If you could only choose five

[Deleted]

Which dividend stocks would you buy?

[ModE98]

Currently, would go with LINE, LTC, RIT, RRD, T. All subject to change, as circumstances develop and manifest themselves.
LINE - Oil & Nat. Gas
LTC - Healthcare REIT, primarily LT Care facilities.
RIT - REIT (closed-end fund paying monthly dividends)
RRD - RR Donnely & Sons Co. - Print Media - rapidly diversifing.
T - AT&T Inc. - Telecommunications

[soycapital]

PEP, EPD, RSG, XOM, VVC. option ABT, MCD (wait for dip on MCD).
This is what I consider a "conservative" divi portfolio, guess that's where I'm at right now. Make sure to dollar average in, of the first five I think PEP, RSG, VVC are at reasonable levels, I'd probably wait a bit on EPD and XOM for better pricing. If you find something you like be willing to be patient for the right price. Look at the charts. Good luck

[IPAfan]

TTT
ENH
PM
FRFHF.PK
JNJ

Should yield a bit more than 3%, provide a decent dividend growth, and opportunity for pretty good capital appreciation. Not all of these companies will increase their dividend every year. I expect that PM and TTT will do so, JNJ will probably continue to increase the dividend. ENH and FRFHF will probably increase the dividend over time, but will often keep it steady for a few years at a time. For instance, ENH has kept the same dividend for a while, but has repurchased 30% of shares in less than 2 years.

[Deleted]

Thanks for the suggestions. A lot of our money has been sitting in cash for the last couple of years. We are still wary of the market but know we should get back in. Dividend paying stocks seem like a conservative way to dip our toes back in. Keep suggestions coming... We appreciate it.

[yclept]

Low Beta Dividend search -- high yield
02/11/11
Ticker	Name	Last	MktCap	Industry	Sector	PEInclXorTTM	ProjPECurFY	PEGLT	Yield
FDI	Fort Dearborn Income Securiti	15.15	132.95	Misc. Financial Services	Financial	7.41	NA	NA	9.29
EVN	Eaton Vance Municipal Income	11.34	256.83	Misc. Financial Services	Financial	9.67	NA	NA	8.73
MFA	MFA Financial, Inc.	8.34	2342.96	Real Estate Operations	Services	8.43	9.08	NA	11.27
CMO	Capstead Mortgage Corporation	13.16	922.9	Real Estate Operations	Services	8.65	8.48	NA	11.85
PTNR	Partner Communications Compan	19.34	2987.94	Communications Services	Services	9	8.92	1.27	10.9
TNE	Tele Norte Leste Participacoe	15.64	6875.18	Communications Services	Services	9.96	6.24	0.47	21.1
LPHI	Life Partners Holdings, Inc.	8.38	156.24	Insurance (Miscellaneous)	Financial	5.45	5.16	NA	9.55
CLCT	Collectors Universe, Inc.	14.06	111.02	Business Services	Services	6.8	NA	NA	9.25
0	0	0	0	0	0	0	0	0	0
0	0	0	0	0	0	0	0	0	0

Yep, that looks like 5 to me. All of these have to be monitored for changes. This is not like an stinger missile that you can just fire and forget.

[runewell]

I think you're better off stashing your funds in Elvis memorabilia.

You might diversify with a bit of Michael Jackson

[Deleted]

It seems that everyone is not a fan of dividend paying stocks. What is the downside compared to investing in other vehicles? Just looking for something somewhat safe that will start making money than just sitting in a money market. Any better ideas?

[soycapital]

Dividend stocks are a very good core group of equities for your portfolio. You may want to do more research on them so that you are comfortable with them. It is important to buy divi stocks at the right price so that you don't lose sleep when the price of the shares drop. Of course the price will move up and down but not to worry, if you buy a good company at a good price hang on and over time you will do very well. I suggest you reinvest the dividends which means when they pay the dividend instead of cash you will be paid with more stock. If you are not good at evaluating stocks you could subscribe to a dividend newsletter. The Motley Fool has one and so does Morningside. www.morningstar.com/?t1=1297526048 and www.fool.com/
It is very difficult to make money in the market unless you do the right things. The correct dividend stocks will get you to your goals IF you are patient. Don't try to time the market or buy the "hottest" sector. As beerfan suggested, JNJ would be a good starting point, very safe, price is reasonable. If you have a larger amount to invest, do it over time, don't buy your whole position at once. It is good that everyone is not a fan of dividend stocks or they would be way to expensive for us to buy! Many chase the high returns and over time end up losing.

[IPAfan]

I think if you are really interested in investing in safer dividend companies that will increase their yield you should find some core holdings in the US like PM, JNJ, MCD (not a buyer at these levels, but a great company can continue to grow.)

