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07-17-2015, 01:20 AM
(This post was last modified: 07-17-2015, 01:21 AM by notexactly.)
Hey guys.
If you were starting from scratch today, a completely fresh portfolio. In what 5 companies you would first invest in, in today's market?
As a new comer, I am reading and absorbing as much as possible. However, I am overwhelmed by the number of choices I have and which ones to prioritize in the infant stages of my portfolio.
When I say infant, I mean:
12 shares JNJ @98
8 shares XOM @86
'X' shares AAPL through an employee stock purchasing plan (I work for Apple)
I've been watching KO, O, WMT, VZ, T, PG, GE, MO, UNP etc.
Capital is piling up in my account, and its time to make some decisions!
*I'm also trying to stay away from companies that yield <2%, because I want to get the ball rolling! I also like to keep the P/E ratio under 25 and a history of increasing dividends.
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I would start with a couple of REITS: HCP & STAG. For stocks, I would start with SO, ORI, and IP. These stocks have good dividends with low to moderate growth. The dividends from these stocks can then be reinvested in stocks with higher growth.
A quick list of quality stocks in each sector I am eyeing at the moment.
Energy: CVX/XOM
Materials: BBL
Industrials: GE/MMM
Consumer Discretionary: TGT/WMT
Consumer Staples: PG/MO/PEP
Health Care: JNJ
Financials: WFC/AFL
Info Tech:IBM
Telecom: T/VZ
Utilities: SO/ED
REIT: HCP/WPC
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The five I would buy today if I was starting from scratch would be XOM, CVX, PM, O, and T. You've got safety and decent yield.
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(07-17-2015, 10:03 AM)ChadR Wrote: The five I would buy today if I was starting from scratch would be XOM, CVX, PM, O, and T. You've got safety and decent yield.
That's a pretty solid top 5 there, nice yields and all pretty safe.
One possibility would be to swap an oil stock for a utility like D, WEC, SO OR XEL that offer similar yields yet a bit more diversification.
Build a strong base to start and then go with some higher growth ideas later on.
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Given the size of your portfolio, I would not worry yet about diversification. Instead, concentrate on your best idea. Since you're into XOM at $86, I'd just keep buying this dip. It is one of the few values available right now among blue chips, and you can lower your average price per share by continuing to accumulate. By the time you are ready to retire, you'll want to have hundreds of shares of XOM, in addition to everything else you'll eventually have in your portfolio. So you might as well knock out the XOM part while the price is good!
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(07-17-2015, 01:43 PM)Kerim Wrote: Given the size of your portfolio, I would not worry yet about diversification. Instead, concentrate on your best idea. Since you're into XOM at $86, I'd just keep buying this dip. It is one of the few values available right now among blue chips, and you can lower your average price per share by continuing to accumulate. By the time you are ready to retire, you'll want to have hundreds of shares of XOM, in addition to everything else you'll eventually have in your portfolio. So you might as well knock out the XOM part while the price is good!
That's a great point Kerim.
Not often you can buy XOM at a 3.5% yield.
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07-17-2015, 01:58 PM
(This post was last modified: 07-17-2015, 08:44 PM by Dividend Watcher.)
Gawd, I hate giving shopping lists. I don't want you buying things just because someone gave you a tip. You'll be much more confident in the next bear market if you had made the decision based on your understanding of the company yourself.
That being said, all good suggestions. I'm thinking a different tack than most suggestions above. Since you're younger than some of the socks in my dresser, a little more growth but a lower yield at your age may get the dividend steamroller moving. You're not going to be interested in looking at 2-3% yielders as much as utes and REITs when you're 50ish. In other words, mix it up a little.
For my answer, I'll go back to the reply in the thread you started in May:
Quote:If I were you I'd look at things like JNJ/ABBV, COP/CVX/XOM, PH/EMR, AMGN/GILD (it's now officially a dividend payer), ROST/TJX, LMT/RTN, KO/PEP, AAPL/MSFT, HCP/WCP/OHI or even DE/CAT right now. I don't think any of them are outrageously priced -- especially for the time frame you're looking at.
Still don't think they're too extended right now either and to which I would add GWW/FAST and delete the AAPL/MSFT pairing since I know where you're at there. Probably can drop the JNJ/ABBV pair since you already have JNJ and ABBV is at the top of its range.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
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07-18-2015, 10:49 AM
(This post was last modified: 07-18-2015, 10:50 AM by earthtodan.)
This is always a fun one. If I had to start with 5, based on a quick scan of my watch list it would probably be UNP, JNJ, TD, VTR, PCP.
Several other names in REITs and industrials could easily substitute, but picking 5 wasn't supposed to be easy.
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Just went through this with my kids, good savers @ 26 and 29 years old but don't want to futz with a portfolio. The drill down went like this.
