This past 12 months or so have been a year of learning.
I stepped away from my photography hobby because of burn out. I just lost interest. I’m starting to get the interest back little by little. The picture above was me messing around with iPhone silhouettes. Just watching the sun go down and enjoying the light.
I also learned a lot about investing. My dividend growth portfolio will take a hit to income this year because I'm correcting mistakes make over the last couple of years. I'm taking a step backwards so that I can put the portfolio back on the right track.
One of my mistakes was buying high flying stocks. They had good trends going up and up - until I bought them. Then they’d turn south and keep heading south by as much as 40%!
My biggest lesson here is to watch out for stocks setting new 52-week highs. Instead, be patient. The stocks will go on sale sooner rather than later. And, the nice thing about stocks going down is their yield goes up! Too many times I bought a high flying stock with a yield in the twos - 2.5% for example - only to see the stock go on sale and the yield increase to the threes! If only I had waited a handful of months!
Another important investing lesson is to graph the earnings per share and the dividend payment. Looking at lists of numbers on spreadsheets is fairly meaningless. Percent growth rates can look impressive but, those numbers take on a completely different meaning when graphed out.
Take a look at these five-year dividend and earnings graphs to see what I mean. Blue lines are quarterly earnings per share while the green lines are dividend payments.
Comcast (CMCSA) is the cable company everybody loves to hate but, few companies match its consistent earnings and dividend growth.
National Oilwell Varco (NOV) and Helmerich & Payne (HP) are two energy stocks in my portfolio. Energy is on sale right now and one of these companies is on my buy list and the other isn’t. Can you tell which one? Hint, I’m buying for dividend income. NOV’s income has declined just as much as HP but, their income is still above their dividend payments while HP’s income is well below.
My last example is a former favorite and still a holding. Copa Airlines (CPA) has had some great trends when the only thing you look at is columns of numbers on a spreadsheet. But, once those numbers are put into a graph, they show their true ugliness. This is not the kind of stock I want to continue buying. They’ve recently reduced their dividend so I’ll probably sell this one.