Eventually I'd start looking for good companies in Europe. Many of these pay higher dividends, but can still offer higher growth prospects. Right now there are solid european conglomerates yielding 4-5% that have good assets.

[phil5185]

sitting in cash for the last couple of years. We are still wary of the market but know we should get back in. Dividend paying stocks seem like a conservative way to dip our toes back in.

There was a study years ago - clients who incrementally 'bought to keep' got a 13%/yr return for the 20+ yr period. During that same period, the clients who sold out, then waited a couple yrs to get back in got a 2.8%/yr return - ie, 2.8%/yr in a 13%/yr market. The laughable phrase was "we are waiting for the market to recover so that we can get back in". As opposed to buying low??

[Deleted]

We got out of the market when the Dow was around the mid 1300. We were glad we dodged the bullet when it plummeted but didn't anticipate it to be so hard to get back in. The market made a steady upward climb but we were convinced of a double dip. I am still not overly confident of the stock market but know we need to put some money to work. Thanks all of you for your replies. An afterthought... What do you think of a dividend paying mutual fund or an ETF, ie VIG.

[Deleted]

Ratchets, I like your idea of dollar cost averaging and rebalancing every month. My husband has a knee jerk reaction to the market. At least this approach will give him a reason to buy when a stock has a pullback instead of wanting to sell. Thanks all.

[yclept]

Dollar cost averaging is a ridiculous system.

• Intelligent position sizing consists of setting limits on the size of allocations based upon risk/return factors related to portfolio size, not on buying some pre-set dollar amount of a given stock at predetermined intervals.
  
• When a stock is undervalued, one should buy it.
  
• When a stock is overvalued, one should sell it, not be buying smaller amounts of it because some completely irrelevant date has occurred.
  

"I think it's impossible to catch every swing just right in the stock market, and you'll just make yourself crazy by second guessing every move if you try. I think you could benefit greatly from dollar-cost averaging. You can take it a step further also once you pick out your five stocks if you decide to go that route. You can start out with the same amount of money in each stock (20% obviously), and then each month when you contribute more money to your account you buy whichever stock has become the smallest percentage of the five. So it's forcing you to buy on the dips in other words. This is a somewhat similar approach as the 60/40 funds take - when bonds are high they are selling bonds to get back down to 40% and when stocks are high they are selling stocks to get down to 60%. So you could do the same sort of a concept, but obviously on a smaller scale in your own accounts."

The above quotation has more logical fallacies than I care to address. Suffice to say that the price movement of a stock is most strongly related to the underlying value of the stock as modified by market perception of those values as represented by technical indicators. If one doesn't learn to evaluate fundamental values, one is embarked on a disastrous voyage that won't be rectified by rearranging deck chairs.

[yclept]

I think I'm arguing against a religious tenet to true believers of same (and thus wasting my time), but here's an attempt. I'm not trying to start a quarrel -- some strategies move money into the market, others take it out. Those of us who take it out need other people willing to put it in!

I think it's impossible to catch every swing just right in the stock market, and you'll just make yourself crazy by second guessing every move if you try.

Read the 5/15/50 thread. There are many market direction indicators that can be used (like MACD on an index), this is just the one I use. They lag, but they keep one from mimicing a deer staring at the lights in the middle of the road.

I think you could benefit greatly from dollar-cost averaging.

Though I believe there is some validity to seasonal market trends (disputed by many, but I think at least worth paying attention to), there is no logic whatsoever in specifying predetermined periods when stocks will be bought. A stock should be bought when it is undervalued, whenever that occurs. Another fault of the dca advocates is that they never say when to sell, which I guess assumes one is going to hold forever; that converts one from an investor in stocks to a collector of stocks. Selling is one half of a successful transaction, and I posit it's the more important half.

You can take it a step further also once you pick out your five stocks

The tenet that one would keep adding to positions based upon analysis done some earlier time simply because they met certain selection criteria then is just plain crazy. Fundamentals change. Market factors change. Analysis needs to be ongoing both for potential new purchases as well as for existing holdings that should be sold.

You can start out with the same amount of money in each stock (20% obviously), and then each month when you contribute more money to your account you buy whichever stock has become the smallest percentage of the five. So it's forcing you to buy on the dips in other words. This is a somewhat similar approach as the 60/40 funds take - when bonds are high they are selling bonds to get back down to 40% and when stocks are high they are selling stocks to get down to 60%. So you could do the same sort of a concept, but obviously on a smaller scale in your own accounts."

This type of portfolio re-balancing makes some sense when applied to different asset classes for people who are not going to pay attention to their investments. It makes them do something on a regular basis. It makes no sense at all when applied to individual investments withing a given asset class. Especially when newer data will be available regarding current holdings and prospective buys. Where stocks are concerned, it is again reinforcing the illogical precept that all equity investing should be confined to some predetermined and immutable list of stocks regardless of changes that have occurred in the valuation and ongoing business prospects of those stocks.

