"Cutting the losers as fast as you can" does not work very well at all when investing in tech stock (for example) because of all the volatility. So you might consider having (as we do) various rule sets for different types of stocks. There is only one reason we ever sell a DGI stock - if they stop increasing their dividend. We then immediately replace it with one that will continue giving us increases.

@@Nanalyze When I'm cutting a loser, it's a real loser. I do understand what you mean. Just I've been taking these small gambles on crap story stocks just to see if they pay off. So far they haven't paid off. I have cut off doing that. This period feels a bit like the 90s investing where a lot of stocks rose as all boats rose and they were real crap companies. I wasn't going in as bad as I was back in the 90s. But sometimes it's hard not to get suckered by some of these stories. When I see their financials not matching the story, I run now. As much as I'd like to get in early on a Tesla, fact of the matter is it's much better to invest in a Tesla type stock after its financials are moving in the right direction as it will still have room to run.

@@azulsimmons1040 You've come to the right place. We teach people how to become better investors. When you say, "I've been taking these small gambles on crap story stocks just to see if they pay off," that's precisely the sort of thing we're constantly warning investors about. Forget about getting in on an early Tesla. Focus on managing risk. Don't worry. We've all been there! You're a regular here so you already know the drill and it sounds like you're learning from mistakes so great job!

Thank you for the kind words! We'll keep it up :)

Similar to how index providers utilize buffer zones, we do the same with our universe to avoid stocks popping in and out. That's mentioned in the document notes. We'll pass this question over to a researcher to take a closer look at. Please send us an email so we can confirm your subscription status and keep you appraised of the findings.

Please also note that once we're holding a stock in our DGI portfolio, the only reason we ever exit is if the dividend stops growing, and all stocks we are holding are automatically part of the universe and stay there until we don't hold them anymore.

And that was a very good question, thank you!

We cannot - and I mean cannot - overstate how important a record of increases is to this entire strategy. That is the foundation of everything dividend growth stands for. Without that the entire thing calls apart. I know nothing about the companies you have brought up, but I can tell you that without a dividend growth track record they're not even in the same ballpark. To get in this quality club you need at least 25 years consistent dividend growth. That's extremely tough to do which is why the club is so elite and the members so valuable. Joe P.

How does anyone that invests in dividend paying companies not know about the BDC sector ? 😮 The REIT sector ?

@Lawyerup904 We have REITs in our strategy. We focus on a small universe of stocks - 460 tech stocks and around 80 dividend growth stocks. Unlike all the YT instant analysts out there, to have an opinion about a stock worth sharing requires us to spend half a day researching it. We're more than happy to provide more detailed answers to questions on specific stocks for Premium subscribers who pay our bills. ;) Joe P.

@@Nanalyze I think making the universe of investable stocks smaller is a great idea, which is something I also do in my personal strategy. For example, I don't own any mining companies, as I find the relationship between the cyclical price of the resource being mined, the company's ability to mine it and the stock price to be too difficult for me to wrap my head around, so I avoid them. I have a friend who has made plenty of money by focusing almost exclusively on mining businesses, but it's just not for me. I also wouldn't touch companies with negative gross margins personally, or companies at risk of not being able to service their debt.

@@absw6129 Very good comment. Companies with negative gross margins don't have a viable business. As for mining companies, their dependence on the price of a commodity makes them volatile. Energy companies like XOM and CVX are similar, but different as their business models provide natural hedging (upstream/downstream).

I'm also curious on this Joe

This brings up the spectrum of growth vs value. When a company transitions to value, there are now two ways they can grow earnings per share - by increasing revenues or by cutting costs. These large mature companies are using technology - all that sexy AI stuff you keep reading about / IoT / robotics/ SaaS etc. - to do things more efficiently, and these large corporate behemoths can do that for a very long time alongside the advancements of technology which keep getting better with time. Economies of scale allow them to outcompete smaller competitors (this is why size is important, and leadership) and they have the cash to buy very small sprouts for aqui-hires or bolt-on growth. They can also start treating their business as a collection of businesses and divesting those that underperform. These large companies become sophisticated machines of value creation that can consistently increase EPS for decades. When the average company in our universe has INCREASED their dividend EVERY YEAR for 47 years in a row, you can see just how effective value companies can be in creating (wait for it) value. Ever wonder how Buffett became so wealthy? He did it by investing in boring value companies. Joe P.

If a business throws off enough free cash flow it can buy back shares and increase earnings per share (and therefore dividend) without having to grow revenue. It has to be balanced properly of course to make sure company is not shrinking it's cash reserves or even going into debt. That is why it's important to look at a very LONG history of dividend growth - it's difficult to cheat and play a grow-dividend-by-raising-debt game over several decades.

@@Martinit0 Good point. IBM has been doing this for a while, but now may finally be turning the ship around.

Dang, good points. Thanks guys, given me a lot to think about. And the dividend payout would also factor in as "guaranteed" (mega air quotes) return, correct? 1) stock pays no dividend, rises 10% per year 2) div-growth stock's price increases 7% but maintains a 3% dividend every year. (Assume divs are reinvested) Are those two stocks somewhat equivalent in return? (Ignoring dividend taxes)

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Yes, I trade them when they do a reverse-split danger! 😆

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Dollar cost averaging into dividend kings is a solid strategy. There are plenty of them to build a decent portfolio out of.

Paying too close attention to yield is probably one of the biggest mistakes dividend growth investors make. Slap any given yield into an Excel spreadsheet, then take the 10-year growth rate and do the math looking forward. Then, you'll see how quickly a yield grows over time when the dividend is growing. ;)

@@Nanalyze that is how Linde got to 1,6% by growing divs over 25 years. Now compare to inflation over that period and count your losses.

You are not understanding how yield works and the concept of yield-on-cost. The growth of the dividend is handily outpacing inflation. Open up Excel and do the math on this stuff because it's really quite simple.

Here's a video that might help: kzfaq.info/get/bejne/fq56d6Sm0KmrlIU.html

Have you looked at the Linde stock price and zoomed out a bit? In 2014 LIN stock was at $130, today it's $430. 20 years ago in 2004 stock was in the $30ies. It 10x in 20 years on top of dividend growth. Not that many stocks have such a stock AND dividend growth at the same time. Now whether it is good to enter today is another story.

Good stocks are good to hold at any age. ;)