Investing for dividend income is a great way to increase spendable income while leaving the principle alone, and possible making some capital gains with time. Do others own income generating stocks, bond funds, etc?
-- Edited by djpotts55 on Tuesday 29th of November 2011 11:24:48 AM
bjoyce said
04:35 PM Apr 4, 2010
We have a portion of our portfolio in XLACX, which is similar in many ways. A few years ago it was trading higher per share and paying out larger dividends, but times change. Does ADVDX guarantee they will keep their dividends high?
Steak Eater said
08:04 PM Apr 4, 2010
-- Edited by Steak Eater on Friday 15th of October 2010 04:27:43 PM
Gary said
07:07 AM Apr 5, 2010
Many of us don't have 100K to throw into something.
I looked over their performance during the weekend also and wasn't too impressed. The Wells Notice doesn't do much to build my confidence either. I'll keep my money where it is and maybe it will build back up slowly. I still have a little time before retirement.
Buyer beware. If it sounds too good to be true, it probably is.
djpotts55 said
01:06 PM Apr 5, 2010
I haven been successful in finding many investments that pay around a 10% yield. I also like to use ROTH IRAs as a way to generate retirement income that will be tax-free for life starting at 59 1/2 years of age.
-- Edited by djpotts55 on Tuesday 29th of November 2011 11:16:29 AM
Gary said
08:14 PM Apr 5, 2010
Deleted.
-- Edited by Gary on Monday 5th of April 2010 08:17:54 PM
Steak Eater said
08:27 AM Apr 6, 2010
-- Edited by Steak Eater on Friday 15th of October 2010 04:27:59 PM
Racerguy said
10:09 AM Apr 6, 2010
This topic in no different than "which is better?" Chevy, Ford ,Dodge . We appreciate any advise but many of us just deal with what money we have and adjust as needed. I admire those of you that keep up with this and feel you are successful. There is no wrong answer IMO.
heyduke said
10:58 AM Apr 6, 2010
well call me simple minded but I much prefer to create my own portfolio of solid dividend players that have historical paid their dividend and still have the opportunity for capital appreciation... now that is fine for me but others may not be so inclined to manage their own money... which reminds me to start another topic on stock trading and full timing...
bjoyce said
12:11 PM Apr 6, 2010
Steak Eater gave the killer for me, that high turnover does cause tax implications. My wife is very good at finding tax efficient mutual funds because we have been burned by those surprises at the the end of the tax year.
Steak Eater said
04:10 PM Apr 7, 2010
-- Edited by Steak Eater on Friday 15th of October 2010 04:28:20 PM
Steak Eater said
07:42 AM Jun 8, 2010
-- Edited by Steak Eater on Friday 15th of October 2010 04:28:38 PM
Delaine and Lindy said
08:56 AM Jun 8, 2010
Just remember the Bush tax rate goes away in 2011. TAXES up up and away. Was announced this morning that 2011 will be devastating for investments.......... I don't have to worry about investments in the market, They got us twice not anymore, we are circulating our money.
Woodchip said
09:08 AM Jun 8, 2010
Deleted
-- Edited by Woodchip on Wednesday 9th of June 2010 09:28:09 AM
NorCal Dan said
09:51 AM Jun 8, 2010
2 thoughts on this thread...
(1) Investing in the market is legalized gambling...if you can't afford to lose it all, don't play.
Any my favorite...
(2) You can't take it with you...enjoy it while you can.
Racerguy said
11:12 AM Jun 8, 2010
Dan hit the nail on the head.
Steak Eater said
04:34 PM Jun 8, 2010
-- Edited by Steak Eater on Friday 15th of October 2010 04:29:03 PM
GENECOP said
06:53 PM Jun 8, 2010
Steak Eater wrote:
Woodchip wrote: Mr. & Mrs. Potts, I was hooked after reading your first post here, that upon investing $100,000, the stock you invest in returns approximately $1700 per month. Did I read this right?
