Long time lurker and first time poster in new format. I have a few random questions – primarily regarding dividends.
I have a portfolio that WAS about 60/40 with about 40 individual high quality, long term dividend paying stocks. A few CEF’s…PCI,PDI,PTY and a few Reits and Pfd’s. I consider all those to be equity. Bonds made up of a number of funds…PIMIX,IOFIX,PIGIX,PMZIX,DBLSX,JGIAX. Average port beta about .60. Overall avg yield 4+%. 83% of port is in sheltered accounts.
Home up north and Florida condo. No mortgage or other debt. No pension. Port yield + Soc Sec provides a good bit more than I need without touching principal. I have been very comfortable with things since retiring in 2015.
Age 73, wife 70. Health good for our ages and remain active,
All equities have been paying dividends for LONG time. Probably averaging about 30 + years, with a couple only 10 yrs.
I have recently sold a few holdings to raise dry powder.
Since the proverbial “XXXX hit the fan”, my current allocation is now about 50/40/10.
I was able to ride out 08/09 without selling anything…but had income back then.
Quite sure CEF’s will reset payouts significantly, and relatively soon…RIGHT?
Bonds…not sure where they will settle out???
Equity dividends are my biggest concern. Like I said I hold a well diversified eq port with long term dividend payers. Big concern is dividend cuts or termination.
1-Nothing…If I could get over my anxiety and felt more comfortable I would love to keep things as they are…but unsure of future cash flow.
2-If I went to ULTRA conservative and/or CD’s, I could live fine for 20-30 years by just drawing down principal.
3-Go to almost all cash/CD’s or ?? in sheltered accounts and wait tiil the smoke clears…and then go back to something like what I have currently.
If I thought the “XXXX” was REALLY going to hit the fan-I would be all over option 2…but would want to do it soon before that scenario was not an option.
Would love to hear any and all thoughts. Any questions…just let me know and I’ll fill in the blanks.
Many thanks for all the conversations and sharing I read every evening!
My portfolio is 100% dividend-paying stocks.
No question - these are stressful times. Back during the financial meltdown, I held an all-stock portfolio. During that time, only one of my 30 or so stocks cut their dividend. A number in fact, raised their dividends. So my portfolio yield stayed pretty much the same. As we all know, dividends are far more stable than stock prices.
For me, one of the reasons to be a dividend investor is that I can avoid all of the angst about selling my stocks when they are down. I plan to sit tight. I have no intention of selling anything. As I have excess cash, I will invest it in stocks I already own that are down significantly. Yes, all of my stocks are down, but since I live off the dividends, there is no reason to sell anything.
Of course, you need to do what you feel is best for you. But in your position, I would do nothing.
Note: I do not invest in bonds, so have no advice on those.
Take care of yourself. I live in Seattle, so we have been "sheltering in place" for a while now. If you live somewhere that does not have a shelter in place recommendation or order right now, I'd still recommend it as a way to help protect yourselves from this fast-moving virus.
"My portfolio is 100% dividend-paying stocks.
No question - these are stressful times. Back during the financial meltdown, I held an all-stock portfolio. During that time, only one of my 30 or so stocks cut their dividend. A number in fact, raised their dividends. So my portfolio yield stayed pretty much the same. As we all know, dividends are far more stable than stock prices."
Are you retired, Kathy? Do you withdraw from your portfolio?
This pretty much describes some of us around here. As near as I can tell, the list includes:
Anyone else (retired, living off portfolio cash flow?
@KathieL What would be some of the div stocks you like?
May be I can pick some during this downturn and start building a long term portfolio. I am still 13 years away from retirement though. Or may be I should wait for next downturn for adding dividend stocks as there is going to be one for sure before I retire?
Ivyman - to each his own.
I started shuffling my income holdings, mostly CEF’s, in anticipation of cuts. So my income has increased to more excess of needs which I’ve invested into PONAX for years for times like these. I can go from a 5%+ yield to 8%+ yield at better bargain prices but more risk. Losers to bigger losers. I invest in CEF’s for cold hard cash not protection of principle which is currently on the dark side of the moon at -30%. I also keep 5-10% of assets in cash for this purpose also. So I’am buying protection or more income.