As an aside, CAT is getting pretty pricey by most fundamental metrics. This would be a far better time to be selling CAT than to be buying it. I find the total LT D/E of 2.63 particularly bothersome, especially considering the relatively low return on assets (4.49% TTM). It won't be long before the interest they're paying on those borrowed funds exceed the profit they are able to earn on same (assuming it's not already true, I didn't bother to see what rate they're paying on the borrowed money). The D/E alone is sufficient for me to preclude it from further consideration.

[yclept]

Well, I just saw your edit. See, I knew I was wasting my time.

[soycapital]

If you guys have a personal problem picking each others styles apart please do it off the board! This is not the place for that crap. Mod-can you delete these post off here?

[tyfighter3]

Here is some stocks that pay good divedends and will grow in the coming years, GE, DD, XOM, BA, CAT. You could add a bank to this and you would be covered for years to come. JMO

[yclept]

If you guys have a personal problem picking each others styles apart please do it off the board! This is not the place for that crap. Mod-can you delete these post off here?

It seems to me that discussions or even arguments about the soundness of various investing strategies is an entirely appropriate topic for a forum like this -- maybe not this particular thread, but threads have a way of morphing around subsequent posts. If you don't like it, don't bother reading it. If the logical merits of various approaches to money management and buy and sell criteria aren't germane to the purpose of this board, I, for one, can't imagine what is.
Your use of the word "crap" is the only vulgarity that was introduced to this discussion.

[soycapital]

I didn't bother to read more than a few words to get the gist. You see the problem yclept is folks visiting our board for advice and have to put up with a bunch of back and forth useless arguing and insulting about who has the right investing style just isn't right. We all know that without getting the last word in. Do you think this kind of stuff is going to attract people to the board?

[Deleted]

Ha! The disagreement in investing styles mirrors my husband and myself I appreciate suggestions on relatively safe dividend paying stocks. Maybe choosing a few of these my husband will feel he is in the "game" and has a few stocks to keep an eye on and I will feel more comfortable knowing that in the long run these stocks should do well. Thanks!

[danshirley]

Actually the arguments tend to reveal weak places in different people's strategies and are not a totally bad thing... as long as the arguments are kept to fact and don't diverge into fiction.

I am always amazed that the (mostly) silly old geezers on this board come up with the degree of intelligent ideas they do.

It's kind of like watching Willie Nelson sing. It's amazing that such a smelly old geezer is capable of producing something of such transcendental beauty... like this:

[Deleted]

m2w

my two cents....

As some said above...my list would include a lot more than five equities

But....do you just want a yield...or do you want growth also? That matters and will affect the list i provide. If you want income there are high yield equities...but they rarely grow very much.

What is your risk quotient? If the stocks suddenly start a 10-15% correction, are you going to pull the plug? Investing to me is a LONG term proposition.....i NEVER expect to sell some of my positions. My kids...and hopefully their kids....will inherit them.

I buy companies that i understand....that have the ability to withstand cyclical downturns....but in a good economy they will grow their profits. I dont like high flyers....as they tend to soar, they also tend to crash.....think Apple....great company....and one i totally missed because i thought it was a fad. Little did i know.....

Take a look at....

PG
GE
CAT
XOM
CVX
JNJ
PM
HNZ
MO
NYB


these are some that i either have or my wife has in her portfolio. most are huge conglomerates, most with international sales, and a nice steady dividend. None will grow 30+ % in a year....but most will just continue a nice steady march.

I relook at every company once a quarter.....unless BIG news hits, nothing changes. We used to have BP but sold a few days after the oil rig explosion. Unless the reason you buy the company changes....we buy and hold....and use the dividends to continue to add to our positions. Not saying this works for all.....you have to be able to not listen to all the so called experts and pundits.....and do what YOU think is right for you.

[Deleted]

Thanks gdgyva, I like your list... Safe and steady. My husband checks our investments almost every day. He likes playing in the market but I think he has a tendency to buy stocks that are a gamble. I would like him to be happy with a stock list similar to yours. He just needs a handful of stocks to check on once in awhile just to feel like involved. I'm passing all the stock suggestions on to him and hopefully he will get excited about safe stocks that actually make
money

[IPAfan]

I think the DCA argument is more complicated than most are making it out to be. DCA makes a world of sense in the RIGHT sort of business.

For instance the Altria line of companies have been perfect companies to DCA over time. They've managed to grow EPS, buyback shares, pay large dividends and grow them, all relatively consistently over a long period of time. The tobacco companies have been good companies to DCA because they have always traded at a relatively good valuation.

