Monday, December 7, 2015

Where to find DGI stocks? Follow the Herd


Sometimes, finding good Dividend Growth (DGI) stocks can be challenging - especially for beginners. I like to use David Fish’s CCC list with my screener to look for DGI stocks. Obviously, Mr. Fish has put a lot of work in putting together this wonderful spreadsheet every month.

I also like to “Follow the Herd”. 

This is where I review the recent buys from our fellow bloggers (Adam-IWTRS, A Frugal Family's Journey). For this, I usually use the List of Recent Buys maintained by a couple of hard working bloggers:


I can tell you that it takes a lot of effort to collect this type of information. I really appreciate their work and their regular reports.

Often times, I find buying opportunities where my screen fails. KMB was a recent example since my screen missed the P/E ratio due to the one-time special financial event. (My screen looks for companies with lower than average P/Es and higher than average yields with wide moats and/or BBB+ credit ratings).

But beware of information overload. Don't get killed with the herd! I use the lists as starting points for further research. I use my dividend analysis spreadsheet to check the dividend information, EPS growth, ROE growth etc, DDRM to check the total return, Yield Theory and P/E Analysis to check the valuation. Also, I read the company reports and check out the Morningstar and S&P CapIQ analyses.

Obviously, the risk profiles of fellow bloggers are different from yours - so always do your homework before investing your hard earned cash.

Do you “Follow the Herd”?

D4s


10 comments:

  1. I appreciate the mention but more importantly the note at the end about doing your own research! Our lists are not meant to blindly follow the herd without doing your due diligence. Such an important point you make here. Thanks again and take care D4s!

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    1. Adam, thanks. Again, thanks for your hard work. Just like to reiterate -- do your homework :)
      D4s

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  2. Ditto what Adam said...appreciate the mention. Glad to share my resources with others in the DGI community. Please use these resources as a starting point but make sure you understand the investment fully before pulling the trigger on a buy. I can tell you from first hand experience that "Following the Herd" is not always a recipe for success.

    Best wishes and success on your personal journeys! AFFJ

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    1. AFFJ, first of all, thanks for all your hard work. I agree the herd approach is not ideal if you go in blindly. I am repeating myself now.... It's like speaking to my son again and again when he plays minecraft. Stop what you're doing and do your homework :)
      D4s

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  3. I disagree about the premise of following the herd. Without having a plan, blindly following others could lead to dissappointing results down the road.

    I think that if someone doesn't know much, they need to learn first, before putting much of their hard earned money at work. If they have 90% of their money in CD's/cash, it will save them from their own ignorance.

    Alternatively, they can start slow with something like $1,000, and check how they do for a period of 6 - 12 months.

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  4. That being said, the resources you linked to are helpful, and could be beneficial to someone who knows what they are doing ( or they think they know what they are doing)

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    1. DGI, in violent agreement here. Thanks for your thoughts and your nuggets of experience. The trick is actually knowing what to do rather than thinking that you know what to do.
      I also like the small increments approach - especially if you have a very low fees brokerage. In math, this is similar to the gradient based optimization algorithms.
      D4s

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  5. You accidentally forgot dividendchimp.com, come on man, that guy researches every stock with 5 or more years of dividend increases. ;)

    Seriously though, everything should be a starting point for individual research and you make a very good point - there are so many stocks and so much information, that we may miss some things, taking note of other dividend investors is a great place to start your own research.

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    1. Chimp,
      Oh man! I feel bad now. Completely forgot. Next time, I promise.
      But anyway, absolutely the point here. The work of others (especially you) are great starting point for further research.
      Thanks! D4s

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    2. Just "busting your chops" my friend!

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