My Approach to Dividend Investing

Following is a guest post from Devin, blogger at Dividend Chimp.

Devin A. Decker, Esq.

Bio: Devin is an Estate Planning Attorney and Dividend Growth Investor.  He has been helping individuals plan for retirement since 2002.  Devin writes about his options trades and provides dividend stock research services at his website: DividendChimp.com

My Approach to Dividend Investing:

I work from the most static to the most dynamic information, this means I start with relatively stable data and move onto information that changes more frequently. I’ve found this to be the most efficient way to track stocks.

Stock prices are in constant flux, this means that Dividend Yield, Price to Earnings Ratios (P/E), Price to Earnings Growth (PEG), and Price to Earning Growth plus Dividend Yield (PEGY) are constantly changing with the stock price.

It may be tempting to jump straight to yield and quickly discard a stock that doesn’t meet your minimum dividend yield criteria.  However, you could miss a great company that raises its dividend 50% next quarter because it wasn’t on your watch list.

On the flip side, don’t too get excited about a high yield stock without checking its dividend history first, you may see the dividend goes up and down from quarter to quarter with no stability.

I prefer to start with data that changes yearly, then the data that changes quarterly, and lastly the data that changes daily (sometimes by the minute).

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Chatter Around the World – 115

Chatter Around the World is a curated weekly update of articles related to economics, investing, dividends and personal finance. In these weekly updates, I also capture my blog updates and news related to my portfolio holdings.

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Top 10 Non-Financial State-Owned Companies (2013)

Image Source: Top Foreign Stocks

Let’s dive into the links that caught my attention this week.

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Canadian Pacific Dividend Stock Analysis 2015

Canadian Pacific Railway Ltd. (CP) is the smaller of the two Canadian railroad companies operating approximately 13,700 miles of network, serving business centers from west coast to east coast Canada and the United States Northeast and Midwest regions. The company has come a long way and has turned to become one of the most efficient and profitable companies in the sector. In a matter of three years, the operating margins have doubled. However, dividend growth investors have found it disappointing as the company has not raised dividends since 2012. With a low starting yield of 0.75% and low payout ratio of 15%, there is plenty of room for those dividends to grow, but the company – thanks to its largest shareholder Pershing Square Capital has gone the route of share buybacks to return cash to shareholders. That trend is expected to continue as the company intends to raise more cash from the debt markets to issue further buybacks.

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Recent Buy – Amgen Inc

AMGN-small

A cornerstone of dividend growth investing is to stay focused on buying quality assets and ignoring the noise surrounding uncontrollable parts of the economy. I have employed this measure and look for decent opportunities whether the overall market is up or down. My only focus is to increase my dividends/income year after year and try not to time the market in order to attempt outperformance. While there are some good value finds in sectors such as energy, commodities and financials, one sector that was begging some attention in my portfolio was healthcare. I decided to put some cash to work in this sector as I am confident that it will do well over the course of years to come. Healthcare is the one sector seeing robust inflation while the rest of the economy faces either headwinds or stagnation.

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Chatter Around the World – 114

Chatter Around the World is a curated weekly update of articles related to economics, investing, dividends and personal finance. In these weekly updates, I also capture my blog updates and news related to my portfolio holdings.

world-spending

How Countries Spend their Money

Image Source: The Economist

Let’s dive into the links that caught my attention this week.

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