Well...I for one would like to know what stocks or funds provide this kind of return.
My husband and I will have around $100,000 to invest after the sale of our home and living off the dividends would be just the kind of situation we'd need to make it out on the road fulltime.
~Woodchip~
Unbelievable. I am truly dumbfounded.
After multiple posts and explanations trying to educate and explain risk vs. reward, and after showing that Mr. Potts' fund picks have lost 17% and 29% each IN 2 MONTHS TIME, someone makes a post asking for his advice in investing the proceeds of their home sale. Wow.
Mr Potts, you win. You have clearly made a better argument and proven to folks here that ADVDX and AOD are great investments, even if they lose capital at a rate of three times what they pay out in dividends . I'm outta here .
Dont be so amazed, its all about greed and human nature, tell someone they can generate 1,700 a month of 100,000 investment in this market and they will be all ears if they are uneducated in the way things work. I think the Madoff guy can get you 2,100 per month on 100,000. : You're walking around blind without a cane, pal. A fool and his money are lucky enough to get together in the first place, Gene
Deb and Paul said
12:12 PM Jul 16, 2010
Wow, what an interesting and lively debate! Shall I jump into the frying pan? I agree with Dan above all because sadly we can't take it with us! On the other hand, I have a nagging urge to leave a little behind for my kids & future grandkids although I hope to outgrow that desire over time.
Meanwhile, I do enjoy dabbling a bit and agree with heyduke that building a portfolio of solid dividend stocks can be a rewarding strategy. Granted, as Steakeater points out, the goal is to for your dollars to increase so whether you call it dividends or capital appreciation is not as relevant as whether or not you have gained or lost money (tax implications aside). Still, I believe that solid dividend stocks can be a defensive position and safer than growth stocks, all other factors being equal. (Steakeater - I have a suspicion you might be able to prove otherwise...)
Here is something I've learned while dabbling that might interest some investors- certain stocks have been identified as "Dividend Aristocrats" by the S&P. This means they have increased their dividends for the last consecutive 25 years. So, if you are willing to accept the fluctuations in your portflio value, you at least have the advantage of knowing you can rely on the yeild with reasonable certainty. Of course, the yields aren't in the double digits either.
I prefer individual stocks to funds for several reasons, not the least of which are the fees. Granted index funds can have low fees. To save trade costs, I have an account with a brokerage that gives 10 free trades per month if you have $25,000 in the account. As a conservative investor, I rarely use all 10. If you want the link, let me know.
The only stock I am in at the moment that pays double digit yields is ANH (Anworth Mortgage Asset Corp) and it is yielding about 13% last I looked. I haven't spent the time to research it much, so I only bought a small amount, more just for fun and to try to figure out what the catch is. If anybody out there knows, I'm all ears. Meanwhile, since I bought it a few months ago, it's outperforming my "real" portfolio with "safe" investments like Mickey D's, P&G, J&J, PEP, etc. My guess is that it's just highly out of favor due to the whole housing / mortgage collapse. Any thoughts?
-- Edited by Deb and Paul on Friday 16th of July 2010 01:04:00 PM
Steak Eater said
08:55 AM Jul 17, 2010
-- Edited by Steak Eater on Friday 15th of October 2010 04:29:28 PM
Steak Eater said
09:26 AM Jul 17, 2010
-- Edited by Steak Eater on Friday 15th of October 2010 04:29:46 PM
Tim & Robyn said
11:37 AM Jul 17, 2010
I would just like to say that all of this discussion is way over my head. It's too bad that public schools don't teach economics as a required course... but then you're up against what biases might be imposed upon them from the powers that be as to what they teach. Since there is now a federal Department of Education, those requirements could change with the changing political winds.
At risk of starting a political discussion (taboo here because of the emotions involved), the way the current Congress and Administration are trying (in my estimation) to dismantle free-market economics makes all of this even riskier. The level of uncertainty they have introduced into the market place because of Obamacare, the recent banking legislation, etc. is one of the big things hampering our economic recovery. The federal government is overreaching in my opinion and put us all at risk. With our current level of national debt and deficits China could claim to own this nation if they were to call in all the paper.
