Investing 102 - Page 20 - Lateral-g Forums

**GregWeld** · #**191** 12-25-2011, 10:18 AM

Here's a good look at what DIVIDENDS look like! $4000 invested in two similar companies --- same industry (aka Sector) -- but one pays a higher dividend than the other. This is showing DIVIDENDS ONLY not the capital growth (or loss) if any. I just cut and pasted this chart because I thought it was very interesting to actually SEE the money trail.

http://static.seekingalpha.com/uploa...nan_origin.jpg

The above is just the chart showing the difference in the COMPOUNDED rate of return of the dividends paid. Below is a link to the actual article I stole it from. The discussion points in the article are "in a nut shell" to look for DIVIDEND INCREASES over time - when looking at all comparisons. Both of these companies are "best of breed" - but Chevron increased it's dividend payout % MORE than EXXON -- and over time that made a $1000 difference!

Interesting is all -- you'll learn nothing from it really because it's a HISTORICAL look and is only meant to help you PERHAPS make another investing decision --- the company that historically increased it's dividend or the one that pays higher NOW but hasn't raised the dividend much over time. EITHER ONE IS A WINNER IN MY BOOK BECAUSE YOU WOULDN HAVE AT LEAST BEEN INVESTED IN SOMETHING RATHER THAN NOTHING...

http://seekingalpha.com/article/3159...g_income&ifp=0

**Sieg** · #**192** 12-25-2011, 10:32 AM

Nuts! I didn't get any high div stocks for Christmas.

**GregWeld** · #**193** 12-25-2011, 10:37 AM

Quote:

Originally Posted by Sieg

Nuts! I didn't get any high div stocks for Christmas.

GOOD ONE!!

**WSSix** · #**194** 12-25-2011, 10:37 AM

Interesting. I was looking into oil companies as a sector to invest in. Exxon was on that list. I'll check out Chevron too.

**GregWeld** · #**195** 12-25-2011, 10:53 AM

Quote:

Originally Posted by WSSix

Interesting. I was looking into oil companies as a sector to invest in. Exxon was on that list. I'll check out Chevron too.

My personal gas/oil/energy plays are in KMP (Kinder Morgan Partners) and EEP (Enbridge Energy Partners)... I chose them because of the much higher CURRENT dividend. But remember -- I'm not looking at growth as much as I am for current dividend yield because I'm already retired and live off that stream...

Both the above pay over 6% -- and for me -- that's HUGE.

Can't go wrong with either CVX or XOM, or any of these names in my book. As long as you're DIVERSIFIED.... and we know - like food etc -- people are going to be using Oil/Gas/Natural gas for a very long time (sadly because I'd like to see less dependence on them but that's a different discussion).

**GregWeld** · #**196** 12-25-2011, 11:03 AM

I just overlaid (compared) a chart of these 4 names -- and EEP is the laggard for 10 year capital growth with a paltry 58% -- the other 3 - XOM - CVX - KMP are all 120% PLUS 10 year capital growth.... they are in virtual lock step with each other AND they pay that nice dividend.

I think these 10 year Google charts INCLUDE the dividend as reinvested to calculate that growth rate but I'm not sure. That would actually be the CORRECT way to look at them for pure comparison sake.

**Sieg** · #**197** 12-26-2011, 08:12 AM

Since Greg isn't in the office yet, this article may be of interest to a few of his students.

http://seekingalpha.com/article/3153...rtfolio-part-3

**GregWeld** · #**198** 12-26-2011, 09:21 AM

Quote:

Originally Posted by Sieg

Since Greg isn't in the office yet, this article may be of interest to a few of his students.

http://seekingalpha.com/article/3153...rtfolio-part-3

Great.... if you want to confuse the hell out of people.

**WSSix** · #**199** 12-26-2011, 10:10 AM

It makes sense to me. A car traveling at 25mph but accelerating at 20mph will eventually over take a car traveling at 60mph but only accelerating at 10mph. The question's when will that occur? Depending on each person's current age and desired retirement age, they will need to choose the car that has the correct current speed and acceleration to cross a threshold at the required time. The more time you have, the more choices you have as there are multiple combinations to get you there.

Ok so it's a little more involved once you try to actually choose the stock, but I think the idea/approach is rather simple to understand. It's like you've been saying, start early and it'll be easier.

And for you engineers and math people, please ignore my simplistic and incorrect units associated with acceleration. The concept's the same even if the units are correct

**GregWeld** · #**200** 12-26-2011, 10:23 AM

Agree with the points -- it's just not Investing 102. I think in order to keep the thread on track -- and to get people to actually START to save and invest... we've all got to keep the message simple and on point.

I'm not ARGUING with Sieg.... far from it. I'm just saying that "concepts" are nice - but usually hard to put into practice. We need to practice walking before we can run... and we need to start out just buying (investing) in simple concepts that can show success. Make it too complicated -- (it's not really - once you're into it - but for this discussion it "could be") and you'll loose people.

I've actually deleted several posts before I submitted them because after I read them - I thought - too much info... too much thinking...

To me - it's kinda like that chart of XOM and CVX --- just buying either one got a good result... 10 years LATER one was better than the other - but who would have known that when they were hitting the buy button? Better to have just bought either one - or a little of both? - and reap the rewards!

In THEORY -- we're trying to show why dividend paying stocks are good investments (not necessarily better than some other particular stock) long term... and that to just get started looking at and understanding your investments, is better than ignoring them.