I put everything on reinvestment I could spare also. To me you sound really diversified. I currently hold 25 positions, 13 being CEF’s. You might want to explore consolidation to the best managed of your holdings which may raise income also although any payout cuts on any position are an unknown.
I doubt humankind is going to perish from the earth after 2 million years. Although we seem to be following the Italian trajectory and will probably exceed it the end of the current crisis is already starting in China and other areas. Of course no one knows what’s next. Being aggressive ahead of clarity has worked in the past for me. So at the very least put everything you have on reinvestment and do nothing until there is enough clarity for you to adjust to any real factual changes to your income you feel you need to make.
@waffle, I recommend you start by figuring out what your monthly costs are: Rent or mortgage, property taxes, insurance, utilities, etc. Figure out what your income will be from Social Security, any pension, etc, and subtract your fixed costs from your income. The resulting figure is how much you need your portfolio to produce. In general, I need my portfolio to yield 5% (before the huge downturn!). So I generally try to buy stocks that pay me 5% or more, but won't buy anything below 4%. The only exception in my portfolio is Apple, which pays a tiny dividend, but has gone up so much I can sell off a tiny slice when it gets to more then 5% of my portfolio and buy another dividend stock with it.
I'd suggest you start buying stocks you like now while prices are exceptionally low. I have a diverse portfolio of stocks, but there are some I actively avoid. In general, I lean toward more defensive stocks: utilities, telecoms, pharmas, health care REITs.
Here are some of my favorites: Do you own due diligence!
Utilities: Southern Company, Duke, PPL
Telecoms: V, BCE, T
Pharmas: ABBV, AZN, GSK, Merck, PFE
HC REITs: MPW, PEAK, OHI
Renewables: Covanta, Brookfield Renewable,
Energy: KMI, RDS-B, OKE
Tech: IBM, Seagate, Apple
@ElLobo - same here, retired and living off the distributions although in addition to individual stocks I also hold some CEF's including PCI and PDI. So far none have announced cuts and I hope it stays that way.
@ElLobo- same here, retired and living off the distributions although in addition to individual stocks I also hold some CEF's including PCI and PDI. So far none have announced cuts and I hope it stays that way.
I'm expecting the Pimco CEFs to cut next month. The falling NAVs appear to be the result of deleveraging that has been going on exponentially these last few weeks with everything.
Thanks to all who have responded so far… I appreciate hearing your thoughts.
Kathie, when I charted out this course of dividend investing, like you I did it thinking that I would not have to worry about the portfolio value…and instead “Just sit back and collect dividends”. Seemed like a perfectly logical and easy way to go and still does. I just have in my mind that this whole thing could get very ugly with millions of people laid off, the country’s distribution systems effectively closed forcing thousands of small and large businesses to close for lack of people to make their products, truckers to haul them and retailers to sell them. Ultimately the cash flow of our economy shuts down, and eventually …dividends dry up. I pray I am wrong.
Lobo…yes I have seen all the companies that maintained and even increased their dividends. That was the huge attraction to dividend investing for me. I know the classic answer to my next question is NO, but…Is this time different?
Pony…I agree about humankind not disappearing. Good idea to perhaps consolidate holdings into best of the best dividend payers…and pray.
Still hanging in there. Thanks again to all who have responded so far.
At age 77(This year) I try to stay around 90% stocks. I see no reason to hold a 1 or 2 percent cd or bond when I can get 4% on stocks like KO and MMM with a lot of years of dividend increases. Bought my first stock in 1967. At that time I was buying my ele. from Southern co. (SO) so looked into and started buying shares until I had enough quarter dividends to pay 3 months of bills. Then added XOM alone with my company shares of Shell oil to pay my gasoline. Then added Ma Bell and after breakup kept Bell A. and Bell South to Pay our phone bill.
Now retired D will pay ele., gas, sat. t.v, wireless internet and water bills.
If you young and not retired investor you have to stay at wheel in all kinds of storms. Like this one! :)
Please understand this is NOT the only way to go. It just the way that suits me!
You can add me to the "retired and living off portfolio income". I'm 57. Sitting tight but as I have some CDs expiring have been buying some preferred stocks and Munis as these have gotten cheap. Have enough dividend paying stocks at the moment.