Back in 2009, Kiplinger published an article looking at a successful market timer and contrasting it with a buy and hold strategy. Below are some key bullets from the article:
- Bob Parrish lost 70% of his retirement savings based on advice from a financial adviser
- Parrish fired his financial adviser and decided to try timing the market
- Parrish did quite well; his portfolio has gained an annualized 23%
- Market timing is a tough strategy and few do it well. Parrish admits, "I'm savvy enough to recognize I've been very fortunate and that it's not going to last."
- Mark Matson, a Cincinnati money manager, likens a market-timing strategy "playing Russian roulette"
- Successful market timing requires three key ingredients: a reliable signal, the ability to interpret the signal correctly and the discipline to act on it.
- Once you get into market timing, it changes from an investing game to an emotional game
- The Hulbert Financial Digest has tracked the performance of investing newsletters for almost 30 years. It identified only about two dozen portfolios that have beaten the market over the past 15 years.
Buy And Hold Dividend StocksPersonally, I prefer an investing strategy that requires less daily attention. As a long-term, value-based, investor in dividend growth stocks, daily market gyrations are just irrelevant noise in the system. Below are five dividend stocks you can buy, hold and sleep at night:
3M Co. (MMM) provides enhanced product functionality in electronics, health care, industrial, consumer, office, telecommunications, safety & security and other markets via coatings, sealants, adhesives and other chemical additives. The company has paid a cash dividend to shareholders every year since 1916 and has increased its dividend payments for 58 consecutive years. Yield: 2.6%
Genuine Parts Co. (GPC) is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products. The company has paid a cash dividend to shareholders every year since 1948 and has increased its dividend payments for 60 consecutive years. Yield: 2.7%
Johnson & Johnson (JNJ) is a leader in the pharmaceutical, medical device and consumer products industries. The company has paid a cash dividend to shareholders every year since 1944 and has increased its dividend payments for 54 consecutive years. Yield: 2.8%
PepsiCo, Inc. (PEP) is a major international producer of branded beverage and snack food products. The company has paid a cash dividend to shareholders every year since 1952 and has increased its dividend payments for 44 consecutive years. Yield: 2.9%
Exxon Mobil Corp. (XOM), formed through the merger of Exxon and Mobil in late 1999, is the world's largest publicly owned integrated oil company. The company has paid a cash dividend to shareholders every year since 1882 and has increased its dividend payments for 34 consecutive years. Yield: 3.5%
Ultimately, each investor must define what works best for him or her, and have the conviction to stick with it during the good times and the bad. Often the good times are preceded with some very dark days, and if you quit too soon you might just the good time.
Full Disclosure: Long MMM, GPC, JNJ, PEP, XOM in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.
- Why We Are Dividend Growth Investors
- 5 Higher Yielding, Lower Risk Stocks To Perk Up Your Dividend Income
- 6 Dividend Growth Stocks With Very Little Debt
- 4 Secrets To Finding The Best Dividend Stocks
- What Determines A Dividend Stock's Yield
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