Money, money, money…
When it comes to investing, I’m a bit of a nerd. I like researching stocks and learning about different investing philosophies. While I like learning about investing, it was MONEY and the rush it provided that first attracted me to it. It feels good to buy a stock and have it make money. This feeling is one of the reasons I think people equate investing in the stock market to gambling. I’m no gambling addict, but I’d wager there are some similarities in the feelings I got when I first started investing to those who gamble.
Resist the urge
While I don’t get as excited as I used to I still get excited and nervous when I buy a stock. I only have to go back to my last purchase of IBM to remind myself of these feelings. What can I say, I like buying stocks! Because I set pretty conservative target buy prices I end up waiting around for stock prices to come down before I’m willing to invest. All this waiting around, tests ones patience. More often than not,
… Continue reading My Name is DGI&R and I’m Addicted to Investing
As you know from my past few posts I’ve been reading Lowell Miller’s The Single Best Investment: Creating Wealth with Dividend Growth. One thing that surprised me a bit was his comments about inflation. The author pointed out that the 60 year average inflation rate in the United States is 4.1%. The book was written 8 years ago in 2006 and has a US focus, so I decided to do some of my own research to see if this figure was still accurate.
What is inflation?
Before I dive into the results, I want to explain what inflation is. Investopedia defines inflation as
“The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.” […] “As inflation rises, every dollar will buy a smaller percentage of a good. For example, if the inflation rate is 2%, then a $1 pack of gum will cost $1.02 in a year.”
The Bank of Canada website has an inflation calculator that you can play around with to get an idea of how inflation affects your purchasing power. Here are a few of my results:
… Continue reading How To Combat Inflation With Dividend Growth And Protect Your Purchasing Power
Merry Christmas everyone. I hope everyone is having a good holiday. With the end of the year coming up, a lot of people spend time to reflect on the year. It’s taken a few years to develop my dividend growth strategy, so I thought it would be a good idea to take a look at my portfolio and go over the past year.
First I thought I’d look at my stock purchases in the year. I have conservative stock targets for buying shares, which means I don’t buy shares a lot. This resulted in only four stock purchases in 2013.
I purchased Intel for $20.50 in February.
I purchased Suncor for $31.84 on June 10th.
I purchased CH Robinson Worldwide for $54.25 on June 24th.
I … Continue reading A Year In Review: Portfolio Additions, Dividend Growth, and Target Buy Prices
To go travelling for a year, Ms DGI&R had to quit her job. I was fortunate enough to be able to take a year leave and come back to the same job. Since we’ve been back Ms. DGI&R has been working a temp job and looking for work. Some more concrete options have emerged recently, but one of the job offers doesn’t offer any type of pension plan. This got me thinking of different options for her. I decided that this can be made up for with a higher salary and diligent savings routine.
I’m a dividend growth investor (DGI), so you would think, we would just pocket the extra money and invest it in dividend growth stocks. My DGI strategy involves buying quality dividend growth stocks at cheap prices. My entry criteria for “cheap” is fairly strict, so I spend a considerable amount of time waiting for prices to drop. When you wait around for a long time you are losing potential higher returns because you are out of the market. This is why I thought adding a couch potato
… Continue reading Index Investing: The Couch Potato Strategy
I read a very interesting article that got me thinking about investing mistakes. The article; 50 Unfortunate Truths About Investing by Morgan Housel, had some points that really hit home. One that stuck with me was:
- As Erik Falkenstein says: “In expert tennis, 80% of the points are won, while in amateur tennis, 80% are lost. The same is true for wrestling, chess, and investing: Beginners should focus on avoiding mistakes, experts on making great moves.”
I can relate to this point, as over the past few years my investing knowledge has grown substantially. Some of the investments I made in the past I wouldn’t make today. My investing technique has changed and become more conservative. Now, I focus on dividend growth stocks and buying at a great price. In the past I didn’t fully understand the power of dividend growth companies, so the number of companies I’ll invest in has dropped considerably. I learnt a huge amount in the first few years of investing. During this period of starting out I totally agree that one of the best things beginner’s
… Continue reading Investing Mistakes
Lone Primate / Foter / CC BY-NC-SA
In this series I’m going to take a look at the Canadian Banking Sector. If you talk to most Canadian dividend growth investors I think you will find that Canadian banks make up a significant portion of their portfolio. Canadian banks have reasonably high dividend yields, have performed well historically and they used to have very impressive dividend streaks with strong dividend growth until the global financial crisis hit.
