February 2023 Net Worth $1,762,748
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Hey Everyone and welcome to our February 2023 net worth update. We reached
$1.762 million! We’ve had a decent bump in January with markets moving up.
Ove...
Dividend Income Report – January 2023
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Welcome to the first dividend report of the new year. I have lots of plans
for 2023 and some of the biggest ones will likely occur in the next two
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Quarterly Review of DivGro: Q4-2022
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Welcome to the 40th quarterly review of DivGro, my portfolio of dividend
growth stocks.
Quarterly reviews provide a summary of dividend income, dividend c...
Rising Dividends = Rising Returns
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The research linking rising dividends with superior long-term returns
continues. A report from Ned Davis Research, described in the Wall Street
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The Psychology of Money – Book Review
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Dear Readers, I recently completed reading “The Psychology of Money” by
Morgan Housel. This has to be one of the best personal finance books that I
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29 Companies Rewarding Shareholders With Raises
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As part of my monitoring process, I review the list of dividend increases
every single week. This process helps me to identify patterns, and find out
mor...
Very Comprehensive report JC! It's always goo...
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Very Comprehensive report JC! It's always good to take a look back at how
you've done and to assess where you want to go.
I especially liked your dividends...
2022 Week 46 investing and trading report
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I feel like the markets are easing their bearish stance. They are still
extremely volatile and choppy intraday, but we are poised for a rally that
may la...
2020 Q1 Dividends - $430.58
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The markets have been in turmoil and I have seen my investments drop by
20%. My standard reply to market volatility has been that I don’t care
because I ...
Portfolio Update – March 2021 – $1,000 per month!
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I am a little shocked, and disappointed in myself, that it has been almost
eight months since my last post. The timing makes sense though: I went back
to s...
Passive Income for July 2020
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Once a month, I like to talk about my total passive income for the previous
month. I do this to track how much passive income is coming in. When I
start ...
Portfolio Update May 2020
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It is time to give a new update about my current portfolio. April has shown
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The post Portfolio Up...
Cardiovascular Systems
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Cardiovascular Systems, Inc., a medical technology company, develops,
manufactures, and markets devices to treat vascular diseases in the United
States. Th...
Buy: ABBV
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Today I added a new position: ABBV. They didn't show up on my screener
because some spin-off activity made it look like their div history is much
shorter t...
When it comes to current dividend yields, in general, the cut off used by dividend investors vary such as 2% absolute dividend yield, 3% absolute dividend yield, or dividend yield higher than S&P500 index yield. I have observed that there are quite a few good quality dividend paying companies that have dividends yield of around 2%. There is a school of thought that low dividend yields will take more than 10, 12, or even 15 years to be equivalent to any high yielding CDs or money market accounts. In addition, when low yield dividend stocks are compared to high yield dividend stocks, considering conservative dividend growth rates, low yielding stocks will often lag by significant amount. Mathematically, it does make sense and hence, it is difficult to argue on this thought. Purely based on dividends alone, it is always good to go for relatively higher yield dividends stocks.
In general, I have always made relative comparison with S&P500 index yield. But I have not had a minimum dividend yield floor value, below which I have not invested. Current low yield may be a reflection of company being of good quality. Following are three examples of low yielding dividend stocks that I believe are of good quality.
Lowe’s Companies(LOW) is a home improvement retailer which focuses on retail do-it-yourself (DIY) customers and do-it-for-me (DIFM) customers who utilize LOW’s installation services, and commercial business customers. Its product lines include products and services for home decorating, maintenance, repair, remodeling, and the maintenance of commercial buildings. It continues to have very stable gross and operating margins. It continues to generate operating cash flows. One would expect that with housing market crash, LOW’s earnings would also crash. However, it was not the case, and it indicates the strength of its business model. Even though the housing market is grim, I believe the repair and maintenance segment will continue to generate revenue and income for LOW. Current yield is 2.2%.
John Wiley & Sons (JW.A) is in publishing industry where there is a general concern about industry’s continued decrease in profitability. Contrary to this trend, JW.A continues to have stable gross and operating margins, generates stable operating and free cash flows. Its core competency is digital publishing that focuses on the subscriber based products. It does not have to depend upon advertising revenue alone. Notwithstanding the low payout and low dividend yields, the company will last longer than 10 years. Therefore, I believe low dividends yield alone should not be a show stopper. Current yield is 1.7%.
Becton, Dickinson and Company (BDX) is another example of low dividend yield stock. The company does not have excessively high debt levels (or leverage) and hence, was not affected by financial turmoil. It does not depend upon the credit markets. BDX generated more than half of its sales from outside of US which have different growth rates than US economy. It does have challenges such as regulatory driven change in spending patterns, health care reforms, or recession driven slow down. But these issues will affect the whole industry and not BDX alone. Contrary to general belief, BDK operates in an industry with high barriers to entry. The quality and reliability requirements for end products in this industry are among the stringent ones. It has build business around its core competency which makes me think and believe that it will last for more than 10 years. Current yield is 2.1%.
I am still in my early investing years and have a long way to go before I stop investing. So if I think the company has some core competency, competitive advantage, low risk to dividends, and will survive beyond a decade, then I am open to invest in such low yield dividend stocks. I believe the slow steady earnings will provide capital gains and help me moderate out total returns. Such companies provide stability in your portfolio.
Disclosure: Long on LOW, JW.A, and BDX
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As part of my monitoring process, I review the list of dividend increases
every single week. This process helps me to identify patterns, and find out
mor...
3 days ago
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Linked here is a detailed quantitative analysis of Microsoft Corporation
(MSFT). Below are some highlights from the above linked analysis: Company
Descript...
2 months ago
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