In my web wanderings, I encounter many disparate views on investing. Some I agree with, others I don’t. Then there are the few I can’t even wrap my head around. About a year ago, it appeared that sentiment had begun to shift. One post, The dark side of dividend income by Bite-Sized Income (now dormant) highlighted this change. In a nutshell he presented an argument that dividend investing (@ 4%) is not worth the time. A plausible scenario is presented but it is unlikely the majority of us could capitalize on it.
Nowadays, more bloggers than I’ve ever seen are reaching for returns. Most are testing the water but a few are going ‘all-in’. Strategies include:
- High Yield (bonds/securities)
- Swing Trading
- Real Estate
While these strategies can be successful, other than real estate, timing (to some degree) is paramount. Swing trading has traditionally been more prevalent on the Singapore exchange is now seeing an uptick stateside. Real estate often requires more effort than an individual would consider ‘passive investing’ (am I right WRI?). In updating my database, (see this post), I’ve seen some DGI portfolios reduced to one or two concentrated positions and others into strategy modification. Most are staying on course in this long-term low interest rate environment so far. However – regardless of the strategy, we are first and foremost investors and no one – other than small (starter) portfolios – is a DGI purist.
There was an article in Thursday’s Wall Street Journal that said, “… there will come a point dividend growth will be slowed if earnings and sales don’t improve …”. If this observation becomes reality and the S&P DGR slows, how many more investors will reach for yield through greater risk? Even (the original) Dividend Mantra sold out of a position in 2014 (SYY) due to a DGR downward trend of 3.44% (from 4.9%). Imagine if earnings continue their downward trajectory in 2017.
One additional trend I’ve noticed are some of the UK bloggers reducing their Euro holdings and replacing them with British holdings – probably due to the depressed value of the pound. I’ve been looking at some UK companies as well – perhaps a semi-safe way buy into the long-term value post Brexit (hedge strategy?). I saw Dividends and Hobbies bought VOD (#74) – probably for the same reason.
On the database, Dividends Down Under suggested adding a blogger’s home country field. Added and being populated – with about a third identified (and growing), 17 distinct countries have active bloggers (so far). I’ll try to get a more complete report together after month end.