond the Dow, I could find higher, and maybe riskier yields. Beyond the Dow you could find cheaper stocks, but they will be less popular since they aren’t in the Dow, and those 2 steps require more research and won’t necessarily have better returns.So it is a good way. If the trust is still available, it had dividend reinvest option and when you rolled at the end of the 12 months, it was at a discount. No management fee, just a custodian fee that was tiny and you don’t see. You could buy then 10 individually at your broker, just put equal amounts in each. Then you could use a stop loss order. Good luck.
Which is a better option, SIP Growth or Dividend Reinvestment? My financial advisor says dividend reinvestment is currently better.
the question you should ask is what do you need the money for, it this for retirement, is this to buy a house in 5 year. what it for. second. I would not have a financial advisor inless he charges by the hour, and you want to spend two hours with him in 4 years. ME I would buy a REIT etf SUCH AS VNQ, a stock ETF like VIG, VOO SPY, second it is ok to take the DIVIDEND pay the tax on them. and if you want put the extra back in. say you get 10k a year in DIVIDENT, taxes should be between 1500 and 2500, so pay tax have 7500 extra, if you want keep 2500, and put back 5k. it sometime how to save in stock if you never take any of the money out, so I take some of the profit form my dividend, and pay tax and then reinvest.
How can I educate myself for effective dividend reinvestment?
Seeking Alpha has many good authors who write about Dividends and Dividend Growth Investing (DGI). Be sure to catch David Van Knapp’s articles on his Dividend Growth Portfolio on both Seeking Alpha and Daily Trade Alert. This is a real life portfolio where David accumulates dividends in cash up to X amount, then decides where to reinvest them.The other method is to simply have all dividends automatically reinvested back into more shares of the same stock. The difference in these two methods is mostly in how much time you want to spend on it.
What purpose does a dividend reinvestment plan (DRIP) serve?
Dividend reinvestment plans allow you to invest in a company that you apparently like by taking advantage of dollar-cost-averaging and no transaction fees.Dollar-cost-averaging is buying shares of a stock on a regular basis. In relation to most dividend paying stocks, that would be every 3 months (though some stocks pay dividends monthly, semi-annually or annually). Over time this works well because you buy stocks at both high prices and also low prices - it averages out.DRIPS also do not charge transaction (commission) fees so you get more shares for your money.It also has the advantage of being worry free. You can set it up and let it happen.As with all other investments, you should review your holdings on a regular basis to see if the company still meets the reasons that caused you to make your initial investment.Good luck/Good DD (due diligence)
How does long term dividend re-investing work?
What would you consider long term investing? Why do many people say invest in stocks and re-invest dividends for long term like 10 or 15 years when there could easily be at least 1 or 2 stock market crashes other those 10-15 years wiping out a good portion of your profits? I understand investing over many years is profitable, but why would someone stay invested in a company for 15 years when there's almost a certainty that there will be a market crash within those 15 years?
What is advisable growth or dividend reinvestment plan?
Few points that can help you decide between Growth and Dividend reinvestment option:-1] One should prefer dividend reinvestment option over growth option if there is no need of periodic income.2] Unlike dividends from stocks, dividends from mutual funds are similar to redemptions.3] In case of debt fund in the short-term, growth option should be preferred unless one is in the 30% tax slab.4] In case of equity funds in short-term, both growth as well as dividend reinvestment option are same.5] Growth option is better in case of equity funds in the long-term.To know more on this and understand the above points in detail watch the video posted by YADNYA INVESTMENT ACADEMY on YouTube.