The only economic education I have ever had was to read a couple books by Thomas Sowell prior to the 2008 elections. I may be (and probably am) oversimplifying, but the basic theses were:
1) That there is not enough of anything for everybody to have as much as they want of it... (He calls it 'Scarce resources that have alternative uses')
2) and that a free market is far superior to a centrally planned government economy, because there is no way any bueracracy can understand and assess all the interrelationships that millions of investors, thousands of companies etc. can do virtually instantaneously, without any of them having to understand the intricacies of any of the other interested parties.
This is why (he says) in the former Soviet Union grocery store shelves were virtually empty.... not because the capacity to produce wasn't there, but because ability to anticipate what was needed didn't exist in the beurocracy.
Even Communist China has adopted free market principles, and they are fast headed to being the dominant economic power in the world, if they aren't there already. Why are we here abandoning those same principles?
That's my rant for today....
Tim Fansler
Deb and Paul said
11:20 PM Jul 17, 2010
Steak Eater wrote:
A dollar in capital appreciation is the same as a dollar of dividend - tax implications aside, one is no more valuable than the other.
I also strongly disagreed with Mr. Potts' fund recommendations (ADVDX and AOD). Those two funds were not in any way, shape, or form "solid dividend" funds,
Exactly! And I'll raise you one. Sometimes a dollar of dividend is worth even less. One simple example would be a stock (or fund) that lost, oh let's just say 29% which was quoted as a 2-month loss for AOD. So your $1000 investment is now worth $710, with a loss of $290. If you choose not to sell the shares, you can NOT deduct that loss on your tax return. However, you also received that big fat dividend of let's just say 20%, or $200. You will of course have to pay taxes on that, even though your entire investment is actually only worth $910 (your stock value of $710 plus your dividend of 200). You now have less money than you started with AND you must pay taxes on a $200 divdend.
I also agree that these types of "high dividend funds" are a poor investment. And as Steak Eater points out, the biggest inherent risk is if they reduce their dividends, then the inflated price of the shares will plummet. That's what I like about the individual stocks that have a track record of consistently raising their dividends. The only way to do that in my opinion is to keep the dividends realistic. No get-rich-quick schemes.
Thanks for your thoughts on the ANH stock. So it seems one should get out BEFORE it seems likely that the Federal Funds Rate will be raised. Interesting. So, my guess is it might be fairly safe for the immediate future. Let me ask you this, though; is this because we can presume the mortgage instruments in the fund are at a fixed rate of interest? Because if, for arguments sake, one could find a REIT that contained adjustable rate mortgages, wouldn't their value remain relatively constant even when the Fed Funds rate increases?
To Tim & Robyn I wanted to say you brought up some very interesting points too. Economics is such a fascinating subject, though, you might want to find a book that would match your current level of understanding and take it to the next level. My father was an Economics Professor so I was sort of weaned on these discussions. Now my son is majoring in it so he's my new mentor. There is still so much I want to learn about macroeconomics (which focuses more on the global picture). I've worried about the debt, too, but I really don't think it's as dire as it first appears. If I understand it correctly, our advantage is that (unlike the countries in the European Union for example who no longer have individual control of their curriencies) here in America, we alone control how much money we print and could print more if the powers that be deem it a wise course of action. More dollars in circulation would reduce their value (inflation) but I suppose if done correctly (perhaps incrementally?) this approach could be well tolerated by our economy. So in theory we could print money to pay off China! Done all at once though would of course be much too inflationary. Other deals are also frequently made between countries and in exchange for other concessions such as trade agreements, etc., portions of debt are often forgiven.
Finally, at the risk of getting political, I'll say that I agree with you on the virtues of a free-market economy!
