Investing in Dividend Paying Stocks
I was recently interviewed for a press release through a
financial question and answer format. One of the questions asked of me in the interview was:
Where do you think the stock market is headed over the next five
years?
My Answer!
Charles M. O’Melia: No one knows! There is an old Chinese
proverb that goes something like this: “He, who could foresee
events 3 days in advance, would be rich for thousands of years.”
On a long-term basis I have only witnessed expansion and
progress.
I believe that to be the nature of our American
economy and our American way of life. And as our economy goes,
so goes the stock market and I see no reason to change that
belief.
Who would have thought the expansion in China would generate 5
billion dollars of business for GE? The US companies listed on
the New York stock exchange have the ability to profit
throughout the global expansion of business around the world.
And, an investor can profit without the necessity of having to
own an overseas fund or companies to profit.
Up until that question, the thought of what the market was going
to do tomorrow (or for that matter, 5 years from now) have never
concerned me. I never gave it a thought (Well, maybe a little!).
There just isn’t enough concern on my part whether we are
heading for a bear market or a bull market, or if the markets
are heading sideways.
When you own a portfolio filled with companies that have a
history of raising their dividend every year, and a systematic
approach of adding more shares to the portfolio through the
dividend reinvestments every quarter, plus having a simple
savings plan with an opportunistic buying approach of adding
even more shares to the portfolio every quarter, it really doesn’t matter. I am always buying more shares.
Sometimes I pay too much for one of my companies; sometimes I
receive a great bargain. But no matter which, bargain or
expensive, my income from those companies always continues to grow and grow and grow and grow and grow.
Sometimes, the dividend yield of one stock may be 5.
15%, and the
following year or two (even with two dividend increases during
those two years) the dividend yield would drop to less than 3%.
This, for example, may mean the stock price would have risen
from the 30 dollar range to the 60 dollar range. I have found
that when that 5.
15% dividend yield drops to around 1%, the
company’s stock in question becomes so high that the company
usually has a stock split, as well as a dividend increase.
Right now, the DOW seems to be having trouble breaking that
11,000 barrier. And, right now, I can’t help thinking back, way,
way, back.
For those of you who don’t remember the late 1960’s, early 70’s,
the DOW barrier was 1,000.
Oh, what a tough time that DOW 1,000 barrier was!
I remember
thinking – it’s going to break it this time. Back in 1966 was
the first attempt (rose to 985) and it kept on trying to break the 1,000 barrier for the next 6 years.
When it finally broke 1,000 (it reached 1,050 or so, in 1972), it immediately fell back.
It took another 10 years before the DOW broke the 1,100 barrier.
Six years for the DOW at 985 to break 1,000.
Another 10 years to break 1,100.
A total of 16 years to add a mere 115 points on the DOW.
So, is the 11,000 barrier in the DOW today similar to the 1100 barrier of times-gone-by?
Will 11,000 on the DOW become a 16 year barrier? Could be!
Then again, maybe not!
I don’t know! “He, who could foresee events etc.”In the meantime, I will continue watching my dividend income continue to grow and grow and grow and grow and grow!
To find the LINK for the complete financial interview visit:
http://www.thestockopolyplan.comYou have permission to this article either electronically or in
print as long as the author bylines are included, with a live
link and the article is not changed in any way. Please provide a
courtesy emailto: charles@thestockopolyplan.com telling where
the article was published. (Word Count 706)Charles M. O’Melia is an individual investor with almost 40
years of experience and passion for the stock market. The author
of the book ‘The Stockopoly Plan – Investing for Retirement’;
published by American-Book Publishing.
The book can be purchased
at
http://www.pdbookstore.com/comfiles/pages/CharlesMOMelia.shtmlCharles O'Melia
