ConocoPhillips (COP) just announced that it is cutting its quarterly dividend from 74 to 25 cents/share. This comes after management constantly reiterated that the dividend is a priority. Unfortunately, when a company is selling a commodity whose price can fluctuate greatly, and you have very high capital expenditure costs, they cannot really do much other than cut the dividend to conserve resources. This environment is tough on ConocoPhillips, because they are a pure exploration and production play, and have no downstream operations ( refining and marketing) like the big integrated companies such as Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX). If ConocoPhillips still had Phillips 66 (NYSE:PSX), it would have been able to weather the storm in oil prices a little easier. It is also unfortunate that I was right to question the sustainability of the dividend payment from ConocoPhillips in my earlier assessments from 2015. [more]
without a clear plan or strategy to accomplish specific goals. This investing sin causes investors to chase unrealistic returns, and to abandon one strategy for the next when things get tough. A common trait of succesful investors is identifying their investment objectives, and then devising a plan to accomplish those. The important part after that is patiently sticking to your plan even when things get tough. It is unrealistic to assume that any real strategy can deliver results that are always better than everyone elses, and can also generate consistent profits all the time. Investors who fail to understand this, end up abandoning strategies at their temporarily weak point, and then wasting precious years that could have caused the capital to compound and accomplish their goals.I believe that in order to be successful in investing, one needs to select a strategy, and stick to it for decades. This allows the power of compounding to do its magic. If you switch investing methods/styles every few years, because you chase what is hot, you are not going to let compounding do the heavy lifting for you. In addition, if you have high portfolio turnover, your compounding will be negatively affected, because you will be paying more in commissions, taxes and fees.
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Dividend growth stocks are the gift that keeps on giving. I like the fact that most of the work in selecting good dividend growth stocks is upfront in analyzing those investments. What follows next is a lifetime of dividend payments, distributed every quarter, which grow over time. My goal is to assemble enough dividend growth stocks in my portfolio, in order to start generating income to pay for my retirement. My dividend portfolio is a silent worker in my household, who works 24/7 for me, and who dutifully shares all of their income with me. This income is completely passive in nature, and it does not require me to wake up at 6 am every day, shuffle TPS reports all day long, and make sure I do not forget to put a coversheet on those same reports.
I like watching dividend growth investing at work – this is when the companies I own keep rewarding me with a higher dividend check for a decision I made years ago. There were several notable companies which raised their dividends to shareholders. The list includes:
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As most of you are aware, oil prices have decreased significantly since hitting a high in June 2014. This has reduced earnings projections for energy companies, and therefore depressed share prices. The question on the minds of many dividend investors is what to do in this situation. I generally operate under the belief that the upside will take care of itself, meaning that if prices rebound, earnings will go up and dividends will continue growing as well. This is why in this article, I will focus mostly on risks, and how to mitigate their potential impact. I will also discuss how I plan to deal with this situation.
The goal of a dividend investor is not how much a company can earn today, but whether it can earn more over time. Oil companies earn more by finding and producing more oil, or if prices they sell at increase over time. Before we dig further, there are several risks which are discussed, concerning energy companies these days. I will address those below. [more]
The goal of every dividend investor is to generate dividend income that is larger than their annual expenses. This coveted goal is called the dividend crossover point. Regular readers know that my goal is to reach the dividend crossover point somewhere around 2018. I am on track to achieve that, because I put money to work every month, and have been doing that after starting from scratch more than 8 years ago. When you have a goal, and a plan to achieve that goal, the important thing is to keep working towards that goal. I do this by constantly searching forattractively valued companies, which also have good prospects to grow dividend income in the future. [more]