Cheers, Deb
-- Edited by Deb and Paul on Saturday 17th of July 2010 11:29:47 PM
heyduke said
07:52 AM Jul 18, 2010
free markets are in my opinion more flexible and efficient... but a lot of what recently happened in the economy and in the stimulus provided did (also my opinion) keep us out of what could have been a crippling blow to the US economy...
now the good news... blue chip stocks are still having a fire sale so load up if you dare... i have...
Deb and Paul said
11:00 AM Jul 18, 2010
As Warren Buffet said, "...attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
Steak Eater said
08:17 PM Jul 18, 2010
-- Edited by Steak Eater on Friday 15th of October 2010 04:30:08 PM
Steak Eater said
08:59 PM Jul 18, 2010
-- Edited by Steak Eater on Friday 15th of October 2010 04:30:22 PM
Deb and Paul said
12:44 PM Jul 19, 2010
Well thanks a lot Steak Eater. I was planning to get up at the crack of dawn for a hike this morning but after reading your post last night, I got so curious about Berkshire, Warren, book values, etc., that I was up half the night researching it all. Needless to say, I slept right through my alarm. But seriously, he does seem like a fascinating guy for many reasons, not the least of which being that he breaks the stereotype of the greedy rich by being such a generous philanthropist.
It seems we've devitated from the original post quite a bit so I might try my hand at starting a new thread to share more of these ideas.
I have few final thoughts regarding this original post. First, in all fairness I believe that when Mrs. Woodchip posted that she was interested in a fund that paid such a high return, I believe she was responding to the original post but had not yet taken the time to read all the replies that pointed out the risk. I'm sure it is now clear that such a high return on investment would be coupled with very high risk.
Some of us believe that the funds Mr. Potts suggested are not prudent investments, based in part on past performance. In all fairness, hindsight is 20-20, as I often gently remind myself whenever I wonder why I followed Citibank all the way into the crapper! Still, if you remain bullish on these two funds Mr. Potts, I hope their performance improves for you in the coming years. In today's climate, it can be an accomplishment just getting back to even.
Finally, COMPLETELY off the subject, I'd like to say I've enjoyed this topic so much because I miss my father, who was always had such excellent opinions yet was equally willing to change them with no loss of pride when new information presented itself, and he always managed to stay so very well informed that every conversation with him was a learning experience. Here's to dad's everywhere. Deb
-- Edited by Deb and Paul on Monday 19th of July 2010 12:45:45 PM
Steak Eater said
08:04 PM Jul 19, 2010
-- Edited by Steak Eater on Friday 15th of October 2010 04:30:36 PM
larneal said
02:37 PM Dec 14, 2010
Wow - what a discussion. I'm a long time investor in the stock market and my take on it is this: It's too complicated and risky for the average Joe. And certainly if you can't afford to lose it then don't put it in the stock market. However, the bottom line is, for growth it's the only game in town. I retired 5 weeks ago, but fortunately for me I finally decided several years ago to let the professions do the investing. So I quit doing it myself and found a financial advisor that I could trust. For me it's worked out.
One thing for sure, you can't live on Social Security alone, unless of course, you just want to exist. My goal was to average 6% growth on my investments. I am with Edward Jones and my broker has done a good job. He consults with me before each trade but I rely on his expertise. Most of my investments are fairly safe, but again, with investments there's no way to avoid all risk.
My advise to anyone with money to invest would be to seek out a good financial advisor.
Larry Neal
rjenkins said
03:36 PM Dec 14, 2010
All this reminds me of a story a friend of mine gave regarding a relative that did financial planning. He would proudly say "I make small fortunes for people"....pause...."I take their large fortunes and convert them to small fortunes"....
Investing for dividend income is a great way to increase spendable income while leaving the principle alone, and possible making some capital gains with time. Do others own income generating stocks, bond funds, etc?
-- Edited by djpotts55 on Tuesday 29th of November 2011 11:24:48 AM
-- Edited by Steak Eater on Friday 15th of October 2010 04:27:43 PM
I haven been successful in finding many investments that pay around a 10% yield. I also like to use ROTH IRAs as a way to generate retirement income that will be tax-free for life starting at 59 1/2 years of age.
