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I just opened a Roth IRA, and am ready to invest in the stock market

UNSTUCK

UNSTUCK

But stuck more often.
jackjoh said:
My wife Joan just passed away and I am 93 and getting lazy about writing but want to remain as active as I can. If I sell the house I will put the money into fidelity. will wait a while until I get used to Retirement at Sage Wood at Day Break

.
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Jack, you’re 93. Sell the house and blow the money on a Ferrari or something. That’ll keep you active.
 
TurboMinivan

TurboMinivan

Still plays with cars
Location
Lehi, UT
Happy new year, everyone.

I'm sure we all remember the financial letdown that was 2022:

UNSTUCK said:
My 401k finished the year at -27%. That hurts.
Click to expand...

Greg said:
I'm down 19% in the last year...
Click to expand...

anderson750 said:
My total portfolio is down 17%.
Click to expand...

It seems that for the last 3-4 months of 2022, every financial 'guru' was publicly crying about the imminent recession that was certain to obliterate us all in calendar year 2023. This gloom and doom caused a lot of fearful people to completely exit the market and sit on the sidelines in cash... but this was the worst possible move an investor could have made. The S&P 500 ended up 24.73% for calendar year 2023.

I've just been sifting through my finances, seeing how 2023 treated me. My 401k calculates my year-end return at +19.74%, and my HSA says it returned +25.55%. This seems logical, based on the index fund options I am using in each of these accounts.

Most important (to me), I was curious if my Roth IRA's monthly dividend income hit my year-end goal... because I expected it to not quite hit the mark (and it did not). You see, back on Jan 1 2023 I was not sitting on a pile of cash to immediately deploy into my account. Instead, it took most of the year for me to gather up $7500 of surplus cash to deposit into my IRA, and thus my contributions did not have as much time to generate growing dividends. :(

Real numbers:
End-of-2022 average dividend income: $175.22 (just for context)
End-of-2023 goal for dividend monthly income: $235.00
Actual end-of-2023 dividend monthly income: $224.21

Last year, I was already planning ahead--I wanted my monthly income for the end of 2024 to reach $300.00. Due to again not having a pile of cash ready to deploy--and thus knowing my dividends won't grow as rapidly as I would like--I am lowering my goal for next year to $290/month.

We'll see how it goes.
 
UNSTUCK

UNSTUCK

But stuck more often.
Well, I had to go look. I’ve stopped contributing to this 401k so my gains are purely the change in market value. I’m up 22.8%.
If this keeps up I’ll be back to 2020 numbers in a year or two. 🙄

(Happy new year!)
 
N-Smooth

N-Smooth

Smooth Gang Founding Member
Location
UT
It looks like I’m at 16% for the year. The last few weeks have been awesome to watch it all go up. I started stressing about retirement about a month ago. I was wondering if I’m contributing enough so I stopped paying extra on the mortgage and my truck loan (because they have such outrageously low interest rates anyways) and started throwing it at my 401k. I just feel like I’m behind so hopefully this eases my mind a bit. I really feel like once my truck loan is gone and my daughter is done with preschool and child care I’m going to throw all that money at my retirement accounts for a year or two. We’ll see.
 
anderson750

anderson750

I'm working on it Rose
Location
Price, Utah
TurboMinivan said:
Happy new year, everyone.

I'm sure we all remember the financial letdown that was 2022:







It seems that for the last 3-4 months of 2022, every financial 'guru' was publicly crying about the imminent recession that was certain to obliterate us all in calendar year 2023. This gloom and doom caused a lot of fearful people to completely exit the market and sit on the sidelines in cash... but this was the worst possible move an investor could have made. The S&P 500 ended up 24.73% for calendar year 2023.

I've just been sifting through my finances, seeing how 2023 treated me. My 401k calculates my year-end return at +19.74%, and my HSA says it returned +25.55%. This seems logical, based on the index fund options I am using in each of these accounts.

Most important (to me), I was curious if my Roth IRA's monthly dividend income hit my year-end goal... because I expected it to not quite hit the mark (and it did not). You see, back on Jan 1 2023 I was not sitting on a pile of cash to immediately deploy into my account. Instead, it took most of the year for me to gather up $7500 of surplus cash to deposit into my IRA, and thus my contributions did not have as much time to generate growing dividends. :(

Real numbers:
End-of-2022 average dividend income: $175.22 (just for context)
End-of-2023 goal for dividend monthly income: $235.00
Actual end-of-2023 dividend monthly income: $224.21

Last year, I was already planning ahead--I wanted my monthly income for the end of 2024 to reach $300.00. Due to again not having a pile of cash ready to deploy--and thus knowing my dividends won't grow as rapidly as I would like--I am lowering my goal for next year to $290/month.

We'll see how it goes.
Click to expand...
I need to go and look and see how 2023 finished. Between all the doom and gloom and lower than anticipated oil prices, I have about paid close attention.
 
Greg

Greg

I run a tight ship... wreck
Admin
Location
Grand Junction, CO
Yeah, the last few months have been working hard to make up for the rest of the years dismal performance. The market seems pretty healthy, I'm at a 19.5% return for 2023 with a strong rally starting in October.
 
