Dividends4Life: A Simple Dividend Strategy That Will Get You 4%

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A Simple Dividend Strategy That Will Get You 4%

Posted by D4L | Wednesday, August 24, 2011 | | 0 comments »

I recently had a conversation with a financial advisor who stressed the value of having a simple story when consulting individual investors. He noted that DCFs and detailed corporate analyses are great, but can you deliver a compelling rationale in understandable language to regular people? As I pondered his words, I thought of people like my parents, who really just need a dependable income stream and less of the volatility of recent weeks. Could I create an easy to follow system for the equity portion of their portfolio with a simple rationale to meet their needs? Here is my attempt.

To satisfy the stated requirements, I sought to identify large, well-known firms that consistently paid (and hopefully raised) dividends. These stocks provide more peace-of-mind as investors are familiar with the firms, their products, and their ability to keep paying dividends through good times and bad. The logical starting point was the Dividend Aristocrats (DA) list, as these S&P 500 firms have raised their dividends annually for 25+ years. They not only survived the turmoil of the last decade, they increased their payouts. That seems like a pretty simple, compelling reason for income-oriented investors to purchase them.

Source: Seeking Alpha

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