The Most Boring Part of Dividend Growth Investing

I can recall the face of my assistant when I was dancing around the printer, waiting desperately to read those quarterly reviews. A pile of numbers, charts and a good coffee and I was the happiest man on earth. Wow… this is boring! She kept telling me. I don’t know why, but I’ve always been passionate about numbers and how they work together, especially when there is a dollar sign in front of them.

I will never write it enough on my blog; the secret of investing is a solid plan. The problem with this line is those most solid investment plans are quite boring. They are even more boring than reading quarterly reviews! February was the first month where my pension portfolio was 100% invested and I had no trade to complete. I’ve invested the bulk of my money within 2 months and I took the following 2 to complete it. Now, the boring part starts; watching the money grows.

Why is it so boring?

When I started investing at the age of 23, I was reading books from Timothy Sykes and imagined myself being a baller in my BMW. Well it turns out that if you want to be successful with your money, you have better chances of adopting a boring, but effective strategy.

Then again, I was all excited when I received the commuted value of my pension plan. I was like having a $10,000 gift card on Black Friday. But now that I’ve purchased stocks of all companies I wanted, the only thing left is to watch them grow. We often make the analogy of planting seeds in a garden to illustrate good investing habits. You get all excited to design your garden, buy your seeds and prepare everything. But once they are all planted, all you have to do is to make sure they have enough water and sun and that’s about it. Sitting in front of your garden and watching an empty square is definitely boring.

It is boring because nothing will happen. One day, your portfolio will go up by 1% and you will get all pumped. The next day, it will drop back to 0.5% and you will wonder how many days it’s going to take before you see some results. A reader even asked me to publish my new account total return since inception (the portfolio was created on September 2017…. Not even 6 months ago) to see if my strategy works. Unfortunately, the only thing that I will accomplish by showing my total return results is to show you that I am lucky since my portfolio beat the market. But beating the market after 6 months is like being first after the first minute of a marathon; it doesn’t tell you how you will finish the race.

Do not fall into the market’s booby trap!

While I’m very well aware I’m not the next Warren Buffett, I consider myself an experienced investor. And even then, I almost fall into the market’s biggest booby trap: excitement! Exactly three weeks after buying shares of Qualcomm (QCOM), I sold them back to make a healthy profit (about 20%) and buy Shopify (SHOP) as it was nailed down by Citrus Report.

My strategy does not rely on quick profits; I should have never done this kind of trade. In fact, there is nothing wrong with this specific trade (I’m now up +50% with SHOP). The problem is that it created excitement. It created a feeling of power and proudness. Those are the kind of feeling you do not want to have while investing. This is how your whole strategy will go bust and you will be left with a bunch of unrelated stocks in your portfolio that were bought on a hunch. After my trade on SHOP, I also went ahead and bought Canopy Growth (WEED.TO). I know… so much for calling myself “The Dividend Guy”. This is when I noticed that I was going the wrong way and went back to my investing principles. I figured I could have 10% of this portfolio to be invested in riskier stocks out of my strategy. So far it’s paying well, but that doesn’t mean it’s the right thing to do.

I find investing excitement elsewhere

I am passionate about everything I do. I feel it is important to “feel the fire” in all aspect of my life.  In order to avoid investing pitfalls, I tried to find other means to “entertain” me when I invest. The first one is to track my dividend income. I’ve been against tracking my dividend income for many years as I thought it was worthless. After all, I will not touch this money for another 29 years. What’s the point of keeping note of each payout until then? However, tracking dividends works as a monthly reminder that my strategy works. It shows that no matter what I do in my month, I have between $100 and $200 deposited in my account. One day, it will even become $1,000-$2,000 that will be cashed each month. This thought is exciting!

Then, each quarter, I track my dividend increases. It’s like hunting for pay raise where there is always one around the corner. The dollar figure isn’t impressive (imagine a 10% hike on a $33 dividend…), but reading good news month after month makes it worth the wait.

Finally, I can always look back at my RRSP account that has been around since 2008 (previous amounts were used to buy my first house). This account includes some triple digit return stocks that makes me smile each time I look at them.

 

Google+