1. Dividend aristocrat.
2. 5 year dividend increase =/> or near 25 year average
3. Reasonable % payout.
The shakeout yielded: 3M, APD, CL, DOV, GWW, HRL, LOW and MDT.
Equal weight in all and add to them when their yield is .50% greater than their 5 year average yield ( a way to quantify the dip).
I know this portfolio doesn't cover all sectors but it is a reasonable compromise and most importantly, something they both can understand and implement.
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I would pick XOM/JNJ/WMT/AAPL (continue purchasing through your employer sponsored plan)/PM
Solid, fairly easy to understand companies that pay dividends every 90 days. They're also the types of businesses that should not get you nervous and jump ship when the market takes a it. As a new investor one of the biggest challenges is not to change your strategy, pick a good one then utilize it properly during the Bull and Bear markets. A few things are for certain--markets will go up, markets will go down and people will overreact in both scenario's.
Personally, I like P/E's less then 20 for starters.
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08-06-2015, 04:17 AM
(This post was last modified: 08-06-2015, 04:26 AM by notexactly.)
(07-17-2015, 01:58 PM)Dividend Watcher Wrote: Gawd, I hate giving shopping lists. I don't want you buying things just because someone gave you a tip. You'll be much more confident in the next bear market if you had made the decision based on your understanding of the company yourself.
That being said, all good suggestions. I'm thinking a different tack than most suggestions above. Since you're younger than some of the socks in my dresser, a little more growth but a lower yield at your age may get the dividend steamroller moving. You're not going to be interested in looking at 2-3% yielders as much as utes and REITs when you're 50ish. In other words, mix it up a little.
For my answer, I'll go back to the reply in the thread you started in May:
Quote:If I were you I'd look at things like JNJ/ABBV, COP/CVX/XOM, PH/EMR, AMGN/GILD (it's now officially a dividend payer), ROST/TJX, LMT/RTN, KO/PEP, AAPL/MSFT, HCP/WCP/OHI or even DE/CAT right now. I don't think any of them are outrageously priced -- especially for the time frame you're looking at.
Still don't think they're too extended right now either and to which I would add GWW/FAST and delete the AAPL/MSFT pairing since I know where you're at there. Probably can drop the JNJ/ABBV pair since you already have JNJ and ABBV is at the top of its range.
You are absolutely right Dividend Watcher, it would be silly to invest in a company just because someone told me to. I evaluated many things when looking at a company, dividend growth streak, yield, EPS, P/E, P/AFFO for REIT, etc.
But for a new investor like me, I want to get an idea of what companies you guys feel are the bread and butter of any dividend growth investing portfolio, which is the main reason for my post.
After you gave me that short list in the previous thread, I researched every single company you suggested thoroughly. I have ended up investing in JNJ, XOM, a REIT, UNP, and APPL through my employee plan.
Also, I want to say that I really appreciate you taking the time to reply with such detail to all our posts; I have learned a lot from just simply reading through your posts.
(07-19-2015, 07:07 PM)rayray Wrote: I would pick XOM/JNJ/WMT/AAPL (continue purchasing through your employer sponsored plan)/PM
Solid, fairly easy to understand companies that pay dividends every 90 days. They're also the types of businesses that should not get you nervous and jump ship when the market takes a it. As a new investor one of the biggest challenges is not to change your strategy, pick a good one then utilize it properly during the Bull and Bear markets. A few things are for certain--markets will go up, markets will go down and people will overreact in both scenario's.
Personally, I like P/E's less then 20 for starters.
Thanks for the reply RayRay.
I'm interested in all the companies you have listed, except Walmart. For some reason, I'm hesitant because of the rise of online shopping via amazon and others. I want to observe how that dynamic plays out before I investing in a major retailer like Walmart.
(07-17-2015, 01:43 PM)Kerim Wrote: Given the size of your portfolio, I would not worry yet about diversification. Instead, concentrate on your best idea. Since you're into XOM at $86, I'd just keep buying this dip. It is one of the few values available right now among blue chips, and you can lower your average price per share by continuing to accumulate. By the time you are ready to retire, you'll want to have hundreds of shares of XOM, in addition to everything else you'll eventually have in your portfolio. So you might as well knock out the XOM part while the price is good!
I took that recommendation, thought about it, and figured you were right. Diversification at this point in my portfolio is simply a non-factor until it gets quite a bit larger.
I did indeed decide to average down my shares with the lovely drop in XOM the past month! That probably sounds like music to your ears, because I know how much you like your XOM 
(07-17-2015, 05:39 AM)KenBob Wrote: I would start with a couple of REITS: HCP & STAG. For stocks, I would start with SO, ORI, and IP. These stocks have good dividends with low to moderate growth. The dividends from these stocks can then be reinvested in stocks with higher growth.
I just invested in my first REIT! WPC, 23 shares @61$
And my, like you said, the yields on these babies make me smile. Gotta get the ball rollin'
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