Investing in Dividend Stocks

[langdalematt]

So I have decided to not buy another house due to the changing buy to let laws and I am now looking at the markets again and looking for income I can reinvest to buy more shares and hopefully some reasonable capitol growth. Anyone have any suggestions for some of the better dividend stocks with growth potential? I am looking to lock the money away for 10 plus years and not touch it and I was a spread of risk.

Thanks,

Mark

[Brian]

I think corporate bonds may be worth a look at the moment - though I think they are all a bit oversold with this interest rate fiasco.

I was fortunate to pull all my stocks in 2007 and go into the corporate bonds with a portion of the portfolio (though separate) in dividend stocks and Fixed rate cash bonds while they were good.
Corporate bonds risk can be spread effectively by the use of funds - I use some Ian Spreadbury's funds and they have given me some good returns(in ISAs) but I have on occasion snapped up the odd offering from Killicks.

Some dividend stocks are taking a bit of hammer ATM...............but what do I know.

Not one person in the "industry" advised me to pull my stocks when I did. Had I not done it I would be about 50k down now at least and also have a lot less money in my pension (which I also converted to a cash fund in 2007).

With HFT the way it is now - my view is that the equity markets are no place for old men

Good Luck

B

[ViperStripes]

I use Hargreaves Lansdwon, they have pretty good weekly articles and research.

[Padders]

I rather like the Bank of Ireland 13.375% bond with ticker BOI. Currently available at 190p giving a running yield of just over 7%, paid twice yearly. Not much scope for capital appreciation but you can't knock a guaranteed 7%. There is an element of risk with them as there is with all non governmental bonds but I am comfortable with it.

[GOAT]

Interesting question...I hold quite a few Exxonmobil-traditionally a bit of a darling to institutions and private investors. Em have an 18 year history of increasing dividends year on year But the recent turmoil has seen Em having to borrow 10 billion dollars to fund dividends and this will probably lose the their AAA rating. As an employee I'm heavily "in" as we have an ultra attractive purchase scheme, if I was buying independently, I'd be concerned about big oil and it's associated sectors right now.

[langdalematt]

Interesting why you think oil should be avoided given that the price cannot really go much lower as the Saudi's are losing money playing this game, my thoughts were that at least stocks like Shell would become at least stable and move on well in a year or two. What makes you think otherwise?

Interesting question...I hold quite a few Exxonmobil-traditionally a bit of a darling to institutions and private investors. Em have an 18 year history of increasing dividends year on year But the recent turmoil has seen Em having to borrow 10 billion dollars to fund dividends and this will probably lose the their AAA rating. As an employee I'm heavily "in" as we have an ultra attractive purchase scheme, if I was buying independently, I'd be concerned about big oil and it's associated sectors right now.

[GOAT]

I'm clearly no expert but it seems to me that,having used up all the cash, if you are borrowing to pay dividends and risking your credit rating, then that is not sustainable.
having said that, Em is one of the best run, balanced portfolio businesses there is....
just makes me cautious.

[Bobafett]

dividend stocks with growth potential?

I'd like both also....

[Brian]

I'd like both also....

You're preaching to the choir here sister:-)

:-)

B

[Bobafett]

Indeed, can I have both with no risk to my initial capital.

[Devonian]

So I have decided to not buy another house due to the changing buy to let laws and I am now looking at the markets again and looking for income I can reinvest to buy more shares and hopefully some reasonable capitol growth. Anyone have any suggestions for some of the better dividend stocks with growth potential? I am looking to lock the money away for 10 plus years and not touch it and I was a spread of risk.

Thanks,

Mark

Mark

There is always the possibility that this stamp duty could squeeze prices in the next year as people try and negotiate down, so wherever you invest may be worthwhile keeping it reasonably liquid.

I personally think that there's so much long term opportunity from some badly beaten stocks, especially commodities and maybe the odd bank.

That said I very 'cleverly' bought BHP for 686 the other day after it tanked due to the dividend cut. I even more 'cleverly' sold it for 780 to make a very nice profit which is roughly the cost of our skiing holiday for 4 in two weeks time . . . . . . . As I said very 'clever' I am!!

Oh I forgot . . . . . . Since then it's gone up and up and up. Now it's 867 doh! I know a profit is a profit.

Stephen

[simoscribbler]

Noticeable that people have mainly been focussing on invividual stocks, but there is another way...

If you're really looking long term then there's a lot to be said for diversified, fund-based investments, using your various shelters too. I like ETFs because of their low costs mixed with specialist/high conviction investment trusts. So, just as an example and no kind of suggestion whatsoever, in the international income segment (a core part of most portfolios) I use a mix of an ETF ticker VHYL and an IT ticker MYI, but there are literally dozens to chose from. Then add UK equities (but not too many because of 'home country bias' and a worrying concentration of high divi stocks), UK and global smaller companies, bond funds, commercial property, emerging markets and all manner of other options to your taste.

Key things if you go this route: buy and sell infrequently, keep your costs down and re-invest income. People keep saying that markets are below where they were in 1999, and that's true of the FTSE, but that doesn't take any account of divis (the UK part of my portfolio will have returned over 5%pa in divis over that period, all reinvested so I'll be well ahead but behind BTL I'm sure), plus many other markets and asset classes around the world have performed much better in that same time - and some worse, I'm sure. That's why we diversify...

I'm sad enough to admit that this has become a hobby for me: I'm fascinated by investor behaviour and trying to be contrarian/counter cyclical. But all I really try to do is be a decent asset allocator, so I don't buy any individual stocks, and I have no idea what the market will do in future. I'm completely agnostic in fact. But, to take the example of the nice profit in the post above - I missed out on that in one sense, but captured the uptick in commodity stocks because I have some fund-based exposure to the sector. But because it's diversified, and I'm in for the long haul (I hope) I didn't sell out when the funds bounced 20% or whatever it is. I'll just keep taking the divis (my commodity portfolio probably yields around 8% at present, though that's a classic 'value trap' and will fall back) and reinvesting in whatever sector looks cheap to me at the time, or I don't have a big enough weighting in. So, again as an example, in Jan/Feb I was putting most of the income from all of my holdings, across many sectors, into commodity-oriented funds (either specifically or by geography, eg Australia and South America), because they all seemed so cheap relative to past levels and current divis. But I've moved on now, and have started topping up in a couple of other sectors.

And whatever you do avoid over confidence and confirmation bias - it's the hardest thing to do, I reckon...

Almost forgot: a key advantage of this method is that you don't have to watch prices day to day. My only interest is in seeing what's got cheap enough to buy (as a sector/country etc) and what has got so expensive as to be worth reducing/rebalancing. I do it all the time, but it would be possible to only buy and rebalance quarterly, i reckon, without any loss of performance - in fact, it would probably do better.

[walkerwek1958]

As an employee I'm heavily "in" as we have an ultra attractive purchase scheme,

Be very wary of having all your savings invested in your employer. Remember Bradford & Bingley, employees lost their jobs and savings when the shit hit the fan. An extreme scenario, but it's possible a company can hit hard times which cause the share price and employment prospects to fall in unison. By all means take full advantage of tax-efficient share save schemes but shift the money out elsewhere when you can...........that's what l always did.

Paul

[bitfield]

Be very wary of having all your savings invested in your employer.

You'd be better off investing in your biggest competitor. That way you hedge your bet.