Comments on: Is there such a thing as a bad dividend increase? http://www.thickenmywallet.com/blog/wp/2008/02/25/is-there-such-a-thing-as-a-bad-dividend-increase/ Everything to do with thickening your wallet by entrepreneur turned President of an Investment Company Wed, 10 Mar 2010 15:31:00 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Carnival of Personal Finance #142 - The Homeless Edition — The Baglady http://www.thickenmywallet.com/blog/wp/2008/02/25/is-there-such-a-thing-as-a-bad-dividend-increase/comment-page-1/#comment-7676 Carnival of Personal Finance #142 - The Homeless Edition — The Baglady Mon, 03 Mar 2008 07:54:30 +0000 http://www.thickenmywallet.com/blog/wp/2008/02/25/is-there-such-a-thing-as-a-bad-dividend-increase/#comment-7676 [...] examines the conventional wisdom that dividend increases are always a good thing for investors in the following article. Some companies could have stock prices that stall but the dividends increase. Is that always [...] [...] examines the conventional wisdom that dividend increases are always a good thing for investors in the following article. Some companies could have stock prices that stall but the dividends increase. Is that always [...]

]]> By: admin http://www.thickenmywallet.com/blog/wp/2008/02/25/is-there-such-a-thing-as-a-bad-dividend-increase/comment-page-1/#comment-7436 admin Tue, 26 Feb 2008 15:13:16 +0000 http://www.thickenmywallet.com/blog/wp/2008/02/25/is-there-such-a-thing-as-a-bad-dividend-increase/#comment-7436 FJ-Thanks for the comment and sharing your thinking. I fixed the link (I hope!) FJ-Thanks for the comment and sharing your thinking. I fixed the link (I hope!)

]]> By: FinancialJungle http://www.thickenmywallet.com/blog/wp/2008/02/25/is-there-such-a-thing-as-a-bad-dividend-increase/comment-page-1/#comment-7428 FinancialJungle Tue, 26 Feb 2008 02:59:11 +0000 http://www.thickenmywallet.com/blog/wp/2008/02/25/is-there-such-a-thing-as-a-bad-dividend-increase/#comment-7428 "Astute observation"? Thank you for the compliment. I basically agree with everything you said in the article. Can't speak for all the dividend investors. I for one care about both the dividends as well as the fundamentals of the business, although price appreciation isn't as vital to my financial goals. I plan to live on dividends exclusively, so price appreciation works against me, but there's nothing I can do about it. If fundamentals improve, share price is bound to increase. I also want to emphasis your point that if "the business is mature technologically", it's alright if fundamentals remain static. For example, if I can buy a toll bridge business for cheap, I'm happy to collect 15% or 20% distribution despite having zero growth potential. My investment model is: Total Dividend Return (TDR) = Yield + Growth > 10% Riskier businesses require higher TDR. A toll bridge business yielding 15% + 0% growth is still a good investment. In fact, it's better than one yielding 2% + 8% growth... assuming identical risk profile, of course. This is why I'm not a traditional dividend investor, who only favours stocks that raise their dividends. Sorry for going off topic a bit. (By the way, the link to my blog is broken. :P No big deal.) “Astute observation”? Thank you for the compliment.

I basically agree with everything you said in the article. Can’t speak for all the dividend investors. I for one care about both the dividends as well as the fundamentals of the business, although price appreciation isn’t as vital to my financial goals. I plan to live on dividends exclusively, so price appreciation works against me, but there’s nothing I can do about it. If fundamentals improve, share price is bound to increase.

I also want to emphasis your point that if “the business is mature technologically”, it’s alright if fundamentals remain static. For example, if I can buy a toll bridge business for cheap, I’m happy to collect 15% or 20% distribution despite having zero growth potential.

My investment model is:

Total Dividend Return (TDR) = Yield + Growth > 10%

Riskier businesses require higher TDR. A toll bridge business yielding 15% + 0% growth is still a good investment. In fact, it’s better than one yielding 2% + 8% growth… assuming identical risk profile, of course. This is why I’m not a traditional dividend investor, who only favours stocks that raise their dividends. Sorry for going off topic a bit.

(By the way, the link to my blog is broken. :P No big deal.)

]]> By: Cheap Canuck http://www.thickenmywallet.com/blog/wp/2008/02/25/is-there-such-a-thing-as-a-bad-dividend-increase/comment-page-1/#comment-7417 Cheap Canuck Mon, 25 Feb 2008 18:17:47 +0000 http://www.thickenmywallet.com/blog/wp/2008/02/25/is-there-such-a-thing-as-a-bad-dividend-increase/#comment-7417 Great article. So far all of my investment has been in RRSPs through index funds, but I am planning to dip my toes into the world of dividend stock investing (taxable account), and have been closely scrutinizing different stocks to see what my best option is. I am thinking I will start with a Canadian bank to get my feet wet, but there are a lot of attractive yields out there right now so it is a tough choice. Your post has given me even more food for thought. Thanks. Great article. So far all of my investment has been in RRSPs through index funds, but I am planning to dip my toes into the world of dividend stock investing (taxable account), and have been closely scrutinizing different stocks to see what my best option is. I am thinking I will start with a Canadian bank to get my feet wet, but there are a lot of attractive yields out there right now so it is a tough choice. Your post has given me even more food for thought. Thanks.

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