N-Smooth

N-Smooth

Smooth Gang Founding Member
Location
UT
BUMP just because I like this thread and refer back to it often. My accounts are killing it right now since the majority is in index funds and obviously the market is doing great.

I do however have some HSA funds I want to invest and I want to delve into some dividend stocks just for funsies. I have 15 different stocks w/dividends in my robinhood account but the share #'s are pretty small potatoes. @TurboMinivan and @mesha I know the two of you are super into dividend stocks, do you have any you are really psyched about right now?
 
glockman

glockman

I hate Jeep trucks
Location
Pleasant Grove
N-Smooth said:
BUMP just because I like this thread and refer back to it often. My accounts are killing it right now since the majority is in index funds and obviously the market is doing great.

I do however have some HSA funds I want to invest and I want to delve into some dividend stocks just for funsies. I have 15 different stocks w/dividends in my robinhood account but the share #'s are pretty small potatoes. @TurboMinivan and @mesha I know the two of you are super into dividend stocks, do you have any you are really psyched about right now?
Click to expand...
Txn has a 3% dividend that has increased every year for 20 years. The stock is pretty cheap right now and there are several pretty cool RME dudes adding to the value of that company😁
 
TurboMinivan

TurboMinivan

Still plays with cars
Location
Lehi, UT
N-Smooth said:
... I want to delve into some dividend stocks just for funsies. I have 15 different stocks w/dividends in my robinhood account but the share #'s are pretty small potatoes. @TurboMinivan and @mesha I know the two of you are super into dividend stocks, do you have any you are really psyched about right now?
Click to expand...

At this exact moment, I am very pleased with NextEra Energy (NEE). They just announced a 10% dividend increase, and management just stated their resolve to continue at 10.0+% DGR <dividend growth rate> for at least the next few years. I am planning to significantly increase my wife's position in NEE as soon as I can gather a few thousand dollars.

Now let me go a little deeper. First, more background. Yes, I have a Roth IRA which I have dedicated entirely to dividend growth investing. We also opened a Roth IRA for my wife, and that account is also dedicated to dividend growth investing. While my dividend stock investing strategy has evolved a bit over the years, I do try to keep my investing choices somewhat conservative... but for my wife's account, I am even more conservative. In her account, I have set some rules for myself--I will not even consider buying shares in any company unless it meets the following criteria:
  • 5DGR must be 6.00% or greater
  • Chowder number must be 10.0 or greater
  • Dividend must currently be rated Very Safe by Simply Safe Dividends
  • Stock must currently be on sale according to the current dividend yield
Rule #1: 5DGR. I admit that when I first began dividend investing, I forgot that what I really wanted was to be a dividend growth investor. Chowder (the screen name of a Reddit poster who is well known in a few of the investing subreddits) helped me see the light here, pointing out that if you plan to live entirely off of dividend income, your dividends must grow at a faster pace than inflation. Since inflation historically averages around 2.5% or so, I rounded that up to 3.00% and then doubled it to 6.00% as a minimum requirement to help make sure I stay ahead of inflation. In addition, this rule reminds me not to fall into yield traps and avoid stocks with high current yields but very low dividend growth. For example, a certain stock might have a current yield of 8% but a 5DGR of only 2%. Inexperienced investors will salivate over the starting yield and dive right in, but in the long run the slow growth rate will eventually cost you as inflation takes over your income.

Rule #2: Chowder number. Chowder came up with his own metric which helped guide him in buying dividend stocks: he would add the current dividend yield to the current 5-year dividend growth rate. He would use this number as a forecast for future dividend return, and he referred to this metric so frequently that it became known as the Chowder number. I liked it, so I decided to use it, also.

Rule #3: Very Safe. Simply Safe Dividends is a web site that digs into the financials of every company which pays a dividend. Based on the findings, they assign each company a grade on a 100-point scale... but they only share these scores with subscribers. However, they also broadly break down the scores into five categories (0-20 = Very Unsafe, 21-40 = Unsafe, 41-60 = Borderline Safe, 61-80 = Safe, and 81-100 = Very Safe) and these broad scores are often listed around their web site in free articles and posts. Historically, these guys have a pretty good track record of predicting dividend cuts and eliminations; while there are occasional surprises (such as new management suddenly deciding to suspend the dividend for out-of-the-blue philosophical reasons), dividends rated Safe and especially those rated Very Safe are rarely cut. For this reason, SSD is my first checkup on the future health of a dividend.

Rule #4: on sale. Before buying, I will look up a stock's 4-year average dividend yield (I can find this for free at seekingalpha.com) and compare that to the current yield. If the current yield is higher, then the dividend is currently 'on sale' and I may buy some shares. If the current yield is lower than the historic average, the stock is currently overpriced and I will try to find a better value elsewhere. I base this philosophy on the work of Geraldine Weiss, which was later backed up by the Kovacs (a modern father/son dividend investing duo who write articles for Seeking Alpha in addition to running their own web service) in their 'MAD dividend strategy' charts.

