On Thursday the post in The Dividend Key series talked about High Dividend Stocks and how they performed better than low dividend stocks. One thing I mentioned in that article was how the highest dividend stocks produced better returns with less risk. There is another study on dividends that talks more in depth about this risk / reward relationship. The study conducted by Lehman Brothers went back to 1970 and saw that the top-quintile of high dividend stocks produced a higher return with less …
Day 3: The Dividend Key – High Dividend Stocks
As a dividend growth investor, I am not necessarily after the highest yields. I tend to look for dividend growth as opposed to just yield. That being said, high dividend stock investing has proven to be a positive strategy. Jeremy Siegel, who is famous for his book, The Future for Investors, studied the S&P 500 from 1957 to 2002 by breaking stocks into 3 groups: highest dividend stocks, lowest dividend stocks, and the entire S&P 500. His results are presented in the chart below: Click …
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Day 2: The Dividend Key – Real Return Comes from Dividends
In yesterday's post on The Dividend Key, the importance and value of reinvested dividends was presented. Today, I am going to present the findings of a study by Robert D. Arnott that broke down investment returns into their individual components. The study looked at three sources of returns for investors: 1. Inflation - the amount a stock grows just through inflationary trends 2. Valuation expansion - the company becomes more valuable and therefore so does the stock price 3. …
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Day 1: The Dividend Key – Reinvested Dividends
I thought I would kick the new year off with series of posts on why I have focused on investing in dividend paying stocks. There is scads of research out there that speaks to the benefits of a dividend based approach, and Tweedy, Browne Fund Inc. has put together a summary of these benefits and posted a pdf document which every investor should read. I think it is so important that I am doing a series of 6 posts that will present what I think are the most interesting findings from this summary. …
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Weekly Dividend Investing Roundup – December 28, 2007
Welcome back from your holiday celebrations, in whatever shape that happened to take. I was amazed when I checked my Google Reader feed list the number of posts was quite large. It was fun to go through the new posts and here are some of the ones that I found especially entertaining and informative. In addition, I have listed the Carnivals I participated in over the last week as well. The Carnivals Carnival of Financial Planning The Carnival of Personal Finance Festival of …
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Investment Risk Profiles
Can your stomach tolerate a 30% drop in portfolio value rather quickly? Determining your investment risk profile is one of the first steps any investor should take when thinking about designing a portfolio and an asset allocation. It really will tell you what level of risk you will be comfortable with in your portfolio. It all comes down to what level of risk, or standard deviation, an investor is willing to put up with in the pursuit of investment goals (link to Excel chart creation). In …
