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DRIP stock recommendations?

1,550 Views | 11 Replies | Last: 7 yr ago by CS78
CS78
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Looking for 2-3 drip stocks to start putting about $1000 total a month in to with a 20+ year time frame. I'll likely rotate the $1000 between stocks each month to keep cost down. Taxable account but I'm not concerned with taxes due to my passive real estate losses.

Pretty sure XOM is going to be one. Any recommendations for another one or two with a >3% yield?

Thanks!
IrishTxAggie
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AG
AT&T?
Bayou City
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Why not buy an ETF of dividend payers and dividend growers? Eliminate the non-systematic risk upfront and meet your target objective.
turfman80
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Proctor and Gamble or Clorox
Pfizer
Exxon
Emerson Electric
dallasag12
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AG
I am using the same strategy and about 3 years in. My big ones are:

Altria (MO) - 3.89% yield, but is considered a "sin stock" due to tobacco/alcohol
General Electric (GE) - 3.13% yield, solid conglomerate that is not going anywhere over the next 20 years
Proctor & Gamble (PG) - 3.03% yield, again, solid company that has withstood market swings
Pfizer (PFE) - 3.57% yield, strong company in a large industry
AT&T (T) - 4.79% yield, same reasoning as Pfizer
edwardsk2003
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quote:
Why not buy an ETF of dividend payers and dividend growers? Eliminate the non-systematic risk upfront and meet your target objective.


And also you can likley do it w zero transaction fees.

treetop flyer
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Diversified etf. Invest and forget it.
CrossBowAg99
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quote:
quote:
Why not buy an ETF of dividend payers and dividend growers? Eliminate the non-systematic risk upfront and meet your target objective.


And also you can likley do it w zero transaction fees.


OP likes to make things complicated and fill out paper work

I Kid
CS78
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First, thanks for the tips. Going to bite on XOM for now with PG probably being my second. I couldn't really settle on any others for the time being but will reevaluate later. I like Exxon for the current price of oil that will go back up at some point and I like PG for its steadiness in down markets.

quote:
Why not buy an ETF of dividend payers and dividend growers? Eliminate the non-systematic risk upfront and meet your target objective.

I'm late to the buying cycle and am an overall market bear right now. Dividend stocks as a whole appear to me to be overpriced. When the market corrects, I will consider adding an ETF for new money and maintaining the already in place positions. Going to use an old sharebuilder account (now capital one) and it looks like they don't charge any fees on dividend reinvestment. Paperwork and fees should be minimal.
Bayou City
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"Dividend stocks as a whole appear to me to be overpriced. When the market corrects, I will consider adding an ETF for new money and maintaining the already in place positions."

First, you think the market is going to correct, yet you are placing money into an equity with a strong correlation to the S&P. Second, if you're criterion for investing are income and downside protection (consider a correction or bear market on the horizon) why would you buy in now? No correction, you earn X return. If its a correction, you lose 800 bps and a bear market you lose 1600 bps basis. So, you would be taking risk to earn 350 bps/year, under the aegis of protection from the systematic effect of a down-market. Ergo, you are buying into the largest dividend paying stock by cash outlay in the world (somewhere around 2-2.5% of all distributions made by publically companies globally), when you are saying dividend stocks are overpriced.

The payout ratio has also been increasing, and if they were to maintain their 10 year historical dividend growth rate, they will be very tight on free cash flow.
CS78
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Because- I think EVERYTHING is overpriced for the most part BUT I need somewhere to put money. I own a number of rent houses I manage myself. Used to I had plenty of time. I figured out I could use my time to actively invest in real estate and destroy any returns the stock market could give so I gave up stocks, mutual funds, etc for a number of years. Now with a W2 job, 2.5 kids, and all the houses, it's flipped and I don't have much time but my monthly income is in surplus. I still quick flip a house or two here and there but I largely don't have the time to take on more rentals.

That lead me to building up a large stock of silver as a fall back to pay property taxes in the event all things go to hell but that task is completed. I just consider it my families off the books, permanent emergency fund with no plans to ever sell.

Short term emergencies are covered by monthly free cash and I keep some cash set aside to turn houses that I don't dip in to. I flat out dont have the discipline to just save each month. Its either getting invested or spent. Found myself at the Chevy dealership eyeing new Z06 corvettes last month (good thing my arse is too wide for those seats). So where does that leave me? Wasting excess monthly income on junk we don't need or this.

Bayou City
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It's easier to save a dollar than to make a dollar. If you think everything is overpriced, why not tread water in ultra-short/short high credit quality muni's until the markets wash out? I am not trying to talk you our of the investment, just trying to shed light on the objective and the avenues in which that objective can be reached.

I also say that because you have significant exposure to RE. Given that exposure, your exposure to an industrial commodity (silver), and reliance on rental income to maintain a surplus; I'd figure out where I need to be on a cash flow basis, and work backwards into the lowest risk profile to achieve that return.

The last thing you want is a systematic event that results in your equities following your RE or your RE to follow equities to the point you don't have the cash to carry one or are reliant on liquidating equities to cover the carry on your RE. I say that because you can be RE rich with great cash flow one day, and 6 months later be sitting on a pile of real estate taxes, unoccupied properties, or leased out properties at cap rates that don't cover expenses.

Stay nimble and congrats on the success.
CS78
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Thanks for the thoughts.



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