Polliesdividend

The problem/challenge of a Dividend Growth investor

Just a little writing about the my thoughts of today.

Today is the third day that we see red numbers on all the major indices. This is great news!

 

www.polliesdividend.com

 

This may sound strange, but the latest, very sharp price falls are actually very favorable for the dividend growth investors. Why you may ask. First of all; DGI’s are in it for the long run. They try to achieve the highest possible total return in the long term. And reinvesting the dividend pays an important role. Just look on the Internet for studies about total return and dividend. You can see that a significant percentage of the total return is due to reinvesting the dividend. So dividend really matters!

Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”
Warren Buffett

 

Reinvesting

Now we see a decline in the stock prices, just before the European dividend season erupts. And I’m happy about it. Because it gives me the opportunity to reinvest my dividends at considerably lower prices. The lower the share prices, the more new shares can be bought at each reinvestment round and the more powerful the interest-on-interest effect ultimately.

 

Problem

Okay that’s the theory. But at this moment I got a little problem. And that is that I don’t have enough cash laying around to buy on this dip. And I really want to! I see some great opportunities that I didn’t see for awhile. It is hard to see the markets decline and all I can do for now is just site at the sideline and watch ;-(

Bad times make for good buys

I definitely have to look for some cash or reallocate some of my emergency fund cash. Mmm, this is hard. I don’t want to touch my emergency fund. I just have to look harder or reallocate some other cash.

What do you think of the current market dip? Will it continue, or is it just a little blip?

I like to hear from you

Cheers,

Pollie

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14 thoughts on “The problem/challenge of a Dividend Growth investor

  1. BescheidenBeurs

    I feel the same urge, but I will not let it affect my actions. I will just continue to invest the same amount every month (and get better value in the next months I expect)

  2. Jung in Rente

    I kind of felt the same urge, when I saw the market dipping over the last couple of days. However, the price level after the correction is not that much different from H2/17. And as I didn’t buy a whole lot of stocks back then, I also didn‘t take the chance now. But who knows, maybe in a couple of months I‘ll feel sorry for myself, when DJ is crushing the 30,000 mark…

    – David

  3. Pursuit 2 Freedom

    I’m also thinking of adding to Ahold. But haven’t done that yet.

    Having said that, do look very good at the prices before you buy the “dip”. I noticed that a lot of stocks, especially in the US, went up a lot a month ago or something like that. Now they only went down the same path, but if you look at the long run, then the run up was just to much. In other words, it looks like they overreacted up and that is corrected now. That doesn’t make them automatically good buys. So be selective I would say.

    What stocks did you have in mind if you had the cash right now?

    1. Pollie Post author

      I agree you must always be selective and do your research. And the dip was just a small correction (for now)

      The stocks on my watchlist:
      MMM
      MUV2
      ADM
      GE (if they get a little but more cheaper)
      PG
      FL
      AAPL
      ABT
      ABBV
      ED
      DIS
      IBM
      Nestle
      Novartis
      Sanofi
      Nn group
      Unibail

      Just to name a few

  4. Luc Meyers

    I think this is just a temporary dip. Peter Lynch, one of the best investors ever, once told, after black monday in 1987, that he would hold on to about 5% cash in his portofolio. Ready to buy, would such an event,
    ever occur again and there would be lots of good stocks for sale.

  5. dividendgeek

    Never try to time the market 🙂 That being said I agree with your assessment. It is a challenge. But, since I don’t own individual stocks I just keep buying funds at market price. Keeps it simple. On an average it should be okay. I think stocks till dip a bit more … But, will be back before end of this year. I am no Buffet 🙂

  6. DividendSolutions

    Hey Pollie,

    i did not react to the flash crash, either. Just observing and playing the waiting game. I think that we’ll see some more dips and that the volatility will remain high after Monday.

    In my opinion it’s very important for a DividendGrowth Investor to have a substantial cash reserve which can be used at times like these. I have two reserves. One for unexpected events in life and one only for investments.

    I like your watchlist. PG, ConED, IBM or Novartis are candidates for purchases on my list too.

    Keep it up!
    DividendSolutions

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