-- Edited by djpotts55 on Tuesday 29th of November 2011 11:16:29 AM
-- Edited by Gary on Monday 5th of April 2010 08:17:54 PM
-- Edited by Steak Eater on Friday 15th of October 2010 04:27:59 PM
-- Edited by Steak Eater on Friday 15th of October 2010 04:28:20 PM
-- Edited by Steak Eater on Friday 15th of October 2010 04:28:38 PM
Deleted
-- Edited by Woodchip on Wednesday 9th of June 2010 09:28:09 AM
-- Edited by Steak Eater on Friday 15th of October 2010 04:29:03 PM
Meanwhile, I do enjoy dabbling a bit and agree with heyduke that building a portfolio of solid dividend stocks can be a rewarding strategy. Granted, as Steakeater points out, the goal is to for your dollars to increase so whether you call it dividends or capital appreciation is not as relevant as whether or not you have gained or lost money (tax implications aside). Still, I believe that solid dividend stocks can be a defensive position and safer than growth stocks, all other factors being equal. (Steakeater - I have a suspicion you might be able to prove otherwise...)
Here is something I've learned while dabbling that might interest some investors- certain stocks have been identified as "Dividend Aristocrats" by the S&P. This means they have increased their dividends for the last consecutive 25 years. So, if you are willing to accept the fluctuations in your portflio value, you at least have the advantage of knowing you can rely on the yeild with reasonable certainty. Of course, the yields aren't in the double digits either.
I prefer individual stocks to funds for several reasons, not the least of which are the fees. Granted index funds can have low fees. To save trade costs, I have an account with a brokerage that gives 10 free trades per month if you have $25,000 in the account. As a conservative investor, I rarely use all 10. If you want the link, let me know.
The only stock I am in at the moment that pays double digit yields is ANH (Anworth Mortgage Asset Corp) and it is yielding about 13% last I looked. I haven't spent the time to research it much, so I only bought a small amount, more just for fun and to try to figure out what the catch is. If anybody out there knows, I'm all ears. Meanwhile, since I bought it a few months ago, it's outperforming my "real" portfolio with "safe" investments like Mickey D's, P&G, J&J, PEP, etc. My guess is that it's just highly out of favor due to the whole housing / mortgage collapse. Any thoughts?
-- Edited by Deb and Paul on Friday 16th of July 2010 01:04:00 PM
-- Edited by Steak Eater on Friday 15th of October 2010 04:29:28 PM
-- Edited by Steak Eater on Friday 15th of October 2010 04:29:46 PM
At risk of starting a political discussion (taboo here because of the emotions involved), the way the current Congress and Administration are trying (in my estimation) to dismantle free-market economics makes all of this even riskier. The level of uncertainty they have introduced into the market place because of Obamacare, the recent banking legislation, etc. is one of the big things hampering our economic recovery. The federal government is overreaching in my opinion and put us all at risk. With our current level of national debt and deficits China could claim to own this nation if they were to call in all the paper.
The only economic education I have ever had was to read a couple books by Thomas Sowell prior to the 2008 elections. I may be (and probably am) oversimplifying, but the basic theses were:
1) That there is not enough of anything for everybody to have as much as they want of it... (He calls it 'Scarce resources that have alternative uses')
2) and that a free market is far superior to a centrally planned government economy, because there is no way any bueracracy can understand and assess all the interrelationships that millions of investors, thousands of companies etc. can do virtually instantaneously, without any of them having to understand the intricacies of any of the other interested parties.
This is why (he says) in the former Soviet Union grocery store shelves were virtually empty.... not because the capacity to produce wasn't there, but because ability to anticipate what was needed didn't exist in the beurocracy.
Even Communist China has adopted free market principles, and they are fast headed to being the dominant economic power in the world, if they aren't there already. Why are we here abandoning those same principles?
That's my rant for today....
