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Monday, January 30, 2017

The Best Part of Dividend Growth Investing is the Desire to Contribure More.

I have an addictive personality. As a child it was video games, a teenager it was athletics, in college it was my school newspaper. Most recently it has been my career. I have devoted many hours to each of these interests and got a tremendous amount out of it. I'm ultra-competitive even when I coached middle school students.

The latest focus of my energy has been investing in dividends. Though I only have a limited amount to invest, it is a perfect match for my personality. And I know it will payoff in the long run. The reasons are not what you may think. The majority of my investments still go to my Betterment Account. And to be honest in terms of strict return I may be better off putting all my money there. The fees are low and the truth of the matter is that most investors don't beat the market.

What dumping my money in Betterment doesn't give me is control. It doesn't allow me to apply a specific investment strategy. So therefore my investments are very steady with a modest increase each year.

My Robinhood account is completely different. The X-Factor for Dividend Growth Investing is that I find money that I didn't know I had. In order to find the money to invest I pass up on other pleasures like buying clothing, eating out, or making other unnecessary purchases. The results are more investments. The more I put in, the more I will be able to take out in the long run.

Of course I could apply the same method of frugality and invest the money into funds. But for me at least I don't see myself having the motivation to do it.

Recent Purchase JNJ

I almost made it out of January without a buy. It would have been my first month without a purchase since I started dividend growth investing in May. It's not that I didn't have the money. I made my regular deposits into my Robinhood account. I just didn't see a lot that was cheap. And what was cheap, wasn't screaming buy. My thought process was that since I only had around $100 to invest anyway, why not hold onto it? I could make a larger buy for something I was more interested. But just as the month was about to end I changed my mind. 

I've been wanting to own JNJ since I started dividend investing.  The price has either been too high or I haven't had the money. This month nothing really interested me that much. So when I had enough for a share @113.08 I jumped all over it. With a P/E ratio of 19.8 is just about fair value for a stable company with an excellent track record of dividend increases. The payout ratio is only 54 percent and the one year price target is $124. I don't think I got the greatest deal in the world. But for some stocks fair value might be the best you can hope for in this market. One thing I do want to get away from is buying a single share of many different stocks. It's not that I don't want to be diversified, I just want to start building larger positions. With JNJ I'm okay with starting a small new position because it is a foundation stock that I can see myself adding too over time.

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