Fishing in the Bathtub

Posted by D4L | Wednesday, January 02, 2008 | , | 8 comments »

So you want to catch a really big fish? Have you considered fishing in your bathtub? Probably not. If you want to catch a big fish, you have to drop your line where the big fish swim; and if you want to snag a superior dividend investment you have to go where they gather.

My two favorite fishing holes for dividend investments are:

  1. S&P 500 Dividend Aristocrats - This list is designed to measure the performance of S&P 500 index constituents that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years.

  2. Mergent's Broad Dividend Achievers - The Broad Dividend Achievers™ Index. Eligible companies must be incorporated in the U.S. or its territories, trade on the NYSE, NASDAQ or AMEX, and have increased its annual regular dividend payments for the last 10 or more consecutive years.
At the time of this writing, there were 58 companies included in the S&P 500 Dividend Aristocrats and 319 companies included in the Merchant's Broad Dividend Achievers Index. These lists provide a starting point for your evaluation; they are not a buy list.

Of the two, I consider the Aristocrats my favorite spot since it is limited to a more elite group of companies in the S&P 500 with an entrance fee of increasing dividends for 25 years, while the Achievers is open to more companies (NYSE, NASDAQ and AMEX) with a lower dividend entrance fee of 10 years. Now sometimes you don't want to spend the time driving to one of these tournament lakes, you can cast your line over to the left here in these two small ponds "Dividend News" and "Google Dividend News", or any other place dividend stocks are discussed. I have been known to pull out a couple of keepers from these spots.

Now remember, these are just companies worthy of additional consideration - the first step of the evaluation process. In a later post, I will discuss my pre-screening process.

Where do you fish for dividend investments?


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8 comments

  1. Anonymous // February 17, 2008 at 4:51 PM

    Morningstar's Dividend Index - lists stocks with consistent dividend growth. Regards. Babui

  2. Dividends4Life // February 17, 2008 at 8:25 PM

    Babui: Based on your comment, I have looked at Morningstar's Dividend Leaders Index and the FDL fund that tracks it. Initially, it looks very promising. I have made note of it and will do more research.

    Thank you so much for the suggestion.

    Best Wishes,
    D4L

  3. Al Locator // May 26, 2008 at 3:12 AM

    Have you considered closed-end funds? These days, some of them have yields around 10% (your 2017 YOC goal) and decent track record regarding distribution stability and total return.

    Regards,
    Al.

  4. Dividends4Life // May 26, 2008 at 7:34 AM

    Al Locator: I do look at closed-end funds and include them in my ETF holdings. Did you have a specific closed-end fund in mind?

    In my income portfolio, I hold currently hold AOD. I is sporting a current yield of 12.9%. I buy a few such investments to help the yield as I build a traditional dividend portfolio based on solid dividend growing companies.

    Best Wishes,
    D4L

  5. Al Locator // May 26, 2008 at 12:09 PM

    D4L: Thanks for the swift reply.

    I'd suggest taking a look at RVT and RMT which hold small and micro-caps (a rare occurence!).

    Among domestic REITs, try RQI (Ben Stein recommends it). RWF for international REIT.

    For international stocks look at ETO, ETG.

    Foreign bonds - GIM, ESD. A good asset class, growing distributions like hell lately.

    Happy researching,
    Al.

    PS. By way of disclaimer, I hold positions in most of the funds listed.

  6. Dividend Tree // May 27, 2008 at 11:01 PM

    D4L,
    Some food for thought !
    I have IIA and IGD in my income group (part of aggressive approach). These provide high current yield (10%). It helps boost portfolio YOC. In these two, I started 14 months ago at approx 10% YOC, now about 13% YOC. I made one time buy in both and since then have been reinvesting. I invested in such a way that reinvestment adds @1 share every month. It provides monthly compounding.

    DT

  7. Anonymous // October 13, 2008 at 9:30 AM

    I can't seem to find Mergent's dividend lists. I found them a couple of weeks ago following your link and downloaded them. Now they seem to be offline since Mergent is selling etf's. Same with Morningstar. I can find their products but not the individuals who make up their lists.

  8. Dividends4Life // October 13, 2008 at 9:12 PM

    Anon: Something has changed. I was looking for the International Dividend Achievers this weekend and I ran into the same thing.

    Best Wishes,
    D4L

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