One of the biggest risks an income-oriented investor faces is a large decline in dividend income. There are different approaches used to mitigate such a risk. In this article, I will share with you how to guard against systemic dividend decline. One popular approach is to carefully screen dividend stocks and only invest in those which satisfy certain income and balance sheet requirements (e.g. dividend coverage ratio, free cash flow growth, etc.). Another approach is to select from a list of stocks that have had a stellar track record of dividend payments such as the Dividend Aristocrats and Dividend Kings.
Investing and trading are two methodologies at benefitting from the financial markets. Both groups i.e Income and growth, have a similar objective however pick diverse time frames and approaches in accomplishing the overall aim.
Investing and Trading
Develop the ability to generate income and build long term wealth for you and your family from global currencies, stocks, commodities and shares.
Investing and trading are two approaches at profiting from the financial markets. Both groups have the same goal but choose different time frames and approaches in achieving the overall aim. Both offer great value when using the financial markets to fund your retirement.
Understanding how to earn income and growth from the financial markets is a key building block of your Retirement Prosperity by Design. The financial markets are the deepest pools of financial resources on the planet. There is no shortage of money, just merely an understanding of how to access it.
As Benjamin Graham has stated “An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.” In this article, I hope to convince you that because of repeated changes to the definition of “the dollar” one cannot ever be 100% satisfied that the lending of “dollars” is an investment operation. This inflation in the currency supply may not affect the prices of all goods and services uniformly, and many goods will not climb at a rate of 7.5% per year due to enhancements in productivity, but the inflation effect is very real leading to the conclusion that the only truly valid unit of account in today’s world are ounces of gold and ounces of silver, s,o should gold and silver in hand be considered the default position for any holder of wealth?
Given this short-term uncertainty, a logical question arises: “how much of my portfolio should I keep in cash?” This is an excellent question and one that can be informed by some mathematical evaluation. I say “informed” because mathematical models cannot precisely predict the future. They can, however, help guide our decision-making. Today I am going to discuss how I view the cash vs. stocks decision. I’m going to leave out the discussion of gold (for now). The benefit of this article to you should be to give you some ideas of a general framework you can use to shape your own decision-making.
In this post, I am going to compare the results of withdrawal policies applied to two different portfolios consisting of equities and gold. The first portfolio will center around one of the largest positions in my portfolio, VYM, which is the Vanguard ETF that tracks the FTSE US High Dividend Yield Index.