What/When Is Enough?

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:

  • Options
  • High Yield (bonds/securities)
  • Commodities
  • Metals
  • ForEx
  • Futures
  • 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.

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5 thoughts on “What/When Is Enough?

  1. For sure real estate rental require more work, that’s why I consider it as semi-passive. However, the one I bought back home in the MidWest is fully passive, as I’ll just pay my brother to fix, my sister to manage. BAM! haha 🙂 Diversifying portfolio can be keys. Even with my real estate business, I got to stop buying more and more before it’ll become a full time job.

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  2. At least there’s no debt on that one – even with management fees you could -in theory – be actually profitable before capturing depreciation 🙂 (no mean feat!) – my real concern is if dividend growth reverts to the mean (lower) will investors increase risk in an attempt maintain returns?

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  3. Some of the earlier DGI bloggers (Income Surfer, Roadmap etc) are now moving away from DGI. Though Divhut remains steadfast in his portfolio.

    It is an interesting world we live. The idea of DGI stocks is that they continue raising dividends regardless of the situation in the world, which is ultimately why so many buy them, no? So if they continue raising even if another 2008 happens, they’ve done their job.

    Our portfolio is very small, we are at the start of our journey. We will continue investing in companies that seem to have a growing future for at least 15+ years. The danger of NOT investing is always powerful. And as most of our best income earning years are ahead of us, (hopefully!!!) it should all work out.

    Tristan

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  4. During my time investing I have lived to regret not following DGI principles (1987, dot-com). Had I maintained, I imagine my portfolio would be twice the size (at least). I’m with DivHut on making at least one buy monthly (even if a smaller portion than normal). The Diplomats are taking the fewer -but larger – approach. DGI may not be flashy or hold the promise of instant gratification – but it is a proven concept for the long haul which is why I always returned to the fold.

    I think you have a good start to a great future!

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