Sunday, February 10, 2008

Dividend Dreaming

Since mentioning in my last post about my forex trading that I'm thinking it's time to start moving some gains from that account into other investments, building a new dividend stock and bond portfolio is on my mind. I'm thinking 50/50 between the two asset classes and a set amount invested each month. I'm not sure yet if I want dividends to automatically reinvest or if I will take those as cash so I can direct them to what I consider better opportunities.

When it comes to bonds, I tend to stick to high yield stuff. One favorite of mine, HYB, is my usual pick. In my experience, this type of bond fund tracks the movements of stocks fairly closely, so you don't really get the stability that people usually buy bond funds for. However, these guys have been paying an uninterrupted dividend for 20+ years, and for as long as I've been aware of HYB (about five years now), it has been a consistent amount every month. So even though the fund may fluctuate in value quite a bit, it pays out a steady stream of cash that I can hold in the account to provide some stability (not to mention having more cash on hand to invest in opportunities that come up).

For the stocks, I want dividend payers. Specifically, I'm looking to select them from the S&P 500 Dividend Aristocrats list. The reason I'm focusing on those is that, amongst other things, the companies on that list must have at least a 25 year track record of uninterrupted dividend payments.

What I lack at this point in time though is a tool for determining which companies on that list have the highest rate of dividend growth. Some may have a higher relative yield right now, but I want the income from this portfolio to grow, so it's the companies that are actually making that happen that I'm truly interested in.

If anyone reading this knows of such a resource, please let me know!

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