I looked around at a few brokers to see where to put my money. I had my Roth and a taxable account at T Rowe Price. Their brokerage fees were pretty high. ScottTrade did not allow the purchase of fractional shares. The big bank had its 401(k) plan with Fidelity. I called them up, and after finding out their fees and features I decided to stay with them. I moved my Roth over there. (I was unemployed and used the money from the taxable account for living expenses.)
I looked at the financial statements for the stocks on two of the Dividend Aristocrats list: the S&P 500 list, and the High Yield list. There is a lot of overlap.
I did not buy shares in every stock on the list. I can remember why I passed on a few of them. Old Republic was losing money then, and they are losing money now. Pitney Bowes still has a high yield. Everybody says that is a red flag, yet they are still paying it. Better safe than sorry. Leggett & Platt had a pretty high payout ratio. (I could see from their cash flow statement they were paying out as much as they were earning. I don’t think I had heard of the term “payout ratio” at that point.)
So I started out buying $1000 worth of shares in each stock. I don’t know why I did not just start out buying 50 shares of the ones I wanted. The absurdity of buying so few shares hit me when my 12 shares of 3M got me a whopping $6.30. It’s been almost three years, and I still have not accrued an entire share of 3M.
Since then I have sold some of them. LLY stopped raising their dividend, CINF has slow yield growth, UVV went down in price and sells something fewer people are buying, and EV is a financial stock.
Eventually I also got rid of FDO PNR, and CAT. FDO has a low yield. PNR also has a low yield, and it overlaps with a few other stocks. I had 20 shares of CAT. I got a letter from them offering to buy up my shares, or offering me enough to get me to 100. Either way they wanted to charge me $2/share. They can jump off a cliff. I sold on the open market.
Some might say buying a stock solely on the dividend is a bad idea. But is it any worse than blindly buying 500 because some firm decided to group them together? Besides, indexes are dragged down by stocks that do not pay dividends. If I wanted to get excited about price, I could become one of those gold nuts who keeps predicted the societal collapse that never happens. (I don’t think buying gold based on price is any different than buying a stock based on price.) Cash may be king, but cash flow is the king of kings.
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One Reply to “Dividend Journey 006”
Wonderful essay, got the satisfaction of studying
comment edited by Everyday Freethought
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