Investing 102

[GregWeld]

Originally Posted by SSLance

BTW Greg, don't ever let up on what your are posting and preaching...

After thinking about what you said a bit today, I went ahead and made the purchases I was looking at making. No time like the present...

From what I'm seeing, Dividend Champion stocks don't really make big moves, they just kind of trod along...so it really doesn't make much sense waiting for dips to buy as the dips just aren't that big of a deal.

Regardless of whether or not the shares are on the famous "Dividend Champions" list... or where they place on that list.. the beauty of dividend stocks in general is that they continue to spin off cash - which is either re-invested or used for some other purpose. That's the beauty of the simplicity of this type of investing.

For instance (another example only please!) Kinder Morgan Partners (KMP) has been down for awhile now... when it was one of my biggest gainers... but REGARDLESS of what it's trading for today or last week.... it pays me $9973 PER MONTH in dividend. It doesn't make any difference what that number is - each person has their own level of shares in various names etc - but for me - that is the number. Now.... when I look at the holding --- that's a very good cash return (over 7%) and my larger concern going forward is -- will they continue to pay this kind of return? So my larger concern is how is their business going and are they capable of earning enough to continue to pay me. As long as I see that their capable of continuing to pay -- then I'm happy. The share price will only become important IF I wanted to sell. Even then.... I'd have to say to myself -- WELL -- They've paid me $5.44 per year per share... I've owned them for 3 years and collected $16.32 in cash.... the shares are "underwater" (for example) $6.... Do I really have a loss in the shares if I sell??

I would have less of a return on a percentage basis -- but I wouldn't have a cash loss. The longer I hold and the more I collect... eventually they will have returned to me everything that I paid. At current prices I have to hold this name 13 years.... after that -- everything they send me is free money! We will ASSume that the share price is even and has no growth during this time period. That's not a bad return over time -- so once again the actual share price day to day becomes less important.

Does that make sense?