For instance, PM is the most richly valued of the tobacco companies right now. It trades at 15X earnings and pays a 4.5% dividend which seems fairly valued. However, this company is likely to grow earnings at a healthy rate (probably at least in the double digits) for a long time to come through buybacks, population growth, and growth in the emerging markets.

I think that DCA is fine for a growing company so long as the valuation is within reason. Blind DCA is a bad idea (even the best companies are not worthy of investment at very high multiples.)

[danshirley]

DCA:
I think the retired folks here forget that when they lived a real life and had useful employment they didn't wake up wondering where the market was going today.

35 years ago when I was teaching and running a cardiac cath lab at H. Medical College I woke up rehearsing the class I was going to teach that day and reviewing in my mind the cases scheduled in the cath lab and hoping I didn't forget anything. Lives were at stake. The future lives of my students and the current survival of the patients... and my own life as a teacher etc. Scr*w the market.

I didn't really think about what was happening to my retirement account except maybe once a year... if that. I didn't have time to look into individual stocks and their current valuation etc. etc.

So for me... then... dollar cost averaging was the best method of putting money into the stock market. Once a year or so I would try to decide on what mutual fund or index fund I was going to DCA into next year.

What's right for a short man is not necessarily right for a tall one... and people are not idiots because they live different lives and have different values than you.

[yclept]

There is no logic to DCA. It is tauted as some kind of money management methodology or maybe risk management tactic, but it makes no sense for either purpose.
For a stock expected to rise, it represents a strategy to buy some now then buy some later at a higher price, and later again at a still higher price. If the expectation is that a stock is going to go up, it should be bought now (in a position size that represents an appropriate risk profile for the size of the portfolio) at the lowest price expectable over the foreseeable future.
For a stock expected to fall, it represents committing to sink ever more money into a stock that one shouldn't own at all. I can imagine no sound logic that puts continued buying of an overvalued or otherwise failing stock on autopilot.
The whole DCA thing is based upon the premise that there are some stocks that are so "holy" they should be owned, whatever the price. Former Enron shareholders might have some relevant input on that topic.
DCA is a "feel-good" diversion from real stock evaluation; it reinforces the confusion many people have in distinguishing between a successful business model (i.e. a "good company") versus an undervalued or overvalued condition of a stock that represents ownership in that company. Such people confuse the stock value with the value of the underlying company. The value of a company is primarily represented by assets minus debt combined with the far harder to determine future prospects of same. The value of a stock is represented by the price a willing buyer will pay for it right now. They are not the same.

[yclept]

"I think the retired folks here forget that when they lived a real life and had useful employment they didn't wake up wondering where the market was going today."

That's probably a valid point. My own experience is that I would have been better served economically if I had spent more effort early on shepherding my investments and less doing whatever else I did that consumed the time. But then those early years for me were before the internet and all the tools it provides existed. I don't think my early investments would have been so aimless had the tools that exist now been available then.

[IPAfan]

yclept,

I think you avoid my point which is that some stocks are perpetually undervalued or fairly valued. Therefore, they should always be owned and bought so long as they continue to be undervalued. The tobacco stocks are the best example I can think of.

So you should DCA into good companies. I do this, and I'm pretty much fully invested. I reinvest dividends and additional contributions. Occasionally I take money out of my investment accounts to pay the bills or invest in my business. I still try to invest heavily when the price is right like you've said. I would never advocate buying more of an overvalued stock. Still, it's a good plan to buy and reinvest dividends and additional contributions into growing companies that pay growing dividends WHEN they trade at a good - fair price.

[yclept]

Beerfan,
I believe tobacco stocks carry risk that is not reflected well in ordinary valuation metrics, such as overseas copyright violation and domestic societal attitude which allows governmental entities to tax the products unmercifully, limit their access to advertising and otherwise curtail their business. So I'm not sure I agree that they are always undervalued or fairly valued.
That aside, I still see no logic in buying multiple positions programmatically in the same stock at predefined time intervals (which is the basic definition of DCA as I understand it). If the stock is rising (as one would hope would be the case if the fundamental analysis was correct), all this insures is that each purchase of the stock is at a higher cost than the last, and requires extra bookkeeping to keep track of basis for taxes. Rather than dribble multiple investments into the same stock(s) (incurring extra commissions), it seems to me that one is better advised to buy a position based upon portfolio size and the next time money is available move on to the next stock. After the portfolio is diversified with the most promising candidates, one might want to add full position sizes of the best candidates of the existing positions.
But then, if it was me, a lot of the original tickers would be sold along the way. Underlying fundamentals constantly shift, bringing new issues to light that are more attractive than existing positions. We do not deal with a stock market, we deal with a market of stocks.
Whatever! To each his/her own. Differing opinions are what makes a market.