Saturday, 30 April 2011

Getting Started

Hello Folks -

My name is Neil and I am at the early stages of investing. I am, as the title suggests, a beginner to investing.

I have done some studying of investing in growth stocks, value investing and even options trading.

The purpose of my writing this blog is to participate in the online community from which I have read and learned so much. I am NOT advocating that you follow and do what I do; I am NOT an investment professional - so please before you invest consult with a professional - and do your own due diligence.

After much reading and coming to a realization as to what my comfort level is, and my goals, I have arrived at my personal investing strategy.

So here is my mid term goal : Earning $12,000 a year from dividend paying stocks.

My strategy to get there is quite simple - everything in my portfolio must pay. Each stock or unit MUST give back - provide income of some sort or another.

I use TD Waterhouse and Royal Bank Direct Investing for my investing needs and research. I find the TD Waterhouse stock screener easier to use, but use both to research what my next buys will be.

As of today's writing I have about $21,000 in existing investments.

Some of the rules for picking what I put my money into are as follows:

The dividend payout ratio, should indicate that the dividend paid out is sustainable - while leaving enough money on the books to invest back into the company - I am going to look for stocks which have payout ratios of around 60%. (dividend/EPS)

As I am getting a bit of a late start; I am going to be chasing yields a little - going forward the yield has to be over 5% or the stock has to have the potential to increase the dividend and increase the stock price - thus giving me the return I want.

I am going to take advantage of DRIPs where possible - TD Waterhouse does this painlessly - allowing me to pick up more shares or units and not have to pay the broker, taking advantage of compounding my returns over the long term. Currently I am not DRIPing all my stock just MSFT, AQN and HR.UN - the remaining dividends will accrue in my account to give me a nestegg from which I can rebalance or take advantage of buying opportunities.

I will add to this over time and as I learn more.

This should be fun - I look forward to interacting with the online community..


  1. Hi Neil,

    One think about DRIP is that you sometimes buy shares when the price is at the highest. So if your initial yield was 5%, if the stock price goes up, you may drip when the yield on your new shares may be 4% or even lower. Since you are also putting some of your money as you go along, I think it is a better use of money to keep the dividend and decide where you will reinvest it by adding it up to your new savings, looking for something that will still pay you 5% or more.

    Just MHO... have fun!
    Mike B.

  2. I am kind "splitting the difference" here, some is DRIPping to compound and some I am letting accumulate to use in the manner you have suggested.

    Thank Mike!