When the crisis hit, the Canadian banks held their dividends steady while they navigated through the troubling times. Compared to other foreign banks, Canada stacked up very well, as a lot of other banks were cutting their dividends. Now that the financial crisis is over the Canadian banks have started increasing their dividends again and dividend investors are hoping that the banks get back to their old ways.
The Canadian banking industry is made up primarily of the “Big Six”:
… Continue reading An Introduction to the Great Canadian Banking Series (Part 1 of 10)
antonychammond / Foter.com / CC BY-NC-SA
I like to invest in undervalued dividend growth stocks that have a sustainable competitive advantage. Today I’m going to talk about the second part of this phrase as I’ve already written quite a bit about how I determine target prices and how to identify undervalued dividend growth stocks.
Warren Buffett is famous for investing in companies with a sustainable competitive advantage and even coined the term “wide economic moat”. The phrase refers to the difficulty of invading a castle with a wide moat. The same theory applies to companies. If a company has a wide moat then it is difficult for its competitors to gain market share or take profit from the company the same way it is difficult to invade a castle with a wide moat.
Characteristics of wide moat companies are having an established and well known brand, or having pricing power with a large portion of market demand. These help act as barriers against companies
… Continue reading Wide Moat Stocks In The US Dividend Champions List
PHGCOM / Foter.com / CC BY-SA
I am a dividend growth investor. I like to buy dividend paying companies with long track records of increasing dividends and strong competitive advantages. I look for higher than average dividend growth and a steadily increasing stream of income. Oh, and I also only like to buy when the stock is quite undervalued. This criterion has me waiting on the sidelines for prices to drop a lot of the time. I like to buy stocks, so it is difficult not to stray from my strategy with all this waiting around.
Cheap Options in the Gold Mining Industry
My most recent distraction has been the gold mining industry. The industry has been hit quite hard with the drop in gold prices. Gold mining companies typically pay out a small portion of earnings as dividends due to the higher capital costs associated with the industry. This usually translates into a low dividend yield that is below the 2.0-2.5% minimum entry yield I target. Because of the recent drop in prices, the dividend yield for a number of gold mining companies has risen above my minimum
… Continue reading IAMGOLD: A Distraction From My Dividend Growth Investing Strategy
wili_hybrid / Foter.com / CC BY-NC
I have a hard time keeping my Dividend Stock Analyses under 3,000 words. A large portion of the analysis is spent explaining my valuation method and how I determine a target price. In an effort to make my analyses more concise, I’ve decided to create a separate post that describes my valuation technique and just link to the explanation from the dividend stock analysis. Hopefully this should make my dividend stock analyses easier to read, and if the reader wants a better understanding of my methods the information is still available in this post.
My Valuation Method
There is a misconception out there that dividend investors only care about the dividend and don’t worry about the stock price. I can’t speak for everyone, but this certainly isn’t the case for me. I believe it’s important to purchase stocks at a reasonable to cheap price. This helps preserve your capital and will generally result in better returns. Rather than rely on just one method, I like to use a variety of different methods. Using this approach allows me better identify reasonable targets. I find that one
… Continue reading My Valuation Method and How I Determine Target Prices
Suncor Energy / Foter.com / CC BY-NC-ND
Last week I went over how you can compare the current dividend yield to historical averages to see if a stock is undervalued. The idea being that if the dividend is sustainable and the current yield is higher than the 3, 5, and 10 year high yield averages then the stock is likely undervalued.
You can run into problems with this technique in a few situations however. Sometimes a company has a high yield because they are going through problems or because the market expects a dividend cut. If you look at the yield before a dividend cut, it will usually be higher than the historically high yield averages. No one likes to invest in a company right before a dividend cut, so it is important to see if the dividend is sustainable before using this valuation technique. AGF Management Ltd comes to mind when I look at the May 31, 2013 version of Canadian Dividend All-Star List. AGF Management Ltd’s current yield of 9.44% is 32.7% above its 10 year average highest yield, but by looking at the payout ratio I
… Continue reading Overcome Dividend Yield Valuation Flaws and Find Reasonable Target Prices Fast