Tim Fansler
Exactly! And I'll raise you one. Sometimes a dollar of dividend is worth even less. One simple example would be a stock (or fund) that lost, oh let's just say 29% which was quoted as a 2-month loss for AOD. So your $1000 investment is now worth $710, with a loss of $290. If you choose not to sell the shares, you can NOT deduct that loss on your tax return. However, you also received that big fat dividend of let's just say 20%, or $200. You will of course have to pay taxes on that, even though your entire investment is actually only worth $910 (your stock value of $710 plus your dividend of 200). You now have less money than you started with AND you must pay taxes on a $200 divdend.
I also agree that these types of "high dividend funds" are a poor investment. And as Steak Eater points out, the biggest inherent risk is if they reduce their dividends, then the inflated price of the shares will plummet. That's what I like about the individual stocks that have a track record of consistently raising their dividends. The only way to do that in my opinion is to keep the dividends realistic. No get-rich-quick schemes.
Thanks for your thoughts on the ANH stock. So it seems one should get out BEFORE it seems likely that the Federal Funds Rate will be raised. Interesting. So, my guess is it might be fairly safe for the immediate future. Let me ask you this, though; is this because we can presume the mortgage instruments in the fund are at a fixed rate of interest? Because if, for arguments sake, one could find a REIT that contained adjustable rate mortgages, wouldn't their value remain relatively constant even when the Fed Funds rate increases?
To Tim & Robyn I wanted to say you brought up some very interesting points too. Economics is such a fascinating subject, though, you might want to find a book that would match your current level of understanding and take it to the next level. My father was an Economics Professor so I was sort of weaned on these discussions. Now my son is majoring in it so he's my new mentor. There is still so much I want to learn about macroeconomics (which focuses more on the global picture). I've worried about the debt, too, but I really don't think it's as dire as it first appears. If I understand it correctly, our advantage is that (unlike the countries in the European Union for example who no longer have individual control of their curriencies) here in America, we alone control how much money we print and could print more if the powers that be deem it a wise course of action. More dollars in circulation would reduce their value (inflation) but I suppose if done correctly (perhaps incrementally?) this approach could be well tolerated by our economy. So in theory we could print money to pay off China! Done all at once though would of course be much too inflationary. Other deals are also frequently made between countries and in exchange for other concessions such as trade agreements, etc., portions of debt are often forgiven.
Finally, at the risk of getting political, I'll say that I agree with you on the virtues of a free-market economy!
Cheers, Deb
-- Edited by Deb and Paul on Saturday 17th of July 2010 11:29:47 PM
-- Edited by Steak Eater on Friday 15th of October 2010 04:30:08 PM
-- Edited by Steak Eater on Friday 15th of October 2010 04:30:22 PM
It seems we've devitated from the original post quite a bit so I might try my hand at starting a new thread to share more of these ideas.
I have few final thoughts regarding this original post. First, in all fairness I believe that when Mrs. Woodchip posted that she was interested in a fund that paid such a high return, I believe she was responding to the original post but had not yet taken the time to read all the replies that pointed out the risk. I'm sure it is now clear that such a high return on investment would be coupled with very high risk.
Some of us believe that the funds Mr. Potts suggested are not prudent investments, based in part on past performance. In all fairness, hindsight is 20-20, as I often gently remind myself whenever I wonder why I followed Citibank all the way into the crapper! Still, if you remain bullish on these two funds Mr. Potts, I hope their performance improves for you in the coming years. In today's climate, it can be an accomplishment just getting back to even.
Finally, COMPLETELY off the subject, I'd like to say I've enjoyed this topic so much because I miss my father, who was always had such excellent opinions yet was equally willing to change them with no loss of pride when new information presented itself, and he always managed to stay so very well informed that every conversation with him was a learning experience. Here's to dad's everywhere.
-- Edited by Deb and Paul on Monday 19th of July 2010 12:45:45 PM
-- Edited by Steak Eater on Friday 15th of October 2010 04:30:36 PM