I use these four rules as a starting guide. If a stock fails any of these criteria, I will set it aside and move along to something else. If it does meet these four criteria, that doesn't mean I immediately buy it; it simply tells me it is worthy of further research and consideration.

So let's go back to NextEra Energy and see how it fares. The current 5DGR is 11.00%. Rule #1, check. NEE's current dividend yield is 3.64%, giving it a Chowder number of 14.64%. Rule #2, check. NEE is currently listed as Very Safe by SSD. Rule #3, check. Finally, seekingalpha shows the 4-yr average yield at 2.17%, much lower than the current yield. Rule #4, check. Having passed all four tests, I am eager to look closer at this potential investment opportunity (and, as you know, I've already started a position in it in my wife's portfolio).
 
N-Smooth

N-Smooth

Smooth Gang Founding Member
Location
UT
TurboMinivan said:
At this exact moment, I am very pleased with NextEra Energy (NEE). They just announced a 10% dividend increase, and management just stated their resolve to continue at 10.0+% DGR <dividend growth rate> for at least the next few years. I am planning to significantly increase my wife's position in NEE as soon as I can gather a few thousand dollars.

Now let me go a little deeper. First, more background. Yes, I have a Roth IRA which I have dedicated entirely to dividend growth investing. We also opened a Roth IRA for my wife, and that account is also dedicated to dividend growth investing. While my dividend stock investing strategy has evolved a bit over the years, I do try to keep my investing choices somewhat conservative... but for my wife's account, I am even more conservative. In her account, I have set some rules for myself--I will not even consider buying shares in any company unless it meets the following criteria:
  • 5DGR must be 6.00% or greater
  • Chowder number must be 10.0 or greater
  • Dividend must currently be rated Very Safe by Simply Safe Dividends
  • Stock must currently be on sale according to the current dividend yield
Rule #1: 5DGR. I admit that when I first began dividend investing, I forgot that what I really wanted was to be a dividend growth investor. Chowder (the screen name of a Reddit poster who is well known in a few of the investing subreddits) helped me see the light here, pointing out that if you plan to live entirely off of dividend income, your dividends must grow at a faster pace than inflation. Since inflation historically averages around 2.5% or so, I rounded that up to 3.00% and then doubled it to 6.00% as a minimum requirement to help make sure I stay ahead of inflation. In addition, this rule reminds me not to fall into yield traps and avoid stocks with high current yields but very low dividend growth. For example, a certain stock might have a current yield of 8% but a 5DGR of only 2%. Inexperienced investors will salivate over the starting yield and dive right in, but in the long run the slow growth rate will eventually cost you as inflation takes over your income.

Rule #2: Chowder number. Chowder came up with his own metric which helped guide him in buying dividend stocks: he would add the current dividend yield to the current 5-year dividend growth rate. He would use this number as a forecast for future dividend return, and he referred to this metric so frequently that it became known as the Chowder number. I liked it, so I decided to use it, also.

Rule #3: Very Safe. Simply Safe Dividends is a web site that digs into the financials of every company which pays a dividend. Based on the findings, they assign each company a grade on a 100-point scale... but they only share these scores with subscribers. However, they also broadly break down the scores into five categories (0-20 = Very Unsafe, 21-40 = Unsafe, 41-60 = Borderline Safe, 61-80 = Safe, and 81-100 = Very Safe) and these broad scores are often listed around their web site in free articles and posts. Historically, these guys have a pretty good track record of predicting dividend cuts and eliminations; while there are occasional surprises (such as new management suddenly deciding to suspend the dividend for out-of-the-blue philosophical reasons), dividends rated Safe and especially those rated Very Safe are rarely cut. For this reason, SSD is my first checkup on the future health of a dividend.

Rule #4: on sale. Before buying, I will look up a stock's 4-year average dividend yield (I can find this for free at seekingalpha.com) and compare that to the current yield. If the current yield is higher, then the dividend is currently 'on sale' and I may buy some shares. If the current yield is lower than the historic average, the stock is currently overpriced and I will try to find a better value elsewhere. I base this philosophy on the work of Geraldine Weiss, which was later backed up by the Kovacs (a modern father/son dividend investing duo who write articles for Seeking Alpha in addition to running their own web service) in their 'MAD dividend strategy' charts.

I use these four rules as a starting guide. If a stock fails any of these criteria, I will set it aside and move along to something else. If it does meet these four criteria, that doesn't mean I immediately buy it; it simply tells me it is worthy of further research and consideration.

So let's go back to NextEra Energy and see how it fares. The current 5DGR is 11.00%. Rule #1, check. NEE's current dividend yield is 3.64%, giving it a Chowder number of 14.64%. Rule #2, check. NEE is currently listed as Very Safe by SSD. Rule #3, check. Finally, seekingalpha shows the 4-yr average yield at 2.17%, much lower than the current yield. Rule #4, check. Having passed all four tests, I am eager to look closer at this potential investment opportunity (and, as you know, I've already started a position in it in my wife's portfolio).
Click to expand...
This is the kind of response I knew I'd get out of you and I appreciate it so much. I have some research to do! Thanks!
 
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