Krasnaya – learning

[krasnaya]

Good morning,

I've browsed the site, read information here and there, but I guess, as with every field, there's nothing like practice.

So I would like to start a dividend growth portfolio, investing a small monthly amount, which limits me to the BEL-CAC-AEX markets. FYI: I am Belgian.

I will be told that on small amounts (200 to 300 euros) the brokerage fees will kill me: at the beginning it is obvious, but in 2-3 years, the accumulated sums + dividends should have stopped the problem.

I would like to be guided and advised, in order to learn over time how to get by.

First purchase of the day: some Danone.

I simply relied on the site's portfolio for this purchase.

My doubts and fears: how to react to a sharp drop? Strengthen, I guess?

How to react to a sharp rise? Take your PV and re-enter the stock during a fall?

My next purchase should be in late February, early March.

Goal: regular income, say in 5 years.

I just ordered Graham's book "The Intelligent Investor".

Thank you for your opinions/remarks, advice etc.

[Jerome]

Hello Krasnaya, it's good to invest little by little, it smooths out the risk of returning at the worst time. However, I do find that the amounts invested are very small and as you say, the fees will eat up a lot of your profitability, even if you invest for the long term. 

Danone is a good stock. You should not focus on whether the price is going up or down. The important thing is to see if the company is able to maintain its dividend or even grow it.

Good luck to you.

[krasnaya]

What do you think about investing in distribution mutual funds without entry fees?

In order to ensure the seriousness of my Sicav, I only take 5 Morningstar stars?

 

I'm trying to find any dividend publications on the Morningstar website, but I can't find any at the moment...

 

So I could invest each month in this type of mutual fund (but are there any with increasing dividends??), and from time to time in a share during a bonus or other?

 

What is a reasonable minimum amount to enter a stock without the entry fee disrupting the dividend yield?

 

THANKS!

[Jerome]

I have selected a few dividend-paying ETFs in my strategy Ex-US (market = PCX).

Otherwise I know that there are ETFs on dividend aristocrats. You have to look a little and you easily come across them.

However, a few ETFs or investment funds are good to bring a little diversification, especially on types of investments or markets that we do not know well, on the other hand it is always less good than the original, and more expensive.

It is better to start by buying a few solid blue chips, with sufficient starting capital, 2000 euros minimum per share, ideally 4000 euros, then gradually increase your capital.

[krasnaya]

Ok, but when you don't have 2,000 euros to invest in a stock, you have to start from scratch... 😕

 

The only dividend results I have found for funds so far are in Binck banck's key selection.

 

The dividend is not increasing, but reasonable I think:

LO Funds – Euro Responsible Corporate Fdmtl PD

LU0095725890

 

3 Morningstar stars, a dividend paid every year since 2001 (the data does not go back further) 0.33 in 2012, and the NAV is 9.95 euros.

 

What do you think about it given my profile?

 

THANKS!

[Jerome]

These are not dividends, but a corporate bond fund, therefore with constant income.

Given your profile, a fund or ETF may be a good solution, otherwise put aside cash little by little.

[krasnaya]

Good morning,

 

These constant income funds are not interesting for your method?

 

I just found 3 Invesco monthly dividend funds, one of which gave $5.38% gross in 2012.

 

The first dividend of 2013 is in the same vein.

 

Is there a risk in investing in 3 funds from the same company? Invesco in this case?

 

THANKS!

[Jerome]

Given the small amounts you invest, there is no risk. But if the amounts become larger, I prefer to diversify. 

Constant income is not a priori bad, but in the medium/long term it is better to invest in growing dividends so as not to lose in terms of real income, because of inflation. In addition, the magic of compound interest transforms modest returns into real money factories.

Yields of 5% seem attractive at first glance, but since they don't move, their appeal melts like snow in the sun in just a few years, while a yield of only 2.5% that grows by 10% per year exceeds it in just seven years (and then it keeps growing even more…). By reinvesting the dividends it's even better.

[Earnie]

Hello !

When you talk about reinvesting dividends, do you mean waiting until you have accumulated enough dividends to be able to buy back a share of the company that pays them? Or another share?
In my head, I see an investment of (for example) 2000CHF for 20 shares, which would bring in 10CHF/year which would allow you to buy back a share after 10 years. Is this the basis of your strategy? So you have to strengthen your positions for each share over time for an increase in the dividend?
Thank you! (I know my questions are at a newbie level given the level of the forum participants, but I just want to understand...)

[Jerome]

Well, you'll have to be patient.
The goal is to build up a nice portfolio over time, primarily through your savings (see tutorial).
At first the dividends received will be modest, but over time they will grow, thanks to the purchase of new shares and thanks to the growth of dividends.
The more you progress with your portfolio, the more the share of available cash that will come from your dividends will grow (in proportion to your savings).
The goal is that you can ultimately live off it, and that you no longer need to save… and work.
Some use their dividends to buy back shares they already own.
I prefer to buy new stocks, in order to diversify the risk. For this, of course, there must still be attractive ones on the market. Which is not obvious at the moment.

[Earnie]

OK, well I have set up an automatic savings system, plus a totally controlled budget, and even paying child support, I manage to save almost 30% per month from my net salary with the help of several techniques. So yes, I think I will put aside as much as possible in 2015, and buy shares when the market has corrected (2016 not before...). The prices are rising in a completely artificial way, from my point of view, it would be shooting myself in the foot and ruining my efforts to invest now.

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